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Collectivist Economic Planning

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Collectivist Economic Planning is the foundation for rational analysis of economic systems. Chapter three is its centerpiece: Economic Calculation in the Socialist Commonwealth, by Ludwig von Mises. The Mises essay effectively launched the Socialist Calculation Debate. The fundamental point here is simple. Rational planning of production in a modern economy requires market prices for capital goods and labor. By modern economy I mean an exchange economy with extensive division of labor and highly varied final goods. This is not a problem of simple or primitive economies. The details of this argument. Prices serve as a means of communication in coordinating the production of many goods through complex and lengthy stages.

Chapters two and four get less attention because the names of the authors are less known. This is unfortunate, especially for chapter two (by N Pierson). Chapters one and five are the editor's introduction and conclusion. These are not simple end-caps to the book. In chapter one the editor (Hayek) sorts out a number of basic issues. In chapter five the editor makes a forceful case against the proposals of HD Dickinson.

The essay by Enrico Barone is where it belongs, as an appendice. Barone's essay is a good example of how to avoid the real problems of economics. Barone focuses mainly on static equilibrium conditions. Since the truly insurmountable problems of socialism are dynamic, Barone could not understand them with his method.

Collectivist Economic Planning is important for two reasons. It is a book of historic importance. This book was a critical part of the history of twentieth century economic thought. It is important also because it contains a set of timeless theoretical insights into the workings of socialism (along with the 1922 book Socialism, an Economic and Sociological Analysis). While the average reader might find this book uninteresting, those serious about political economy should read it cover to cover.