Rivalry and Central Planning: The Socialist Calculation Debate Reconsidered (Historical Perspectives on Modern Economics) [Hardcover]

Don Lavoie (Author)

Book Description

Publication Date: May 31, 1985 | Series: Historical Perspectives on Modern Economics

This study represents a serious challenge to conventional thinking in contemporary comparative systems, and the economics of socialism. It disputes the commonly accepted view of both the nature of the 'socialist calculation debate' of the 1930s and the lessons to be derived from it. Whereas many socialist and capitalist participants to the debate tended to talk in polar terms of central planning versus the market, the chief result of the whole controversy has been that the Neoclassical 'market-socialist' position is usually taken to represent a successful synthesis of planning with markets, a synthesis which almost completely dominates contemporary work in comparative economic systems. The author argues in fact that the famous debate has been largely misunderstood. His revisionist interpretation argues that it can no longer be viewed as a dated battle between extreme positions that have now become comfortably reconciled. Rather, the lesson is that planning and markets are fundamentally alternative co-ordination mechanisms and that the attempt to combine them tends to subvert the operation of each.

Product Details

• Hardcover: 224 pages
• Publisher: Cambridge University Press (May 31, 1985)
• Language: English
• ISBN-10: 0521264499
• ISBN-13: 978-0521264495
• Product Dimensions: 9.2 x 6.2 x 0.9 inches
• Shipping Weight: 1.2 pounds
• Average Customer Review: 5.0 out of 5 stars  See all reviews (1 customer review)
• Amazon Best Sellers Rank: #3,731,064 in Books (See Top 100 in Books)

More About the Author

Discover books, learn about writers, read author blogs, and more.

Customer Reviews

Most Helpful Customer Reviews

4 of 4 people found the following review helpful:

5.0 out of 5 stars The Real Calculation Debate..., August 25, 2008

By 

James F. Mueller "Lachmanniac" - See all my reviews
(REAL NAME)   

This review is from: Rivalry and Central Planning: The Socialist Calculation Debate Reconsidered (Historical Perspectives on Modern Economics) (Hardcover)

This book is a very detailed study of the entire history of the socialist calculation debate. This debate began with Von Mises' claim that a socialist society (state ownership of capital goods) cannot allocate resources efficiently because of the absence of competitive market prices.

All the participants in this debat would agree with this characterization of Mises' challenge, but, as Lavoie argues, they would emphasize different points. Lavoie wants to correct these many different interpretations by drawing attention to the importance Mises attached to the concept of "competition" --- what Lavoie calls rivalry.

Lavoie uses the word rivalry because economic theory has a peculiar idea of the nature and character of competition. For economists, competition is a Pareto-optimal state of affairs in which all prices converge to equilibrium and market agents are act in the capacity of passive price takers. Dynamic, rivalrous, entrepreneurial price war behavior are generally seen by the profession as being crude representations of pure and perfect competition.

This understanding of competition is responsible, Lavoie argues in this book, for the confusion that surrounds the calculation debate. Mises and his followers (Robbins and Hayek) had a different view of the essential features of a competitive market economy than did their interlocutors. For the market socialists, there is a formal similarity between capitalism and socialism, enabling them to argue that socialism could reproduce the results of perfect competition, thus making the free and unhampered market unnecessary for the generation of efficient market prices.

That is the basic thesis of Lavoie's book. The Austrians have a dynamic idea of markets and competition while the market socialists (Lange and Taylor) had a static understanding of markets.

This book is also valuable because it discusses the role of Mises' challenge in the context of Marxian theory as well. In fact, Lavoie argues that the more interesting confrontation occurred between Mises and the Marxians rather than the subsequent debates between Hayek and the market socialists because both Marx and Mises emphasized disequilibrium. For Marx, the market was not only competitive and rivalrous, but also anarchic and chaotic. Marx believed that central planning (unity and coherence) could eliminate this independence among producers and bring order to the market. It is in this context that Mises' challenge can (and should!) be appreciated.

For Austrians who have not yet read this book, I would encourage you to do so for this chapter on Marx and the one on Mises that follows it. The rest of the book should be old hat for Austrians.

I gave this book 5 stars because it was published in 1985 and covered all of the relevant arguments up to that time from a distinctly Austrian perspective. However, Austrians cannot make these sorts of arguments forever. The market socialists are now gone and replacing them are new, well-trained and equally dynamic professional economists who have challenged the efficacy of market prices on novel grounds. People like Joseph Stiglitz, Bowles and Gintis have made challenging arguments against the market without invoking the concept of equilibrium. Austrians have erred by responding to these criticisms by resorting to the socialist calculation debate because, as Lavoie has shown, this debate is confused because both sides had different ideas of the market. The socialists were general equilibrium theorists while the new challengers are not.

This book is of historical interest (and in this respect is immensely interesting), but I think Austrians need to move on. Of course I cannot fault Professor Lavoie for this so I decided to give him 5 stars for this excellent book.