The Economics of Ignorance and Coordination

The Economics of Ignorance and Coordination

Subjectivism and the Austrian School of Economics

New Thinking in Political Economy series

Thierry Aimar

This book clarifies the specific nature of the Austrian theory and restores the unity and open-mindedness of the Austrian school in general. The intention is not to offer a collection of different or parallel ideas, but rather to retrace, from a pedagogical and constructive perspective, the various stages of the construction of a well-founded theoretical edifice: from Ludwig von Mises to Murray Rothbard, from Friedrich Hayek to Israel M. Kirzner and from Lachmann to Lavoie. The book is a reconstitution of the way Austrian ideas and concepts organize themselves in a common structure.

Chapter 7: The Debate on Collectivism

Thierry Aimar

Subjects: economics and finance, austrian economics


___________________________________________________ From 1848 to World War 1, the growing success of socialist ideas in public opinion provoked a series of reflections on the theoretical principles of the functioning of a socialist economy. Marx and Engels, paradoxically hardly participated in this debate, their only written references to the socialist project appearing in the Manifesto of the Communist Party (1848), Critique of the Gotha Program (1875/1890-91) and the Anti-Dühring (1878). Marx and Engels’ position can be summed up thus: communist society, the end of History, would mean the end of the State and disappearance of scarcity, but there first needed to be a transitional stage called ‘socialism’ or ‘first phase of communist society’. This would be established by a proletarian revolution to end capitalism and would be centred around three basic economic principles: nationalization of the means of production, thus removing the market of productive factors; planning, the basic socialist method; and lastly that this idea of planning should go hand in hand with the abolition of market value and of monetary calculation. The abolition of monetary calculation almost immediately raised questions as to the possibility of such a collectivist economy functioning. In one famous passage, Gossen, a precursor of marginalism, considers that: ‘the central authority, proposed by the communists, for the distribution of the various tasks and their reward, would very soon find that it had taken on a job the solution of which far surpasses the abilities of individual men’ (Gossen, Entwicklung der Gesetze des Menschlichen Verkehrs, 1854). Pierson, (‘The...

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