Socialism, Economic Calculation and Entrepreneurship

Socialism, Economic Calculation and Entrepreneurship

New Thinking in Political Economy series

Jesús Huerta de Soto

This highly topical book presents a new theory on the characteristics of entrepreneurial knowledge. It explores the recent shift among professional economists and scholars in their evaluation of the debate of socialism. Socialism, Economic Calculation and Entrepreneurship presents an application of Israel M. Kirzner’s theory of entrepreneurship to the theory of the impossibility of socialism. It discusses the influence of the fall of socialism, with particular reference to the evolution of economic thought.

Chapter 6: Oskar Lange and the ‘Competitive Solution’

Jesús Huerta de Soto

Subjects: economics and finance, austrian economics, history of economic thought, political economy, politics and public policy, political economy


6. Oskar Lange and the “competitive solution” In this chapter and the next, we shall examine the different attempts of socialist economists at formulating a “competitive solution” to the problem that socialist economic calculation poses. With this in mind, we shall accomplish two goals in this chapter: first, we shall present a series of introductory considerations which place the most significant implications of this new proposal in their proper context, and we shall analyze the most important historical precedents for the proposal; second, we shall carefully study the “solution” Oskar Lange developed. Although our focus on Lange may at times appear too meticulous and extensive, his contribution – the best known and most often cited of those made by socialist theorists – has been so incorrectly interpreted that it is necessary to make a close and thorough examination of it. The analysis of the competitive solution will be concluded in the next chapter, which will be devoted to a study of (among other matters) the contributions made by Henry D. Dickinson, Evan F.M. Durbin and Abba P. Lerner in this area. 1 INTRODUCTORY CONSIDERATIONS One feature shared by all versions of the so-called “competitive solution” is an attempt to introduce a sort of “quasi-market” (in the words of Mises), in which the behavior of the different economic agents resembles as closely as possible that of their counterparts in a capitalist system. When we examine the different contributions, we shall see that they are generally characterized by their ambiguity and contradictory nature, and...

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