Riccardo:
> That is, Hayek (and Mises) must be studied because:
>
> (i) their criticism against planning was essentially sound (while Marxist
> criticism againts the Austrians were not)
>
> (ii) the assimilation of their position with the general equilibrium
> approach was wrong, and theirs was a quite radical rejection of
> Neoclassical economics a la Walras.
>
> BTW, (i) and (ii) are the same, since for them socialist planning was
> nothing but the consequence of the equilibrium theorizing reducing the
> market to the auctioneer.
I think that Riccardo raises some very contentious claims here, in
particular
the claim that the Mises/Hayek critique of socialism is sound. I think we
should be quite clear as to the implications of this. If it is true, then
the
whole communist idea, of which Marx was a leading theoretical exponent,
is invalid and utopian. If Mises/Hayek are right, then
capitalism is eternal, there is no feasible alternative to
a capitalist market economy.
In my opinion, Riccardo is wrong here, the attack on socialism
by Hayek and von Mises contains serious flaws. Allin and I have
published several articles defending the idea of socialism against
the Hayekian critique over the last 8 years, the most relevant
to readers of the list are probably
1. "Information and Economics, a critque of Hayek",
which we presented to the EEA in boston
last year and which is on the web as:
http://www.cs.strath.ac.uk/Contrib/wpc/reports/hayek/hayek.html
2. "Calculation, Complexity and Planning:
The Socialist Calculation Debate Once Again,"
ftp://csf.Colorado.EDU/econ/authors/Cottrell.Allin/soccalc.ps
published in ROPE, summer 1993.
We present a counter-argument against Mises' charge that rational
economic calculation is impossible under socialism
(a charge recently revived by Don Lavoie).
The paper also considers other contributors to the
Socialist Calculation Debate, such as Oskar Lange.
3."Socialist Planning after the Collapse of the Soviet Union",
published in Revue Europeene des Sciences Sociales, 1993. We
make the argument that what failed in the USSR was not socialist
planning as such, but a particular and definitely flawed variant
of same, and suggest the outlines of an alternative system of planning.
The paper is complementary to our 1993 book, "Towards a New Socialism."
The essence of the Mises critique is the argument that
1. without prices there can be no rational economic calculation.
2. prices can only be formed by what Mises called the catalaxis
of the market
To this Hayek adds the following main points
3. economies are very complicated and require the dissemination
of information for their co-ordination
4. the market mechanism acts as such a means of dissemination
5. the volume of information that the market can transmit is
so vast that it would swamp any conceivable planning system.
Whilst Riccardo may be right in saying that Hayek saw economic
planning as an extension of the Walarasian auctioneer to the social
level with the planner substituting for the auctioneer, this is to
be understood in the context of the planning debate of the 30s when
the people against whom he was arguing like Lange explicitly
posed the argument for socialism in neo-classical terms.
Our argument is that if one basis oneself on the Marxian labour
theory of value instead of neo-classical value theory, then the
von Mises critique can be shown to be flawed. The labour theory
of value treats prices as being determined by values, something
which is determined in production prior to sale. It is thus possible
to base economic calculation on something other than price -
on the labour time necessary to produce things. We then argue
that whilst under a market economy this labour time is only
indirectly represented in prices, it can, under a different sort
of economy be calculated directly.
If there exists a common database of labour contents of goods
it is possible for workers at a given unit of production to chose
the technique of production which, considered overall, is the
most economical to society in terms of its time.
This, in my opinion, is why it is so important to defend the distinction
between prices and values. If values can only be derived from prices,
then the Austrian critique of socialism holds - socialism without
a market to determine prices would flounder in a morass of
economic inefficiency.
Riccardo:
> Moreover:
>
> (iii) they were ideologically the winners already in the 80s against
> Keynesianism, well before the collapse of actually existing socialism
>
Might this not be becaus their ideas were perfectly
suited to the needs of reaction, providing an
ideological cover for attacks on the living
standards and social power of the working class.
The fact that the reactionaries found them suitable
does not mean that we should thus give them any credence.