The Socialist Calculation Debate In The First Half Of The Twentieth Century

During the first half of the twentieth century,there was a Socialist Calculation Debate between Austrian School,the leaders of which were Mises and Hayek,and socialists, of which Dobb and Lange were considered as the main representatives.The systemic research on Socialist Calculation Debate is of great significance in many fields.Theoretically,this kind of research can help us to learn more about Austrian School and western Marxism,but also to get a better understanding of the relationship between market and planning,as well as other related issues.Practically,the reform processes of socialist countries involve how the market fixes a price,how to effectively distribute and untilize resource,which are all important themes in the debate.Therefore,the research on the debate around these themes is helpful for us to promote the understanding of the progress of reform and openness,and then will also provide references for further deepening reform.The present research on this debate by domestic scholars is characterised by two features.Firstly,most introductions are scattered.For example,researchers of market socialism would like to mention about this debate when combing the development vein of market socialism,at the same time,this debate also was referred to by researchers of Austrian school when they were focused on the thought of Mises and Hayek and the developing vein of Austrian school in the twentieth century. Contrarily,thorough research on this debate is still in a blank. Secondly,among the existing research,the description of the process of this debate is in lack of accuracy and integrity.For example,Mises is believed as the first to challenge the Socialism.He argued that Socialism was bound to lead to failure because of the theoretic impossibility of socialist economic calculation. While Barone and others indicated that Socialism could achieve Walrasian General Equilibrium at the beginning of the century,therefore,Robbins and Hayek retreated to the second front,admitting that Socialism was theoretically possible,while arguing its practical impossibility in turn.Finally,Lange,Lerner and others put forward the scheme of market socialism,because of which they succeeded in responding to the challenge and winning the debate.However,this kind of description ignored many important aspects,such as the debate between Kautsky and Pierson at the beginning of twentieth century,trial-and-error method proposed by Taylor in1982, and the debates among socialists,etc.Considering present state of research,this dissertation is devoted to solute three main issues:firstly,thoroughly introduce the process of Socialist Calculation Debate,to provide a full view of this debate,secondly,neutrally analyse some related figures and themes,in order to comparatively objectively understand this debate;thirdly,since the relationship between market and planning is always the focues of academic concerns,which is also one of the core problems of this debate,this dissertation explore the relationship between market and planning from the angle of debate,by describing and analysing the process of the debate.In the view of the three questions above,this dissertation mainly includes seven chapters.On the basis of introduction of background and prelude of the debate, this dissertation emphasizes the process of the debate,which can be divided into three parts as follows:Austrian School's criticism to Centrally Planned Economy,the response of socialists to Austrian School and Austrian School's criticism to market socialism,and then analyse the influence of the debate,and at last reflect on the debate.The whole dissertation uses the theme of debate as clue,while,when talking about every single theme, it is written based on time.Chapter One introduces the background of the debate.In this chapter,the theoretic and practical background of Socialism Calculation Debate are mainly discussed,beween which,theoretic background can be divided into Socialism and Austrian School.First of all, this chapter analyses the Marx's thought of Socialism,and gives some comments on primary socialist thoughts,aiming at public ownership of the means of production,planned economy,and distribution according to labour presented by Marx.Further more,combing with Menger's masterpiece,who is the founder of Austrian School,this chapter analyses Austrian School's subjectivism and methodological individualism,but also comments on Menger's thought,with some related issues in the debate.Finally,this chapter describes the background of times,during which some socialist counties were established,and the Great Depress in capitalist world broke out.By the introduction of the background of the debate,we can thoroughly understand Socialist Calculation Debate.Chapter Two describes the prelude of the debate. Gosson, Newurath,Kautsky, Pierson, etc. are mainly involved in this chapter.Before the outbreak of Socialist Calculation Debate,some keen-minded liberal thinkers were conscious of the problems existing in the theory of Socialism.For example,they perceived that the opinions of Marx on Capitalism were questionable,and that socialist community could not avoid utilizing market and currency. So they criticized some problems related to Socialism in Liberalism's position.While,others,who believed in or supported Socialism,firmly protected the theory of socialist economy.In fact,it is true that before Mises started Socialist Calculation Debate,there were not only invisible conversations but also direct arguments between the two sides.By combing these arguments before the debate,we can see the historical origin of Socialist Calculation Debate more clearly,thereby promoting the understanding of the thoughts of both sides.Chapter Three introduces Austrian School's criticism to Centrally Planned Economy.This chapter refers to three figures,such as Mises,Hayek and Robbins.This Socialist Calculation Debate was started by Mises from Austrian School.In 1920,Mises published an article named,paying attention to discuss the issue of Socialist Economic Calculation. And in 1922,he published a monograph,in which he thoroughly criticized socialist system,and asserted that it was impossible to realize socialist centrally planned system.According the core arguments of Mises,Socialism abolished market,currency and price,and that was why it could not make any choice between numerous policies,but carried on planning blindly,thereby leading to utter disorder.From 1935 onwards,Hayek,another key figures of Austrian School,joined in this debate.He combed the process of the debate and further criticized Centrally Planned Economic System from the view of Epistemology.Robbins,a famous British Economist,who was deeply influenced by Austrian School,also criticized Centrally Planned Economy,in his works published in 1935,and in published in 1935,etc..Chapter Four discusses the responses of socialists to Austrian School.In this chapter some socialists such as Barone,Taylor and Lange are mainly involved. While Mises,Hayek and other scholars of Austrian School criticized Socialism,many economists, who believed in or supported Socialism,such as Barone,Dickinson,Taylor and Lange, designed numerous different economic calculation scheme as responses to Austrian School.As for Mises' points of view,many economists believed that the article,written by Barone and published in 1908,had demonstrated that the problem of resource distribution could be solved under socialist system by the means of mathematical calculation.In 1928,American Economist Taylor,addressed a speech of when he was selected as the president of American Economic Association,in which he put forth that Socialism could use trial-and-error method to realize the balance of the economic system.Since 1936,Lange, a well-known market socialist,published a series of articles to carry out theoretic construct of Socialist Economic Calculation issue.Lange argued that Socialism did need to take advantage of market,and that within the framework of public ownership of means of production,by simulating competition and trial-and-error method,it was also possible to find the equilibrium price and to achieve balance for socialist economic system.At the same time of responsing to the challenge from Austrian School,there were also fierce debates within socialist camp,taking the arguments between Dickinson and Dobb, and difference between Dobb and Lerner for examples.Chapter Five analyses the criticism of Austrian School to Lange's model,relating to Hayek and Mises.For Lange's socialist model,Hayek published articles to discuss the inherent problem of Lange's model,and to analyse the feasibility of market socialism model. After Hayek,Mises also published his most important work to criticized Lange's model.The focus of Hayek and Mises' criticism involved trial-and-error method,equilibrium analysis,as well as artificial market and other aspects.By analysing the criticism of Mises and Hayek to Lange's Model,we can clearly see the differences between Austrian School and Neo-classic Economics.Chapter Six is still related to the debate,mainly dealing with Mise,Hayek,Bruce and Romer,etc..As the most spectacular scene of intellectual history of the twentieth century,Socialist Calculation Debate,occurring between twenties and forties, has profound influences both to Austrian School and Socialism.After the debate,both Austrian School and subsequent socialists re-explained their former opinions from different perspectives.From Austrian School's point of view,Mises illustrated Market Process Theory,Entrepreneurship Theory and issues of motivation.While as for Hayek,with the experience of the debate,his academic interest underwent a major change.He began to think about why Socialism,which he could not agree with,otherwise, would be supported by so many scholars.Further more, proceeding from this problem,with the theoretical foundation of epistemology promoted in the debate, Hayek began to explore political philosophy,legal philosophy and other social scientific thoughts.On the other hand,from socialist point of view,although Socialist Calculation Debate could not exert any direct influence to the practice of socialist countries,it did have profound impact on socialist theory especially on market socialist theory.Bruce,Romer,and other socialist thinkers constantly learned from Lange's Model,to promote development of market socialism theory.Chapter Seven,the reflect on this debate.Through combing the process of Socialist Calculation Debate,as well as the analysis of the theme of the debate,we can carry out some thgoughts.The first thought is about the process of the debate.Since previous description of the process has made some mistakes and ignored some important figures,therefore,we are the first to try on the comprehensive and objective description ofthe process. Secondly, as for the most important themes, namely market and planning,Market System and Planning System,we conduct a theoretical analysis,to clarify the respective scopes of application,under the premise of a detailed comparison.Finally,from the perspective of Socialist Calculation Debate,we review the process of China's reform and opening up.While Socialist Calculation Debate involves the Socialist-Liberal ideological struggle,through the review of the debate,we can find that the main participants of the debate,such as Mises and Hayek of Austrian School,as well as Taylor and Dickinson who supported Socialism,all expressed their opinions in a neutral position.Perhaps,this attitude of the debate,is worthy of our attention rather than the debate itself. Just in this perspective, We believe that,for both sides,Socialist Calculation Debate provides a wealth of experience and lessons.For socialists,they needed to realize that,generally,socialist planned economy indeed had some problems in resource distribution,promotion to the advance of knowledge and other aspects.And that was just what Austrian School criticized for.Also,remaining sober-minded to these issues is essential for socialist reform to achieve success.While,for Austrian School,it is true that their arguments on the market were adequate,but at the same time,they also needed to recognize that market was inherently flawed.How to relieve the impact caused by difference between the rich and poor,under modern democratic political system was a problem that Austrian School must pay attention to.In addition,during the debate,the points of view of Austrian School were not accepted by western mainstream economics,and that was partly because of their rejection of mathematical Economics.The most significant lesson the debate provided to them was how to line with mainstream economics,or how to get rid of its marginalized position.Socialist Calculation Debate has been the history of last century,but the arguments around these themes are still going on.abandoning ideological disputes and studying from an objective and rational perspective, it would not only bring us with much more inspirations for our theoretical thoughts,but also with more references for our reform practice.