Economic Calculation in the Socialist Commonwealth

Economic Calculation in the Socialist Commonwealth is an article by Austrian School economist Ludwig von Mises.

[1][2] The article was first published 1920 in German under the title Die Wirtschaftsrechnung im sozialistischen Gemeinwesen[3] and based on a lecture Mises gave in 1919 as a response to a book by Otto Neurath, arguing for the feasibility of central planning.

[2] Mises thought that Economic Calculation is only possible (outside of extremely limited circumstances) by information provided by market prices, which reflects the changes of individual subjective values.

In "Towards a New Socialism's "Information and Economics: A Critique of Hayek" and "Against Mises", he argues that central planning is simplified by the use of computers in calculating the component of price not accounted for by Marxian labor theories of value.

He writes:"The significance of Mises's 1920 article extends far beyond its devastating demonstration of the impossibility of socialist economy and society.

It provides the rationale for the price system, purely free markets, the security of private property against all encroachments, and sound money.

Its thesis will continue to be relevant as long as economists and policy-makers want to understand why even minor government economic interventions consistently fail to achieve socially beneficial results.