Economic Calculation : Private Property or Several Control?

As the centenary of the Russian revolution of 1917 approaches, it is worth reviewing the past 100 years' discussion amongst economists on the possibility – or otherwise – of economic planning under socialism. The socialist calculation debate is of fundamental importance, not merely as a specialist application of economic ideas, but as an investigation of the foundations of all economic activity. Every economic action whatsoever is premised upon calculation, every choice depends upon an assessment of the costs and benefits of each alternative between which the agent is to choose. The view taken of that choice and its attendant calculation, in market and non-market contexts, is constitutive of the schools of thought – Marxian, neoclassical and Austrian alike – which have contributed to the debate. An understanding of the calculation debate is therefore required in order to understand how these paradigms stand in relation to each other. This paper addresses one particular detail of that debate – the claim by Austrian economists that socialism is impossible because the absence of private property in the means of production precludes economic calculation. The paper suggests that several control rather than private property is required for economic calculation, and that several control is consistent with public ownership of the means of production. The Austrian argument on this point, therefore, is without force