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• Human Action: a Treatise On Economics: Vol. 3. Part 5: Social Cooperation Without a Market
• Chapter 25: The Imaginary Construction of a Socialist Society
• 1: The Historical Origin of the Socialist Idea
• 2: The Socialist Doctrine
• 3: The Praxeological Character of Socialism
• Chapter 26: The Impossibility of Economic Calculation Under Socialism
• 1: The Problem
• 2: Past Failures to Conceive the Problem
• 3: Recent Suggestions For Socialist Economic Calculation
• 4: Trial and Error
• 5: The Quasi-market
• 6: The Differential Equations of Mathematical Economics
• Part 6: The Hampered Market Economy
• Chapter 27: The Government and the Market
• 1: The Idea of a Third System
• 2: The Intervention
• 3: The Delimitation of Governmental Functions
• 4: Righteousness As the Ultimate Standard of the Individual’s Actions
• 5: The Meaning of Laissez Faire
• 6: Direct Government Interference With Consumption
• Corruption
• Chapter 28: Interference By Taxation
• 1: The Neutral Tax
• 2: The Total Tax
• 3: Fiscal and Nonfiscal Objectives of Taxation
• 4: The Three Classes of Tax Interventionism
• Chapter 29: Restriction of Production
• 1: The Nature of Restriction
• 2: The Price of Restriction
• 3: Restriction As a Privilege
• 4: Restriction As an Economic System
• Chapter 30: Interference With the Structure of Prices
• 1: The Government and the Autonomy of the Market
• 2: The Market’s Reaction to Government Interference
• Observations On the Causes of the Decline of Ancient Civilization
• 3: Minimum Wage Rates
• The Catallactic Aspects of Labor Unionism
• Chapter 31: Currency and Credit Manipulation
• 1: The Government and the Currency
• 2: The Interventionist Aspect of Legal Tender Legislation
• 3: The Evolution of Modern Methods of Currency Manipulation
• 4: The Objectives of Currency Devaluation
• 5: Credit Expansion
• The Chimera of Contracyclical Policies
• 6: Foreign Exchange Control and Bilateral Exchange Agreements
• Chapter 32: Confiscation and Redistribution
• 1: The Philosophy of Confiscation
• 2: Land Reform
• 3: Confiscatory Taxation
• Confiscatory Taxation and Risk-taking
• Chapter 33: Syndicalism and Corporativism
• 1: The Syndicalist Idea
• 2: The Fallacies of Syndicalism
• 3: Syndicalist Elements In Popular Policies
• 4: Guild Socialism and Corporativism
• Chapter 34: The Economics of War
• 1: Total War
• 2: War and the Market Economy
• 3: War and Autarky
• 4.: The Futility of War
• Chapter 35: The Welfare Principle Versus the Market Principle
• 1: The Case Against the Market Economy
• 2: Poverty
• 3: Inequality
• 4: Insecurity
• 5: Social Justice
• Chapter 36: The Crisis of Interventionism
• 1: The Harvest of Interventionism
• 2: The Exhaustion of the Reserve Fund
• 3: The End of Interventionism
• Part 7: The Place of Economics In Society
• Chapter 37: The Nondescript Character of Economics
• 1: The Singularity of Economics
• 2: Economics and Public Opinion
• 3: The Illusion of the Old Liberals
• Chapter 38: The Place of Economics In Learning
• 1: The Study of Economics
• 2: Economics As a Profession
• 3: Forecasting As a Profession
• 4: Economics and the Universities
• 5: General Education and Economics
• 6: Economics and the Citizen
• 7: Economics and Freedom
• Chapter 39: Economics and the Essential Problems of Human Existence
• 1: Science and Life
• 2: Economics and Judgments of Value
• 3: Economic Cognition and Human Action

3

Recent Suggestions for Socialist Economic Calculation

The socialist tracts deal with everything except the essential and unique problem of socialism, viz., economic calculation. It is only in the last years that socialist writers have no longer been able to avoid paying attention to this primordial matter. They have begun to suspect that the Marxian technique of smearing “bourgeois” economics is not a sufficient method for the realization of the socialist utopia. They have tried to substitute a theory of socialism for the scurrilous Hegelian metaphysics of the Marxian doctrine. They have embarked upon designing schemes for socialist economic calculation. Of course, they have lamentably failed in this task. It would hardly be necessary to deal with their spurious suggestions were it not for the fact that such examination offers a good opportunity to bring into relief fundamental features both of the market society and of the imaginary construction of a nonmarket society.

The various schemes proposed can be classified in the following way:

• 1. Calculation in kind is to be substituted for calculation in terms of money. This method is worthless. One cannot add or subtract numbers of different kinds (heterogeneous quantities).2
• 2. Starting from the ideas of the labor theory of value, the labor-hour is recommended as the unit of calculation. This suggestion does not take into account the original material factors of production and ignores the different qualities of work accomplished in the various labor-hours worked by the same and by different people.
• 3. The unit is to be a “quantity” of utility. However, acting man does not measure utility. He arranges it in scales of gradation. Market prices are not expressive of equivalence, but of a divergence in the valuation of the two exchanging parties. It is impermissible to neglect the fundamental theorem of modern economics, namely, that the value attached to one unit of a supply of n 1 units is greater than that attached to one unit of a supply of n units.
• 4. Calculation is to be made possible by the establishment of an artificial quasi-market. This scheme is dealt with in section 5 of this chapter.
• 5. Calculation is to be made with the aid of the differential equations of mathematical catallactics. This scheme is dealt with in section 6 of this chapter.
• 6. Calculation is to be made superfluous by resorting to the method of trial and error. This idea is dealt with in section 4 of this chapter.

[2. ]It would hardly be worthwhile even to mention this suggestion if it were not the solution that emanated from the very busy and obtrusive circle of the “logical positivists” who flagrantly advertise their program of the “unified science.” Cf. the writings of the late chief organizer of this group, Otto Neurath, who in 1919 acted as the head of the socialization bureau of the short-lived Soviet republic of Munich, especially his Durch die Kriegswirtschaft zur Naturalwirtschaft (Munich, 1919), pp. 216 ff. Cf. also C. Landauer, Planwirtschaft und Verkehrswirtschaft (Munich and Leipzig, 1931), p. 122.