A lesson never learned

In 1920, the Austrian economist Ludwig von Mises offered a proof of the impossibility of socialist calculation. This proof was based upon the idea that without information produced by market operations, central planners would not be able to establish prices at an equilibrium point that would adequately balance supply and demand. Friedrich von Hayek made a modified version of this argument in 1935, arguing that although socialist calculation was not theoretically impossible, it was impossible in practical terms.

Socialists rejected this argument by claiming it had been invalidated in advance by the Barone-Pareto equivalence thesis and subsequently by Oskar Lange in 1938. However, these arguments depended upon a static general equilibrium, not the dynamic equilibrium that is a more realistic approximation of the operation of a real-world economy. Needless to say, the performance of the socialist economies of the last seven decades, particularly their central planners' persistent inabilities to correctly anticipate the price-demand intersections, has offered copious evidence to support the Austrian position even though academics had declared the debate an intellectual victory for socialism.

Vox Day