carnes@gargoyle.UChicago.UUCP (Richard Carnes) (01/24/85)
[Preliminary question: What is the proper venue for this discussion: net.politics, net.politics.theory, net.philosophy, or net.econ? I hate discussions that get carried on in two newsgroups at once.] Our resident economist, Daniel Kian Mc Kiernan, seems to have studied economics on a mountaintop in Austria, for, to judge by his articles, he does not seem to be aware of schools of economic thought other than the one which he espouses. To wit, he writes: >By the way, in case anyone is interested, Socialist economics were >completely blown out of the water several decades ago by Ludwig Edler von >Mises (mentor to Nobel laureate Friedrich August von Hayek). When von Mises >first presented his case, he was actually PRAISED by Socialists (one went so >far as to declare that his statue should be erected in every Socialist >city), who recognized that he had pointed out fundamental shortcomings in >Socialist theory; they expected to develop a new, stronger, and better >theory in response. But try as they might, they just couldn't do it. In >fact, no such theory COULD be developed; von Mises had struck at the very >HEART of Socialism. Some (like von Hayek) converted to Capitalism. The >rest alternated between ignoring him (abetted by the fact that von Mises, a >Jewish Capitalist, lost his academic position fleeing the Nazi take-over of >Austria) and misrepresenting his arguments. In another article he writes: >Wow! Then do what no Socialist before you has been able to do: refute it! >[Namely, von Mises' argument against socialism.] It would guarantee you a >doctorate in economics, and the overwhelming respect of European economists. >not to mention the gratitude that would be showered upon you by your fellow >Socialists. In the course of Mr. von Mc Kiernan's study of Austrian economists, he has no doubt come across the name of Joseph A. Schumpeter. Schumpeter was one of the great conservative economists of the 20th century, and one of the very few non-Marxist economists to exert himself in any significant degree to understand the economic doctrines of Marx (although he misconstrues Marx's position in some ways, in my opinion). (Schumpeter also believed that socialism, which he thoroughly disliked, would be fully compatible with democracy.) In his classic work *Capitalism, Socialism and Democracy*, which I strongly recommend to anyone with an interest in the title subjects, he devotes an entire chapter, "The Socialist Blueprint", to a discussion of the question to which Mr. Mc Kiernan refers above. A brief extract will give the flavor of Schumpeter's discussion: "...Our question may be formulated as follows: given a socialist system of the kind envisaged, is it possible to derive, from its data and from the rules of rational behavior, uniquely determined decisions as to what and how to produce or, to put the same thing into the slogan of exact economics, do those data and rules, under the circumstances of a socialist economy, yield equations which are independent, compatible--i.e., free from contradiction-- and sufficient in number to determine uniquely the unknowns of the problem before the central board or ministry of production? "The answer is in the affirmative. There is nothing wrong with the pure logic of socialism. And this is so obvious that it would not have occurred to me to insist on it were it not for the fact that it has been denied and the still more curious fact that orthodox socialists, until they were taught their business by economists of strongly bourgeois views and sympathies, failed to produce an answer that would meet scientific requirements. "The only authority standing for denial that we need to mention is Professor L. von Mises.... "The economist who settled the question in a manner that left little to do except elaboration and the clearing up of points of secondary importance, was Enrico Barone to whose argument I refer readers who want a rigorous demonstration...." Barone's article is found in the volume, of which Mr. Mc Kiernan is surely aware, entitled *Collectivist Economic Planning*, ed. F. A. von Hayek. Schumpeter lists several other sources as well, including the work by O. Lange which Mr. Mc Kiernan cites in a previous posting. I would also draw his attention to the writings of Anthony Crosland, the British Fabian, and to the work of some of the economists around Mitterand, such as Philipe Brachet. I have a suggestion for Mr. Mc Kiernan. If he can refute the socialists' rebuttals to von Mises, he should publish his refutations in the economics journals, or as a Ph.D. dissertation. This would guarantee him a doctorate in economics, and the overwhelming respect of European economists. Not to mention the gratitude that would be showered upon him by his fellow anti-socialists. But instead of doing so, he has so far contented himself with ad hominem attacks on socialists, accusing them of ignoring Mises and so forth. I do not pretend to be able to debate the technical points of economics with Mr. Mc Kiernan--he possesses expertise in the subject and I do not. But anyone capable of reading a newspaper can verify that there is great diversity of views among professional economists. It is disingenuous of Mr. Mc Kiernan to imply, as he seems to do, that his views on economics are identical to the findings of economic science, rather than the views of a particular school of economic thought. If he continues to misrepresent economics in this way, I will continue to point it out. Richard Carnes, ihnp4!gargoyle!carnes
hfavr@hogpd.UUCP (A.REED) (01/29/85)
ichard Carnes' articles bears out his claim that he posseses no expertise in economics, but the questions he raises are interesting ones. The controversy about the possibility of calculating/measuring values in the absence of a free market, started by Ludwig von Mises, Oskar Lange, Enrico Barone and others, led to the creation of a new field of mathematics applicable to the social and human sciences called "Measurement Theory". This new field clarified the concepts underlying the controversy by establishing an exact hierarchy of scales of measurement. In terms of the new terminology of Measurement Theory, von Mises proved that in the absence of a free market, no ratio scale of economic value could be defined, and therefore no relative calculation could be validated. Barone, however, showed that an ordinal value scale could be defined even in a socialist economy, and contemporary Socialist economists believe that comparative calculation, which can be validated against such a scale, is sufficient for the purpose of economic planning. Thomas Sowell, the originator of Cognitivist (a.k.a. neo-Austrian) economics, argues in "Knowledge and Decisions" that individual calculations based on market knowledge (in the form of ratio scales) are necessarily closer to optimality than collective calculations based on comparative scales. The issue, incidentally, has relevance beyond economics, since all existing theories of distributive justice pre-supppose values measurable against a ratio scale. Adam Reed npois!adam