Wednesday, 5 June 2013

ECONOMICS FOR REAL PEOPLE: The Socialist Calculation Debate

Looks like the Auckland Uni Economics Group will have an interesting discussion on their hands tomorrow night. Here’s what’s planned:

Holidays_in_other_peoples_miseryOne of the great economic controversies of the twentieth century was known as the Socialist Calculation Debate—drawing in thinkers and economists from Vienna to Moscow, and from Warsaw to Chicago—andwhich included at its climax a joke whose punchline was “New Zealand.”
    Soviet leader Nikita Kruschev entered the debate in 1956 by banging his shoe on the podium at the U.N., telling the west: "History is on our side. We will bury you in fine [goods]. You hear that? Quality!"
    In 1971, he repeated the boast in a “kitchen debate” with an American president, saying: "In 7 years we will reach the level of America. When we catch up and pass you by, we'll wave to you."
    That never happened. What happened instead, in 1989, was the economic collapse of the entire creaking basket case that was the Soviet Bloc, whose economy and environment were exposed to the world as a complete and utter bust.
    It was a defining moment in twentieth-century history. "Scientific socialism," which started in Utopia and was continued midst bloodshed and famine, was revealed not as any sort of miracle of production (as many mainstream economists seemed to think) but as a complete and utter bust.
    The reasons for the collapse were explained all the way back in 1920 by one Viennese hero. In a slim pamphlet that was to shake the economic world Ludwig Von Mises identified the flaw at the heart of the socialist economy, of any socialist economy:

        The Utopians … invariably explain how, in the cloud-cuckoo lands of their fancy, cooked chickens
    will somehow fly into the mouths of the comrades, but they omit to show how this miracle is to take place.

     In fact, he observed, despite all their rabid invective Karl Marx and his followers had written not one single word explaining how a socialist economy would actually function in the real world, let alone how the promised miracles of production were to take place. And nor could they. Because as Mises pointed out, there is one fundamental economic flaw in the socialist Utopia that means the system can never produce anything but misery—the inability to calculate—and after decades of debate in 1989 he was finally conclusively proved right.
    No wonder Soviet economists eventually insisted a statue to Ludwig Von Mises be placed in a prominent place in Moscow.
    Join us tomorrow night to discuss that flaw and some of that history, as we discuss the Socialist Calculation Debate--including several important lessons the debate still has for us today.

        Date: Thursday, 6 June 
        Time: 6pm
        Room: University of Auckland Business School, Owen G Glenn Building, Room 215 (Level Two)

Check us out on the web at http://www.facebook.com/groups/191580464208836/

All welcome.
See you there!

2 comments:

  1. "The Utopians … invariably explain how, in the cloud-cuckoo lands of their fancy, cooked chickens
    will somehow fly into the mouths of the comrades, but they omit to show how this miracle is to take place."

    For Utopians read libertarians, and you're on to something.

    ReplyDelete
  2. You could do that, but substituting 'socialist' or 'communist' would be more rooted in historical fact.

    ReplyDelete

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