ABSTRACT
The past three decades have witnessed renewed academic interest in the arguments of the Austrian economists Ludwig von Mises and Friedrich Hayek during the so-called socialist calculation debate. This debate started in 1920 with a pioneering article by von Mises, in which he stated that under socialism rational economic calculation was impossible. In the 1930s a number of “neoclassical” socialist economists, such as H.D. Dickinson, O. Lange and A.P. Lerner, provided theoretical responses to the Austrian critique. By 1940 it was commonly believed that the socialists had won the debate. Rational economic calculation under socialism was generally held to be both theoretically possible (as proved by the general equilibrium models of Barone, Cassel and Bilimovich) and practically feasible (as solved in principle by Lange’s model of market socialism or some other decentralized model). Thus, the debate was relegated to textbooks on the history of economic thought.
