ABSTRACT
The thesis of this chapter is that the celebrated debate over economic calculation under socialism that raged during the inter-war period was important for the history of economic thought in a sense not generally appreciated. Not only was the debate an important episode, of course, for its own sake. It was, in addition, I shall claim, important as a catalyst in the development and articulation of the modern Austrian view of the market as a competitive-entrepreneurial process of discovery. Professor Karen Vaughn has written of her conviction that ‘the most interesting results of the controversy … were the further developments of economic theory to which it gave rise’ (1976: 107). It will be my contention here that the crystallization of the modern Austrian understanding of the market must be counted among the most significant of these ‘further developments of economic theory’. I shall argue that it was through the give-and-take of this debate that the Austrians gradually refined their understanding of their own position; the Mises-Hayek position at the end of the 1940s was articulated in terms far different from those presented in the Misesian statements of the early 1920s. Moreover, this more advanced Mises-Hayek position pointed beyond itself towards (and decisively helped generate) the more explicit Austrian statements of the 1970s and 1980s.
