Mises-Hayek critique

Allin Cottrell cottrell at wfu.edu
Tue Nov 1 11:27:44 MST 1994

At least one contributor to this list has suggested that the Mises-
Hayek critique (MHC) of socialist economic planning is the
most important theoretical topic facing socialists today.  I agree.

Ever since it first emerged as a political doctrine, theory of
society, and hope for humanity, socialism has existed in several
variants, but few would dispute that the most fully-articulated
and coherent version of socialism is that of Marx and Engels.
The Marx-Engels critique of capitalism has two main aspects:
(1) capitalism is a deeply unjust and exploitative system, and (2)
it is also irrational and wasteful (although it was at first a
tremendously progressive system).  The force of these points
rests on the claim that 'we can do better' -- that a superior
mode of production and form of social organization is feasible: a
planned, cooperative and egalitarian system.  And this
alternative system is not just a 'nice theory': the material
preconditions for socialism are brought about by the process of
capitalist development itself, although the realization of socialism
requires a sharp break at the political level, including the
expropriation of the owners of capital.

Now, if it turns out, as per the Mises-Hayek critique, that the
Marxian vision of a planned, cooperative and egalitarian mode
of production is just a dangerous delusion, then we might as
well pack up and go home.  In that case we have no basis -- no
*right* even -- to criticize capitalism, as opposed to this or that
particular abuse or misguided policy under capitalism.  We can
still be 'progressives', in some fairly loose sense, and we can still
champion the cause of the underdog, but if there is no workable
socialist alternative, the critique of *capitalism as such* is just
empty sentimentality.

Hence the importance of probing the MHC.  In addition to
some of the other work cited on the list, Paul Cockshott and I
have been working on this topic for some years.  We believe
we have some strong arguments against the MHC, and in
support of socialist planning -- not as it was practiced in the
USSR, but as it could feasibly be practiced given modern
information technology (and, of course, given the political will).
Aside from our book, Towards a New Socialism (1993), we
have written two articles specifically on Mises and Hayek.
One, which deals primarily with Mises' version of the arguent, I
have mentioned previously (it's in the Review of Political
Economy, 1993).  A second piece tackles Hayek's 1945
article, 'The Use of Knowledge in Society'.  This is currently a
working paper.  It argues that Hayek's points about the inherent
superiority of decentralized, market-based decision-making --
while quite plausible at first sight --are not sustainable in the light
of the scientific theory of information.  It also argues that his
strictures on the absurdity of attempting the 'conscious' direction
of socio-economic development are based on an untenable
subjectivist philosophy that is out of joint with modern scientific
materialism.  And we argue that Hayek's analogy between
market processes and natural evolution is superficial and

To date, we have received rather little comment on our work --
and we would greatly appreciate informed criticism.  For
anyone interested, the two papers mentioned above are
available over the internet, from the colorado 'hererodox
economics' gopher.  Point a gopher at csf.colorado.edu and
look under /econ/Authors/Cottrell.Allin -- soccalc.ps and
hayek1945.ps are postscript versions of the Mises and Hayek
papers respectively.  (hayek.ps is also a critique of Hayek, but
it deals with his theory of the business cycle).

Allin Cottrell
Department of Economics
Wake Forest University
Winston-Salem, NC 27109
(910) 759-5762
cottrell at wfu.edu


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