Mises-Hayek critique

Justin Schwartz jschwart at freenet.columbus.oh.us
Tue Nov 1 17:36:19 MST 1994

On Tue, 1 Nov 1994, Allin Cottrell wrote:

> 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.

That was me.

> 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

No. Marx rejected justice. His critique of justice is quite deep, although
I think ultimately untenable, but this idea should not be imputed to Marx
(or Engels).

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.

No, there's still market socialism.

  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.

A socialist alternative need not involve comprehensive planning.

> 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
> misleading.
> 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).

I'll be glad to look at these. Will you post them tome? It may take a
while to get comments to you.

--Justin Schwartz


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