Marx vs. Hayek, conscious action vs. utopianism

Justin Schwartz jschwart at
Thu Nov 10 08:28:54 MST 1994

On Wed, 9 Nov 1994, Andrew Hagen wrote:

> this will be very short.
> On Mon, 7 Nov 1994, Justin Schwartz wrote:
> > > earlier, Justin Schwartz also wrote this:
> > > > ... the planning crowd has not produced attempts
> > > >to answer the Mises-Hayek critique (MHC) of planning. They prefer to
> > > >attack markets instead.
> >
> > Well, look at how Andrew and Tom behave.
> Let me confess that I have never read any Hayek, had never heard of Mises
> before joining this list, and have no grasp of the intricacies of the
> MHC. I do think that I have a vague grasp of the MHC, however, from
> Justin's descriptions of it.

It's time to start. This problem is THE central problem for socialist
theory. I refer you again to a good short discussion in Scott Arnold, Karl
Marx's Radical Critique of Capitalist Society, Oxford 1990, 243-66.

> I feel however, that it is not really a critique of communist planning as
> much as it is a critique of economic planning given many assumptions,
> such as that the production of resources can be understood from a solely
> economic perspective. If the entire political and social structures were
> transformed would the MHC apply anymore?

No matter how the political and social structures are transformed we need
to be able to solve the following problem, as stated by Albert and Hahnel,
who are democratic planners:

Find out what goods and services people want

Find out what work people are willing to do

Find out the ancillary costs of matching work to satisfaction of demand,
and which costs people will bear

And devise some means of getting a match among these things.

Markets do this by letting individuals register their consumption
preferences in purchases and their labor preferences in taking whatever
jobs are available that best match their production preferences. With a
capitalist labor market this last is a bit of a joke, but under MS, there
is no labor market or structural unemployment. As to ancillary costs
externalities, markets don't do so good, which one economic reason you
need a government.

Still, despite their deficiencies, markets solve the problem with some
level of adequacy. Planning as we have seen it did much worse. If you want
to argue that planning as it might be would do better, you have to explain
how, and not just wave democracy (itself very problematic) as a magic wand.

Mises and Hayek anticipated the problems with planning. They argued that
you cannot know all the things a planner would have to know, whether that
planner was a state planning board or a whole democratic citizenry. Nor
could planners keep track of changes in preferences for work, consumption,
and willingness to bear costs. The upshot of that is planning, in their
view, could not solve the problem as stated, and certainly not as well as
markets. If the problem--I mean the economic problem, not the
MHC--remains, and why wouldn't it? planners have to have a solution to the
MHC. If something in the transformation of social and political relations
will provide a solution, I want to know what it is. Precisely and
specifically what. Please tell me.

--Justin Schwartz


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