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Since the late 1970s there have been a number of articles devoted to re‐evaluating the issues and arguments involved in the debate concerning comparative economic systems. The present state of this continuing debate is evaluated with regard to modern theories of planning, bureaucracy, motivation and property rights. It appears that the debate has not been settled yet.

In the original history of the socialist calculation debate (e.g., Bergson, 1948), Oscar Lange proved that bureaucrats can find the equivalent of equilibrium prices through trial and error. In the revised history of this debate (e.g., Caldwell, 1997; Lavoie, 1985), Lange proposed an erroneous solution to the calculation problem. Dynamic entrepreneurial rivalry moves prices toward equilibrium. Lange and other “Market Socialists” allies thought only in terms of a static competitive market equilibrium that excludes the role entrepreneurs play in adjusting prices.

Austrian economist Ludwig Mises’s central role in the socialist calculation debates has been consensually acknowledged since the early 1920s. Yet, only recently Nemeth, O’Neill, Uebel, and others have drawn particular attention to Mises’s encounter with logical empiricist Otto Neurath. Despite several surprising agreements, Neurath and Mises certainly provide different answers to the questions “what is meant by rational economic theory” (Neurath) and whether “socialism is the abolition of rational economy” (Mises). Previous accounts and evaluations of the exchange between Neurath and Mises suffer from attaching little regard to their idiosyncratic uses of the term “rational.” The paper at hand reconstructs and critically compares the different conceptions of rationality defended by Neurath and Mises. The author presents two different resolutions to a detected tension in Mises’s deliberations on rationality: the first is implicit in Neurath’s, O’Neill’s, and Salerno’s reading of Mises and faces several interpretational problems; the author proposes a divergent interpretation. Based on the reconstructions of Neurath’s and Mises’s conceptions of rationality, the author suggests some implications with respect to Viennese Late Enlightenment and the socialist calculation debates.

During the socialist calculation debate, Ludwig von Mises and F. A. Hayek made a positive argument regarding the impossibility of economic calculation under socialism. In this study, I argue that the arguments made by Mises and Hayek have normative implications for capitalism. I do so by drawing an analogy between an Austrian account of the market process and a neo-Aristotelian account of human flourishing. Neither economic calculation follows passively from implementing a set of profit-maximizing rules nor does human flourishing follow passively from following a set of universal moral norms (be they of utilitarian, deontological, or natural law inspiration). Both economic calculation and human flourishing are inherently based on individual acts of knowledge creation, actualized only by self-directed individuals. In both cases, the creation of such knowledge is both contextual and specific to the unique circumstances of each individual of a particular time and place. Therefore, to assume that such knowledge exists ex ante, and is objective and transpersonal across time, place, and institutional context renders both economic calculation and human flourishing into a technological problem of given means and given ends, in essence defining both activities out of existence. The possibility of economic calculation and human flourishing are therefore dependent upon a political/legal order that protects the possibility of self-directed knowledge creation in both the economic and moral realms, that is, to say an institutional framework of private property rights.

Ludwig Lachmann’s Capital and Its Structure ([1956] 1978) is a classic in the literature in Austrian economics. It is mainly discussed in relation to the Austrian contributions to the macroeconomics debates of that time – from Hayek’s dispute with Keynes to the capital controversies of Cambridge UK and Cambridge US. Among Lachmann’s many ideas developed in that work, critical is his idea that the capital structure of an economy consists of heterogeneous capital goods that have multiple specific uses. This fact of the world makes the intertemporal coordination of economic plans a complex phenomenon and not a simple phenomenon. In the standard macroeconomic account, the coordination failure results from a distortion to the interest rate which miscommunicates to economic actors the underlying savings and consumption pattern in the economy at that time. This results in a boom/bust cycle, as the malinvestments in production projects are revealed in time and must go through a costly correction. But this discussion is simply an illustration of a much broader set of problems of relative prices as guides to productive activity in an economy and the problem of economic calculation. Our chapter explores the capital theoretic side of the socialist calculation debate and highlights the importance that an understanding of the capital-using economy consisting of production plans made up of heterogeneous goods with multiple specific uses is to the argument about the calculation problem being the lynchpin argument against the feasibility of socialist economic planning.

When Beyond Positivism was published 35 years ago, it presented a compelling case for methodological change in the economics profession. That case remains equally compelling in the present day as, tragically, economics remains largely without the methodological pluralism at the heart of Beyond Positivism’s message. Among the costs of an environment of methodological myopia are widespread misinterpretations and the diversion of scholars from efforts at economic understanding to methodological wrangling, which we illustrate using the experience of Austrian economics in the 20th century. Beyond Positivism, we suggest, continues to provide the intellectual case for a pluralist discipline of economics, but one that requires complementary institutional reforms to come to fruition.

Lange's rejection of bureaucratic socialism can be traced throughout his works, from the very beginning to the end. Planners and economic agents have to act under mandatory rules provided by economic theory to avoid the risk of an autocratic regime detached from the people's needs. Drawing upon this premise, Walrasian theory played a pivotal role to introduce rules to tie the hands of socialist bureaucrats based on scientific, economic theory. In this sense, Lange's anti-bureaucratism and Walrasianism descended from a similar political premise. However, the coexistence of conflicting views into the same theory (such as Marxian and Walrasian theories) also implied potential risks, mainly when socialist democracy is conceived in technocratic terms and Marxian theory assimilates to natural sciences.

F. A. Hayek's contribution to economic science is broadly remembered as relating to the “use of knowledge in society” but his contribution to economics of knowledge are often summarized differently. We emphasize the contextual nature of the knowledge. Hayek says the market economy is capable of eliciting and utilizing in the process of coordinating economic activities. There is, however, a double meaning of context that we explore. Hayek developed his argument about the use of knowledge in the context of the socialist calculation debate, and the aspect of knowledge he came to focus on was the contextual nature of knowledge in human action in markets, politics, law, and society. This paper traces out the development of Hayek's focus on the epistemic foundations of the complex coordination in an advanced market economy and shows that his critique of classical and market socialism led to a refined, subtle approach to understanding spontaneous order. Furthermore, it is precisely Hayek's focus on the role of institutions in creating the conditions for the utilization and transference of knowledge through the price system that continues to shape the progressive research programs in economic science and public policy analysis that is his legacy.

We revisit the model of socialism proposed in our Towards a New Socialism (1993) and attempt to answer various questions that have been raised regarding the connection between our view of socialism and our perspective on capitalism, the process of transition to socialism, the failings of the Soviet model, the relationship between socialism and communism, the role of direct democracy under socialism, and the use of labor-time calculation in a socialist economy. We argue that the contradictions of capitalist property relations, and of the accumulation process on a world scale, are set to present once again the necessity of the abolition of private property during the 21st century, and offer some thoughts on transitional forms that could implement this abolition. We defend the ideas of direct democracy and economic calculation in terms of labor time, and argue that these elements distinguish our proposals from the Soviet model. We trace the demise of the latter both to specifics of the Russian situation and to more general problems of Leninism, notably Lenin’s conception of the council state, and of socialism as a long period during which the productive forces are built up in preparation for an eventual communism.