In the latest Critical Review, (Vol.16, No.1), Bryan Caplan offers an original contribution to the socialist calculation argument.(”Is Socialism Really Impossible?”, pp.33-52) He thinks that Mises is right that it is impossible for a socialist system to calculate; but Mises then takes an unwarranted step. Mises concludes that socialism is itself impossible; but this, Caplan says, doesn’t follow. Why can’t an economic system get along without economic calculation?
Caplan doesn’t just have in mind simple economies, where only a few goods are produced, but he questions the absolute necessity of calculation in complex modern economies as well. An economic system without prices won’t do as well as a system with calculation, but the extent to which it fails is “quantitative.” Mises should thus not say that the lack of calculation results in chaos.
Isn’t Caplan challenging the obvious? Perhaps Caplan will next deny the need for money. True, money has advantages over barter; but we should avoid the “extreme” claim that without money, the economy of a developed nation would collapse. For that matter, haven’t the advantages of the division of labor been much exaggerated? I look forward with eager anticipation to future installments of Caplan’s series.
