ABSTRACT
The second intellectual dispute that gave form to Hayek’s concept of liberty has become known as the Socialist Calculation Debate. In his disagreements with Keynes and his supporters, the core concern was how best to maintain the capitalist system. In this second engagement with the advocates of socialism, however, the very desirability of that system was contested. The debate had two distinct phases. In the first, which arose after then end of the First World War, the chief protagonists were Mises and Otto Neurath. It centred on the viability of direct planning and the abolition of markets. In the second phase, during the mid-1930s, Hayek sought to counter the response of ‘market socialists’, such as Oskar Lange and Abba Lerner, who argued, in response to the earlier contest, that competition could still function as a guide to investment even under conditions of common ownership. 1 What emerged from the debate was the forceful equation, on Hayek’s part, of freedom in the market with individual liberty. By contrast, he came to view economic planning, and increasingly government economic intervention of any kind, as the essence of tyranny.
