ABSTRACT
Oskar Lange’s rather immodest comments in the opening paragraphs of “On the Economic Theory of Socialism” (1936–37) clearly manifest his belief that his contribution thoroughly demolished the case against market socialism developed by the Austrian luminaries Ludwig von Mises and Friedrich A. Hayek, as it stood in the mid-1930s. In his highly influential essay on “Socialist Economics,” published in the AEA’s A Survey of Contemporary Economics (1948), Abram Bergson did not directly challenge this belief, but rather relied principally, in criticizing Lange’s proposal, on some presumably non-Austrian objections, chief among which is the absence of an easily observable success criterion by which to conveniently verify adherence to marginal cost pricing by firm managers. 1 Following Bergson’s lead, several textbook accounts of the socialist calculation debate (for example: Zimbalist and Sherman, 1984, pp. 395–402; Gregory and Stuart, 1985, pp. 128–136; Elliott, 1985, pp. 284–334) tend to suggest that Lange did indeed successfully refute all objections to market socialism, either explicit or implicit, in the work of Mises and Hayek through Collectivist Economic Planning (1935). At the same time, they go on to suggest that the Langian plan of market socialism is nevertheless vulnerable to various additional objections which severely compromise its practical attractiveness. The impression that might be gained by the typical undergraduate exposed to these discussions is that Mises and Hayek were fundamentally right about the potentially poor economic performance of market socialism—but for the wrong reasons.
