Would anyone write the following today? From Socialism by Harvard’s Paul M. Sweezy (New York: McGraw-Hill, 1949--the same year Human Action came out). Here is Professor Sweezy on how socialism will work in practice to do what an economy is actually supposed to do (citing Oskar Lange):
“First, each manager should be instructed to combine productive goods and services in such a way that average cost of production for any given output is a minimum...”This will guarantee that no factor of production is used in such a way that its relative effectiveness might be greater in some other employment. Second, each manager should choose that scale of output which equates marginal cost to price. It is not sufficient, however, to address this rule to plant mangers alone; it must also be addressed to the mangers of whole industries (for example, the National Coal Trust) so that they will know when to add new plants or to refrain from replacing old ones as they wear out. If these two rules are followed, the output of each industry and plant as well as the total demand for various factors of production are determined, as they are when all entrepreneurs attempt to maximize their profits.
“The question now arises as to what means are open to the Central Planning Board to find the equilibrium market and accounting prices…. The answer is formally analogous to that given in the case of the competitive system. The Planning Board makes the best estimate it can of the correct prices—in practice it would undoubtedly start from the historically given price system—and instructs all mangers to act as though they were in fact the correct prices. Errors will then show up through the emergence of surpluses or shortages: price readjustments will be made; mistakes will again be observed; and so on until the equilibrium position has been reached.” (p. 230-31)
For more on the topic and the history of the debate, see the Study Guide on Economic Calculation.
