Pizhuhish nāmah-i intiqādī-i mutūn va barnāmah hā-yi ̒ulūm-i insāni (Critical Studies in Texts & Programs of Human Sciences)

Hayek, the Problem of Order and the Socialist Calculation Debate: A Critique on the Book Individualism and Economic Order

Document Type : Research

Author

Abdolhamid Moarefi mohammadi

Associate Professor of Economics, University of Isfahan, Isfahan, Iran

https://doi.org/10.30465/crtls.2026.52767.2955
Abstract
One of the most significant ideological and yet technical debates of the early twentieth century is the socialist calculation debate, which took place between Mises and Hayek as proponents of capitalism and socialists such as Lange. Our objective in this article is to examine the rise and fall of this debate by analyzing Hayek's most important work in this field, the book "Individualism and Economic Order". This discussion began with Mises, who claimed that a socialist economy and, consequently, economic planning were impossible. He reasoned that this impossibility stemmed from the inability of a planning system to calculate prices. This impossibility was interpreted by socialists like Lange as the impossibility of socialism due to the complexity of calculations or the absence of competition in a socialist system. However, Mises and later Austrian economists like Hayek argued that this impossibility was something beyond mere computational problems related to price calculation or the lack of competition. Although Hayek makes crucial points in explaining the miracle of the price mechanism and the market institution, he has overlooked important issues, and his theory has become an idealized one. While it is true that socialism is impossible due to the elimination of the market, the abstract capitalism envisioned by Hayek is also practically impossible for non-Western countries due to its abstract and ahistorical perspective.

Keywords

Economic Order
Lange
Market
Mises
Socialist Calculation Debate
Subjects
Barone, E. ([1908] 1935). “The Ministry of Production in the Collectivist State”, in F.A. von Hayek (ed.), Collectivist Economic Planning. Critical Studies on the Possibilities of Socialism, London: Routledge. pp. 245–90.
Hayek, F.A. ,(1944) , The Road to Serfdom (London: George Routledge and Sons).
Hayek, Friedrich von (2015). Individualism and Economic Order. Translated by Mohsen Ranjbar. Nashr-e Markaz, Tehran.
Kantorovich, L.V. ([1959] 1965). The Best Use of Economic Resource, Oxford: Pergamon.
Lange, O.R. (1936) ‘On the economic theory of socialism’, Review of Economic Studies, vol. IV, NOs 1 and 2; cited from Lippincott, 1964, pp. 55–143.
Lavoie, D. (1985). Rivalry and Central Planning. The Socialist Calculation Debate Reconsidered (Cambridge University Press).
Lange, O. (1936). On the economic theory of socialism, Part I. Review of Economic Studies 4: 53–71.
Lange, O. (1937). On the economic theory of socialism, Part II. Review of Economic Studies 4: 123–42.
Mises, L. von (1920) “Economic Calculation in the Socialist Commonwealth,” in F. A. von Hayek (ed.) Collectivist Economic Planning, New York: Augustus M. Kelley.
Pareto, V. ([1906] 1966). “Manuel d’économie politique”, in G. Busino (ed.), Oevres Completes, Vol. VII. Genève: Droz.
Steele, G.R. (2007) The Economics of Friedrich Hayek, London: Macmillan Press.
Tinbergen, J. (1959). “The Theory of the Optimum Regime”, in L.H. Klaassen, L.M. Koyck and H.J. Witteveen (eds.), J. Tinbergen Selected Papers, Amsterdam: North Holland. pp. 264–304.
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  • Receive Date 31 August 2025
  • Revise Date 25 November 2026
  • Accept Date 12 February 2026

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