Economic Calculation Problem
The Economic Calculation Problem or ECP refers to the alleged inability of a command economy to allocate scarce resources in a rational manner. It usually states that in the absence of some objective exchange value there is no means to determine where production goods ought to be deployed. The argument has been most heavily pushed by the heterodox Austrian school of economics and, by extension, right-libertarians.
Whereas the consequences of the ECP are often overstated, engaging in the debate may still be valuable to aspiring socialist economists. It forces you to critically consider the potential dynamics of socialism, the conditions these must fulfill, and where it should differ from capitalism.
As described by Ludwig von Mises
Statements of the ECP
- Mises' "Economic Calculation in the Socialist Commonwealth" (1920) in HTML
- Mises' Socialism (1951) in PDF, EPUB and MOBI