During the 20th century, several countries took advantage of the general economic equilibrium theory. In India, the central planning of industrial and agricultural development was combined with the free competition of many private entrepreneurs. In contrast, the financial sector has been socialized. This feature film tells the story of a modest but ambitious and hardworking civil engineer (he scolds his son for being late for an important ceremony in the company) who took a loan from a nationalized bank and formed a company in which his junior partners and department managers were his college colleagues. In this way, another private construction company was created, generating moderate returns on capital movement.
In the third plan, passenger cars from a state-owned factory, produced using cheap parts, a maximum in standardization and cheap gray or white paint to slowly start motoring India with inexpensive vehicles. Reformist capitalism had sometimes impressive achievements due to compensating for the worst flaws of this system with establishing more or less socialist institutions.
[a screenshot from a YouTube movie: Love Story (1981) Full Hindi Movie Kumar Gaurav, Vijayta Pandit, Rajendra Kumar, Danny]
In the history of economics, the great Polish and American thinker Oskar Richard Lange (he’s named many times in English language books and articles as Oscar Lange, sometimes Professor Lange) is best known internationally for his book On the Economic Theory of Socialism published for first time in 1936, where he famously put Marxian economics and neoclassical economics together. In the book, Lange advocated the use of market tools (based on the neoclassical or Paretian pricing theory) in economic planning of socialism, and therefore he establshed and promoted many scientifically argued basic priniciples of Neo-Marxism.
The Great Depression had a dramatic even tragic effect on the social and economic development of almost all civilised world
Only fascist Italy remained largely untouched, while Soviet Union and China experienced their own terrible political and economic tragedy. As an answer the neoclassical general equilibrium theory was developed in Great Britain and United States of America, also many elements of central economic planning were in fact introduced in US and in the British Commonwealth.
The Great Deppression had shown it crystal clear; limitation of the State to mere police duties is obsolete and would most probably never work properly again
Facing an extremely grave situation caused by many millions of unemploeyd men with no benefits the national government in Britain and President Roosevelt were forced to seize entire gold reserve (in US) or to went off gold (in UK) and use it to provide an emergency financing for the national economy as a whole and especially for the poorest people, who were in desperate need for some money. What happened next must be described as an amazing fight against the Great Depression.
Because of an immense support among the ordinary people for FDR the capitalist circles were forced to obey but it was, of course, allowed to oppose his policies which he explained on a very clear and distinct way
His message was quite simple indeed: Capital is essential; reasonable earnings on capital are essential, but misuse of the powers of capital or selfish suspension of the employment of capital must end, or the capitalistic system will destroy itself through its own abuses.
During the 1930s a higly important question was in the air: Are the capitalists doomed to fall?
President Roosevelt could possibly consider a sophisticated and scientifically elaborated plan to turn United States into a socialist society preserving, however, all advantages of free market in its really practicable extent. Anyway, the decision about the practical use of the general equilibriumtheory was made in White House. One of the key figures who contributed to this very special theory was Oskar Lange.
That was the background before which the famous socialist calculation debate begun. We must, however, first understand this one, indeed very simple, main issue of the debate
Imagine that you have started your own business. Now you must run this enterprise. You will have to purchase everything necessary to run your business and secure a space for the work. You will, that’s an obvious thing, need to market your goods or other products, including setting proper prices for them, too. You will need to hire employees and later sometimes fire them.
You'll need plans for what to do if your goods or products fail to sell and if they succeed very much. Unfortunately, we have bad news for you. It’s possible for a private enterpreneur to make mistakes in any of these choices, a quite usual thing, and many small businesses will fail within the first year of operation.
Now please imagine that instead of running just this one business, you're running all the enterprises — every business across the country, large and small, and have all their problems on your mind
No doubt you would to make an attempt to delegate nearly all of the decisions to your subordinates but this doesn't eliminate the problem. Somebody have to bee at charge and you will still need to know how to allocate resources among them, what to do when one of them fails. and how to respond to their successes. You will need to know exactly where to put which resources, and at what times, and in what quantities.
These are enormous tasks but they are also the tasks that central economic planner or economists in the central planning unit would need to accomplish to do their jobs well
To cover the socialist calculation debate it wouldn’t be enough to write that free market supporters from the then Austrian school triggered the discussion. Their statemets were of vital scientifical and political importance, both for development of economic science as well as creating the philosophical basics for the New Red Project. These men developed a thorough critique of socialism arguing that public ownership of industry would be inefficient to the point that it would inevitably lead any socialist experiment to a total failure.
There were two key arguments of the Austrians: the knowledge argument and the calculation argument and those problems were intertwined
The first argument was that the central planning board could obtain only incomplete, insufficient information about the society and its needs which are, in addition, not constant but changing. The Austrian economist von Hayek argued that decisions within an economy are normally made by individuals on the basis of the particular situation of their current needs and possibilities. As a result the knowledge of the particular circumstances is distributed in the minds of millions of the market actors and to obtain it from this source is hardly possible.
The second argument is that even if we assume that crucial elements of the above mentioned knowledge could be obtained by the State (for example as a result of the development of some complex communication devices), there will be tremendous amounts of data accumulated which can't be properly analyzed by any central economic planning committee. These unavoidable obstacles means that any endeavor to draft a socialist economy will be done — according to Austrian expats — in ignorance of basic social and economic facts and consequences of such an experiment could be only disastrous.
Therefore the free market supporters are claiming till today that capitalism serves as an only possible decentralised distribution mechanism in the properly functioning economy
… and can't be successfully replaced by any socialist economic planning units. Both these main arguments against the socialist planned economy are, however, not less obsolete than the main artillery of battleships. Already during the 1930s the best experts in the field of maritim warfare were able to foreseen that whole battleship squadrons will be sunk by the warplanes.
During the same decade a group of the most gifted and diligent political economists was already able to make suggestions for an entirely new approach to the planned economy. From the Polish and American scientist and ingenious thinker's Oskar Lange point of view these Austrians were like big fat mice who hasn't learned about relationship with cats.
During the 20th century, several countries took advantage of the general economic equilibrium theory. In India, the central planning of industrial and agricultural development was combined with the free competition of many private entrepreneurs. In contrast, the financial sector has been socialized. This feature film tells the story of a modest but ambitious and hardworking civil engineer (he scolds his son for being late for an important ceremony in the company) who took a loan from a nationalized bank and formed a company in which his junior partners and department managers were his college colleagues. In this way, another private construction company was created, generating moderate returns on capital movement.
In the third plan, passenger cars from a state-owned factory, produced using cheap parts, a maximum in standardization and cheap gray or white paint to slowly start motoring India with inexpensive vehicles. Reformist capitalism had sometimes impressive achievements due to compensating for the worst flaws of this system with establishing more or less socialist institutions.
[a screenshot from a YouTube movie: Love Story (1981) Full Hindi Movie Kumar Gaurav, Vijayta Pandit, Rajendra Kumar, Danny]
In the history of economics, the great Polish and American thinker Oskar Richard Lange (he’s named many times in English language books and articles as Oscar Lange, sometimes Professor Lange) is best known internationally for his book On the Economic Theory of Socialism published for first time in 1936, where he famously put Marxian economics and neoclassical economics together. In the book, Lange advocated the use of market tools (based on the neoclassical or Paretian pricing theory) in economic planning of socialism, and therefore he establshed and promoted many scientifically argued basic priniciples of Neo-Marxism.
The Great Depression had a dramatic even tragic effect on the social and economic development of almost all civilised world
Only fascist Italy remained largely untouched, while Soviet Union and China experienced their own terrible political and economic tragedy. As an answer the neoclassical general equilibrium theory was developed in Great Britain and United States of America, also many elements of central economic planning were in fact introduced in US and in the British Commonwealth.
The Great Deppression had shown it crystal clear; limitation of the State to mere police duties is obsolete and would most probably never work properly again
Facing an extremely grave situation caused by many millions of unemploeyd men with no benefits the national government in Britain and President Roosevelt were forced to seize entire gold reserve (in US) or to went off gold (in UK) and use it to provide an emergency financing for the national economy as a whole and especially for the poorest people, who were in desperate need for some money. What happened next must be described as an amazing fight against the Great Depression.
Because of an immense support among the ordinary people for FDR the capitalist circles were forced to obey but it was, of course, allowed to oppose his policies which he explained on a very clear and distinct way
His message was quite simple indeed: Capital is essential; reasonable earnings on capital are essential, but misuse of the powers of capital or selfish suspension of the employment of capital must end, or the capitalistic system will destroy itself through its own abuses.
During the 1930s a higly important question was in the air: Are the capitalists doomed to fall?
President Roosevelt could possibly consider a sophisticated and scientifically elaborated plan to turn United States into a socialist society preserving, however, all advantages of free market in its really practicable extent. Anyway, the decision about the practical use of the general equilibrium theory was made in White House. One of the key figures who contributed to this very special theory was Oskar Lange.
That was the background before which the famous socialist calculation debate begun. We must, however, first understand this one, indeed very simple, main issue of the debate
Imagine that you have started your own business. Now you must run this enterprise. You will have to purchase everything necessary to run your business and secure a space for the work. You will, that’s an obvious thing, need to market your goods or other products, including setting proper prices for them, too. You will need to hire employees and later sometimes fire them.
You'll need plans for what to do if your goods or products fail to sell and if they succeed very much. Unfortunately, we have bad news for you. It’s possible for a private enterpreneur to make mistakes in any of these choices, a quite usual thing, and many small businesses will fail within the first year of operation.
Now please imagine that instead of running just this one business, you're running all the enterprises — every business across the country, large and small, and have all their problems on your mind
No doubt you would to make an attempt to delegate nearly all of the decisions to your subordinates but this doesn't eliminate the problem. Somebody have to bee at charge and you will still need to know how to allocate resources among them, what to do when one of them fails. and how to respond to their successes. You will need to know exactly where to put which resources, and at what times, and in what quantities.
These are enormous tasks but they are also the tasks that central economic planner or economists in the central planning unit would need to accomplish to do their jobs well
To cover the socialist calculation debate it wouldn’t be enough to write that free market supporters from the then Austrian school triggered the discussion. Their statemets were of vital scientifical and political importance, both for development of economic science as well as creating the philosophical basics for the New Red Project. These men developed a thorough critique of socialism arguing that public ownership of industry would be inefficient to the point that it would inevitably lead any socialist experiment to a total failure.
There were two key arguments of the Austrians: the knowledge argument and the calculation argument and those problems were intertwined
The first argument was that the central planning board could obtain only incomplete, insufficient information about the society and its needs which are, in addition, not constant but changing. The Austrian economist von Hayek argued that decisions within an economy are normally made by individuals on the basis of the particular situation of their current needs and possibilities. As a result the knowledge of the particular circumstances is distributed in the minds of millions of the market actors and to obtain it from this source is hardly possible.
The second argument is that even if we assume that crucial elements of the above mentioned knowledge could be obtained by the State (for example as a result of the development of some complex communication devices), there will be tremendous amounts of data accumulated which can't be properly analyzed by any central economic planning committee. These unavoidable obstacles means that any endeavor to draft a socialist economy will be done — according to Austrian expats — in ignorance of basic social and economic facts and consequences of such an experiment could be only disastrous.
Therefore the free market supporters are claiming till today that capitalism serves as an only possible decentralised distribution mechanism in the properly functioning economy
… and can't be successfully replaced by any socialist economic planning units. Both these main arguments against the socialist planned economy are, however, not less obsolete than the main artillery of battleships. Already during the 1930s the best experts in the field of maritim warfare were able to foreseen that whole battleship squadrons will be sunk by the warplanes.
During the same decade a group of the most gifted and diligent political economists was already able to make suggestions for an entirely new approach to the planned economy. From the Polish and American scientist and ingenious thinker's Oskar Lange point of view these Austrians were like big fat mice who hasn't learned about relationship with cats.
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