Calculation, Complexity And Planning: The Socialist Calculation Debate Once Again

This paper offers a reassessment of the socialist calculation debate, and examines the extent to which the conclusions of that debate must be modified in the light of the subsequent development of the theory and technology of computation. Following an introduction to the two main perspectives on the debate which have been offered to date, we examine the classic case mounted by von Mises against the possibility of rational economic calculation under socialism. We discuss the response given by Oskar Lange, along with the counter-arguments to Lange from the Austrian point of view. Finally we present what we call the ‘absent response’, namely a re-assertion of the classic Marxian argument for economic calculation in terms of labour time. We argue that labour-time calculation is defensible as a rational procedure, when supplemented by algorithms which allow consumer choice to guide the allocation of resources, and that such calculation is now technically feasible with the type of computing machinery currently available in the West and with a careful choice of efficient algorithms. Our argument cuts against recent discussions of economic planning which continue to assert that the task is of hopeless complexity. Department of Economics, Wake Forest University, and Department of Computing Science, University of Glasgow, respectively. This paper was published in Review of Political Economy, vol. 5, no. 1, July 1993, pp. 73–112.