Collectivist Economic Planning by F. A.Hayek

Author:F. A.Hayek [F. A. Hayek]
Language: eng
Format: epub
ISBN: 978-1-61016-162-6
Publisher: Routledge & Kegan Paul Ltd
Published: 2007-11-06T16:00:00+00:00

§ 8

Since, ex hypothesi, there is to be free choice of occupation in the socialistic economy also, that is to say, the individual is to be left free to decide what services he will offer, the relationships that have been described as existing under capitalism can also be assumed to exist under socialism. In fact, they appear to be even more true of the socialistic economy than of the capitalistic; for they were based on the assumption that labour is the only factor of production. Now under capitalism this assumption does not hold good; for land and capital are also subject to the pricing process and so enter along with labour into costs of production and commodity-prices. Furthermore, within this pricing process, an unearned income is obtained from the ownership of these material means of production. It is quite otherwise under socialism. For the very purpose of doing away with this unearned income, the material means of production are removed from private ownership and transferred to the direct ownership of the community. According to many socialists, no price at all need then be paid for these material means of production, for the socialistic economy, being the owner of them, need no longer stimulate the supply of capital or land by suitably high prices. Nobody need pay for the use of means of production if he owns them himself.

Now if wages are the only costs of production that need be considered, and if there is free choice of occupation and a free market for the determination of wages, the problem of price-determination and economic calculation under socialism is well on the way to solution. The only important point of difference between this case and the similar case assumed to exist under capitalism is that the present is one not of bilateral, but only of unilateral, competition. And this not only in the market for consumption-goods, but also in the labour market. For in the socialistic economy, the State alone demands labour; and in the socialistic economy, likewise, the State alone distributes goods. Thus the central authority has a monopoly, both in the labour market and in the commodity market; that is to say, in the labour market it can arbitrarily determine the demand, in the commodity market the supply, and consequently in both cases the price. Of course, since it may be assumed that the authorities in a socialistic community would not exploit their power to the disadvantage of the labourers or the consumers (who are the same persons), this State monopoly, which would be far greater than any monopoly that has ever been known, could not be objected to on grounds of principle. The question, however, does arise, of whether the lack of competition on the demand side of the labour market and on the supply side of the commodity market would not result in the pricing process becoming too unwieldy, inasmuch as the characteristic under-bidding and out-bidding, that is essential for the rapid determination of prices, would in such circumstances be lacking.

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