A Theory Of The Theory Of Public Goods - Ludwig Von Mises Institute: Fill & Download for Free

The original socialist “calculation problem” as posited by Ludwig von Mises concerns the ability of a socialist economy to valuate resources (physical objects and intangible resources like time), which is a prerequisite for making rational economic decisions toward fulfilling an economic plan or goal.Mises sought to demonstrate that socialism lacks a viable mechanism for valuating resources to substitute the factor markets, financial and stock markets of a capitalist market economy. In a capitalist economy, factor markets provide information on the relative scarcities and demands for specific objects, services and time (as in the case of futures markets); the last of which is expressed by the interest rate. This information is encapsulated in prices which are then used to inform the purchasing decisions of users of the factors of production, thereby creating the basis for economic actors to perform rational economic decisions or to formulate plans on the institutional level (such as within a firm or government agency).Socialism in its classical formulation implied that the means of production are socially-owned, and thus allocation of the means of production takes the form of internal transfers within a single entity or network of entities (note that markets are still presumed to exist for final and secondary goods and services). Mises’ contribution to the calculation debate was in pointing out that such a system would be incapable of determining rational prices for different factors of production and would simply result in mis-allocation of resources, but to the end of rational economy as we know it - and thus the end of civilization.Mises’ contribution to socialist thought was to force the debate within the economics field and between socialists, refocusing economists to explore mechanisms for socialist allocation and calculation. Needless to say, while socialism has fallen out of favor with many mainstream economists (or more precisely is outright ignored as a subject worthy of exploration), most subscribe to the neoclassical school of economics which shows that Mises was incorrect and that socialist calculation is theoretically possible, if not impractical. Friedrich von Hayek, Mises’ protege, articulated a “soft” version of the calculation problem by conceding that a socialist system in theory might be able to determine relative scarcities and valuate objects accordingly, but the task was impractical as the number of equations to solve would be immense (at least given the technological limitations of the inter-war years). Hayek instead focused on centralized planning in particular and the inability for central planners to grasp localized knowledge and inefficiencies with transmitting information to central planners for formulating an economy-wide plan of production.A few responses to the “calculation problem” are worth noting, but a more exhaustive exposition warrants an entire article dedicated to the subject itself.Oskar Lange developed a theory of socialism using the tools and theories of neoclassical economics, where the means of production are under public ownership and organized as publicly-owned firms. Managers of these enterprises would be directed to set the price of their output at their marginal cost of production, and a central planning board adjusting prices through a trial-and-error method to achieve market clearing prices. The central planning board would also determine the rate of investment and reinvest profit from the public enterprises back into the economy, and distribute the social dividend (the portion of the profit not reinvested) to the entire population (the raison d'etre of socialism is that every citizen is a part-owner of the means of production and thus the recipient of its income). This model of socialism would achieve an ideal state of perfect competition as prices would be set to equal marginal costs - which, in ideal situations, is what competition is supposed to achieve in for-profit economies.Another, more recent approach to socialist calculation, involves the use of information technology to achieve real time coordination and planning of the economy. In brief, physical stocks of raw materials and goods and services would be entered into a computer network connecting all major enterprises of the socialist economy, with demand adjusted in real-time by inputs via computer terminal from other enterprises or final consumers demanding certain products or resources. In this vision of socialism, the economy for factor inputs would resemble a giant inventory control system. Variations on this theme have been explored by the economist and computer scientists Paul Cockshott, Allin Cottrell, Daniel E. Sauros and to a more limited extent by the Soviet economist Viktor Glushkov. This conception of socialism is more consistent with a Marxist rather than a Neoclassical perspective, where socialism is presumed to arise from technological developments that make new forms of economic calculation possible.Mises asserted the logical impossibility of a socialist method of calculation. He did not realize that his assertion stems from the historically limited context in which it was made. It is also in this chapter that it becomes possible to reconcile Marx’s silence on the question of the organization of socialism with the fact that socialism must be conceived before it is established. The reason, as it is shown, is that the social forces of production were not sufficiently developed in Marx’s lifetime to allow for the possibility of socialism. As a result, Marx’s only option was to study and investigate the laws of motion of capital, realizing that this work would be essential to the discovery of socialist laws of motion in the future. Whereas Mises asserted the logical impossibility of socialist economic calculation, Marx had the foresight to vaguely recognize that such calculation depended on the development of society’s productive forces. In the absence of sufficiently developed productive forces, socialism was simply impossible. - Daniel E. Sauros, Information Technology and Socialist Construction (p 4–5)Ironically despite the socialist calculation debate being of utmost importance to any formulation of a post-capitalist socialist system and the prospect of modern information technology to enable feasible socialist calculation, the broader “socialist” movement is both unconcerned and unfamiliar with the subject and shows more interest in liberal or social democratic policies and perhaps even more disturbingly over the past few decades, with liberal social issues and ethical appeals to “justice”.

Liberalism was a broad individualistic political movement that grew out of a great confluence of multiple social revolutions of the 15th, 16th and 17th centuries. It came to a head in America and Europe in the late 18th century with the American Revolution and the rise of the Whigs in Britain. The Scottish Enlightenment was one of its intellectual apicies — in the writings, especially, of David Hume and Adam Smith — but liberalism went very wide, including in Scandinavia (Anders Chydenius) and France (Turgot, Voltaire, Say, Volney and Destutt de Tracy). It nevertheless hit strong opposition as the French Revolution spun out of control, and as Rousseau’s sentimental romanticism lit a flame that became socialism — which, in turn, grew into foursquare opposition to liberalism’s “bourgeois freedom,” eventually creating the genocidal horrors of Soviet Communism and European fascism.Liberalism had become a changeling philosophy by mid-20th century, having been swapped for technocratic neo-mercantilism by the “progressives” who created, in America, the administrative state, an extremely illiberal institution. By the time I was born in the second half of the 20th century, a “liberal” looked hardly at all like the liberals of a hundred or so years earlier, when William Leggett, Henry David Thoreau, Wilhelm von Humboldt, Herbert Spencer, Frédéric Bastiat, and Gustave de Molinari made their marks by radicalizing liberalism in an even more consistent form than had been previously devised. So, within my lifetime, “classical” was prefixed to “liberal” to bring some order to the general confusion.“Utilitarianism” is the name that John Stuart Mill gave to what was known by his father, James Mill, as “Philosophic Radicalism.” This was a set of approaches that attempted to refine classical liberalism bydiscarding the rationalistic “natural law” tradition,avoiding many of the subtleties of the Scottish Enlightenment,adding a strong debunking, de-mystifying agenda, andgenerally approaching things in a putatively precise way.Jeremy Bentham was its main exponent, though it is worth noting that he cribbed his basic ideas from Helvetius and started off as an exponent and radicalizer of Adam Smith’s somewhat cautious laissez faire.The elder Mill worked with Bentham and businessman/economist David Ricardo to refine the new philosophic radicalism approach into a developed science of “political economy.” The elder Mill developed Say’s Law and (behind the scenes) Comparative Advantage to put some technical bite into the liberal attack upon mercantilism and make a general case for free trade. Bentham advanced some amazing ideas — I acknowledge him primarily for his theory of fictions, and for his (alas) self-suppressed defense of the legality of homosexuality. Bentham’s general attack on natural rights theory, however, was both brilliant and a muddle, and his approach to normativity was even more brilliant, and a bigger muddle yet. But mostly, he scuttled the liberalism in his philosophy with a weird totalitarian obsession, the Panopticon, which is, well, breathtaking in its audacity and intellectual effrontery. Bentham is, as we say these days, a “problematic” figure.The younger Mill, John Stuart, was even more of a genius than his father or Bentham himself. But he was also beset by cognitive dissonance and intellectual confusion. J.S. Mill did not have the wit to see that his defense of the Labor Theory of Value in the Smith-Ricardo tradition was indefensible and already disproven by the time he wrote his economic magnum opus; his bizarre and incoherent introduction of a too-much-made-of distinction between Distribution and Production undermined not only economic theory but also the liberalism upon which he grounded much of his politics; and his case for freedom in On Liberty was too narrowly focused on freedom of conscience, speech and press to prove a bulwark against the rising tide of neo-mercantilism and the socialism that he and his wife flirted with.Utilitarianism, then, began as an intellectually vigorous movement within classical liberalism, but grew into a hydra headed monster that was used for good and ill.It actually outlasted classical liberalism. Ethical philosophy ran with it in Britain, with major figures like the brilliant Henry Sidgwick and the influential G.E. Moore keeping it going long after any rigorous individualism had vanished from the commanding heights of the intellectual and political culture. Before this, however, Herbert Spencer had a fascinating quarrel with Mill on the matter, one well worth studying. And we should not let the subject go by without acknowledging that the analytical elements of the approach deeply affected the development of legal philosophy.Utilitarianism is something of a mess. That it continued to influence people long after classical liberalism morphed into technocratic neo-mercantilism is more than an interesting curiosity. It is worth contemplating at length, for in a sense it helps us understand modern times.That being said, don’t look for a general consensus, for people are almost invariably confused by it.When writers as wildly divergent as economist Ludwig von Mises and philosopher Peter Singer both call themselves utilitarians, you know that sorting all the pieces can be quite a chore.Recommended reading:Principles of Morals and Legislation, Jeremy Bentham“Essay on Paederasty,” Jeremy BenthamCommerce Defended, James Mill“An Essay on Government,” James Mill; Utilitarianism and On Liberty, John Stuart Mill (in The English Philosophers from Bacon to Mill, Edwin A. Burtt, ed.)The Methods of Ethics, Henry Sidgwick“Ways of Judging Conduct” (fourth chapter, The Data of Ethics), The Principles of Ethics, Herbert SpencerThe Growth of Philosophic Radicalism, Elie HalévyEqual Freedom and Utility: Herbert Spencer’s Liberal Utilitarianism, D. WeinsteinThe 20th century literature on the subject is vast and often recondite. I have mentioned G.E. Moore in my answer, above, but of the modern utilitarians I prefer J.J.C. Smart, even if my basic take in substantive philosophy more closely resembles J.L. Mackie in Ethics: Inventing Right and Wrong. It is worth noting that two critics of utilitarianism, John Rawls and Robert Nozick, addressed both utilitarianism and liberalism in their most famous works, A Theory of Justice and Anarchy, State and Utopia, respectively. With Nozick we see classical liberalism reformulated as modern political libertarianism, and in The Libertarian Idea we can follow a former utilitarian, Jan Narveson, reconceiving libertarianism along contractarian lines. A more Spencerian and Misesian approach to much the same thing can be found in the ethical treatises of Henry Hazlitt and Leland B. Yeager. For a discussion of Mill’s disastrous take on production and distribution, see J. H. Levy, The Outcome of Individualism, to which I have provided a foreword in an ebook edition published by Laissez Faire Books — it might still be available on Apple’s ebook platform. Indeed, I have written a number of forewords to classical liberal classics, not irrelevant to the discussion at hand. These include works by Richard Cantillon, David Hume, Frédéric Bastiat, Lord Acton, J.S. Mill and Auberon Herbert.My own take on utilitarianism is actually quite different from all of the above, conceiving of it largely as a metaethical doctrine. I have not published much on this, however, for lack of public interest. I have merely sketched my views.

It depends on what you mean by this question -- do you mean capitalists who are intellectuals or do you mean intellectuals who defend the politico-economic system of free market capitalism?Happy to answer, both, though.Top Ten Intellectual Defenders of CapitalismThis is a very partial list. There are plenty of intellectual defenders of free-market capitalism. I tried not to include contemporaries on this list, because we have yet to see how influential most of them will be.Ayn Rand -- Rand's Atlas Shrugged is the second best selling book of all time, behind only The Bible. She was active on college campuses through the 50s and 60s, on television until her death in the 80s, and is still creating capitalists to this day. Her entire political philosophy can be described as Capitalism -- a free market system with a minimal state funded by voluntary taxation to enforce contracts and provide national defense. Regardless of your disagreements with her, she is the most influential defender of capitalism in the 20th Century. Her works include Atlas Shrugged, The Fountainhead, and essays like "The Virtue of Selfishness."Milton Friedman -- A close second to Rand at times in the mid-late 20th Century, Friedman, an economist at the University of Chicago, was a public intellectual defending capitalism against critiques of greed, monopoly, and inequality. His book Capitalism and Freedom is one of the more popular non-fiction defenses of free market capitalism.Friedrich Hayek -- Hayek, a nobel laureate for his work on the socialist calculation debate, was an economist who wrote openly for a liberal order defined by free markets and a constitutionally-restricted government a little larger than Rand's. Margaret Thatcher famously presented his Constitution of Liberty during a debate in Parliament, noting, "This is what we believe."Ron Paul -- Although an academic lightweight compared to Hayek and Friedman, Paul boiled down the ideas of free market capitalism to simple talking points during his career in politics and was an outspoken spokesman for capitalism during the 2008 and 2012 US Presidential elections. It could be argued that he "created" more believers in capitalism than anybody else save Rand (although many of his millennial supporters from 2012 are now supporters of Bernie Sanders, so that's a debatable point).Ludwig von Mises -- Mises was another economist around the time of Hayek and Friedman (having supposedly called the two of them "a bunch of socialists" over a disagreement at the Mont Pelerin Society meeting one year). Mises was a jew who fled the rise of the Nazis before and during WWII and whose primary work is on credit theory, the role of central banks in business cycles, and the relationship between fascism and socialism. He influenced Paul and others heavily with his a priori theory of human action.Thomas Sowell -- Sowell is yet another economist, whose public intellectual work ranks up there with Friedman's. Much of his popular work is actually on affirmative action, diversity, etc., but he also has a lot of great stuff on the general justice of capitalism.David Friedman -- David Friedman is the more-radical son of Milton Friedman. An economist who teaches at a law school and who is trained in physics, D. Friedman's primary work is The Machinery of Freedom and is one of the most exhaustive defenses of totally free-market capitalism, i.e., Anarcho-Capitalism, that you can find.Henry Hazlitt -- Hazlitt was a journalist around the time of Mises, Hayek, and Read (below). His Economics in One Lesson is an accessible look at understanding the economic way of thinking that guides many of the other defenders of capitalism.Robert Nozick -- Although his direct influence outside of academia was minimal, Robert Nozick kept capitalism afloat as a serious force to be reckoned with in political philosophy departments for a good half-century. The Harvard professor's Anarchy, State and Utopia is a defense of a minimal-state order in which free-market capitalism is upheld as the most just economic distribution possible. His intellectual opponent, John Rawls, is largely thought to have won their showdown in political philosophy departments, but Nozick's influence permeated down to others on this list, like David Friedman, who is in part responding to Nozick's objections to anarcho-capitalism.Leonard Read -- Read was the founder of the Foundation for Economic Education (Home | FEE ) and the author of I, Pencil, among other works. I include him on here because FEE's work at keeping many of the above's works accessible and its home as a bulwark of the ideas of capitalism is incredibly important.As for intellectual capitalists...Peter Thiel -- Thiel's Zero to One is a great work of philosophy, entrepreneurship studies, venture capital studies, and more. He has always been a wonky intellectual, having written defenses of his libertarian beliefs, objections to affirmative action, and more.Marc Andreessen -- Andreessen, a Venture Capitalist in the Bay Area, is known for his twitter presence. But his intellect competes with his social media activity -- he and his partner (below) have an oft-cited belief that "software is eating the world" that has implications far beyond the realm of simple venture capital. Who Funds the Future?Ben Horowitz -- Horowitz is another partner at Andreessen-Horowitz, and is known for his work during the original Dot-Com boom. His book The Hard Thing About Hard Things is considered one of the best intros for tech founders today.Ben Horowitz: Why Andreessen Horowitz Just Raised $650,000,000Tim Ferriss -- Ferriss is the author of The Four Hour Workweek and the host of The Tim Ferriss Show -- a popular podcast on entrepreneurship, life-work balance, and being the best that you can be in your field. He, until recently, was a capitalist in the sense that he invested in startups. His political beliefs are mostly unknown, although he hints at being somewhat libertarian.Jim Rogers -- Rogers is a famous commodities trader and a cofounder, with George Soros, of the Quantum Fund. His Rogers Commodity Index is a popular favorite for those wanting to trade in commodities through indices. He has a number of books, including A Gift to My Children, Adventure Capitalism, and Investment Biker.George Gilder -- Known as Reagan's most-quoted-author, investor and author George Gilder is known recently for his book Knowledge and Power, which explores the growth of the Information Age and the importance of capitalism and markets for transmitting information across seas of confusion (see Hayek, above).John Allison -- Allison is the former CEO and President of BB&T bank and former interim-President of the Cato Institute in Washington, D.C.. He's written a number of successful books that would count as "intellectual," like The Financial Crisis and the Free Market Cure: Why Pure Capitalism is the World Economy’s Only Hope. He was heavily influenced by Ayn Rand.Charles Koch -- When he's not busy being touted as the boogeyman of the American Left, Koch is either running Koch Industries, the most valuable privately-held company in the US, or writing. He's authored or co-authored a number of books, like Good Profit and The Science of Success. He's known to be "an ideas guy," and sits on the board of a number of education nonprofits, like his own Charles Koch Institute and The Institute for Humane Studies at George Mason University.TJ Rodgers -- Rodgers is a semiconductor entrepreneur in the Bay Area known for, besides his great success at business and his scientific mind, calling out affirmative action policies and getting involved in intellectually defending the work that he and his colleagues do. T.J. Rodgers: Targeting the Wealthy Kills JobsJohn Mackey -- The Co-CEO of Whole Foods is known for his "Conscious Capitalism" ideas -- a variant of free-market capitalism that places a burden on companies to improve the lives of both their customers and their employees. His book, by the same title, emphasizes the heroic aspects of business through his own altruistic lens: Conscious Capitalism: Liberating the Heroic Spirit of Business: John Mackey, Rajendra Sisodia, Bill George: 8937485908847: Amazon.com: BooksHope that helps!