Date: 24 Sept. 2020
2020 is the 100th anniversary of the publication of Ludwig von Mises' seminal essay on the inevitable problems faced by socialist central planners in trying to organise a "socialist" economic system. From the mid-19th century onwards classical liberals had pointed out the many serious problems which they thought would hamper socialists from creating a "rationally planned" and well-organised socialist system of production which would not be based on the private ownership of property and the profit system which existed in a free market in the "capitalist system" of production. Their objections ranged from the "incentive problem" in getting workers to work hard or to be rewarded for their special skills and aptitudes, or investors and entrepreneurs in being rewarded for taking risks in an uncertain economic world where returns were not guaranteed, to identifying what it was that consumers really wanted producers to produce, to the selfish vested interests of the new socialist factory managers and central planners, and so on.
However, it would not be until 1920 when Ludwig von Mises, observing the actual efforts of the new Bolshevik communist government in Russia which had come to power in the revolution of 1917, asked the most penetrating question of how socialist central planners could do anything economically rational in an economic system in which there were no prices for goods, labour, raw materials, expertise, or most importantly for capital. He began this investigation in this essay of 1920, and deepened it into a book-length work Die Gemeinshaft (Socialism) (1922, revised ed. 1932), and later, in 1949, in a section of his treatise Human Action.
We present here his original essay in a parallel edition showing the German and English translation side by side so readers can see for themselves this important essay which, had economists and politicians taken more serious in the 1920s and 1930s, might have saved the Russian people from the catastrophe which was central planning.
This page opens with Mises' essay "Die Wirtschaftsrechnung im sozialistischen Gemeinwesen" (1920) in the original German text on the left, either in a facsimile of the original published journal article [facs. PDF or HTML]; and an English translation by Adler on the right; one can also switch to viewing an HTML version of the original German text in HTML on the right.
You can also view his book Die Gemeinwirtschaft (1st ed. 1922, 2nd revised edition 1932) which was a much expanded version of the 1920 article in facsimile PDF on the left; or the English trans. in HTML on the right
Mises would return to the problem of economic calculation under socialism in two further articles published in the 1920s:
On these two papers, see Keizer, William. "Two Forgotten Articles by Ludwig von Mises on the Rationality of Socialist Economic Calculation." The Review of Austrian Economics 1, (1987) 109–122.