Wednesday, February 23, 2011

Economic Calculation in the Corporate Commonwealth

The general lines of Ludwig von Mises’s rational-calculation argument are well known. A market in factors of production is necessary for pricing production inputs so that a planner may allocate them rationally. The problem has nothing to do either with the volume of data or with agency problems. The question, rather, as Peter Klein put it, is “[h]ow does the principal know what to tell the agent to do?”

This calculation argument can be applied not only to a state-planned economy, but also to the internal planning of the large corporation under interventionism, or state capitalism.

Read the rest of Kevin carson's article

James Tuttle,
Regular Columnist, THL
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