Review of Theodore A. Burczak’s Socialism after Hayek
For most Austrians, the collapse of the Soviet Union just proved something that we had long since known. Socialism as we understand it (i.e., the elimination of private ownership of the means of production) is impossible; or, to be more precise, rational economic calculation in the absence of private property and so in the absence of competition between severally owned firms over resources, meaningful prices which reflect relative scarcities and profit and loss accounting, is impossible. Attempts by market socialists like Lange (1936) to come up with a “competitive” response to the Austrian critique, as Lavoie (1985) has shown, have failed to answer Austrian concerns. Interestingly, they have not taken Marx all that seriously either, abandoning key features of his program like his concern for alienation and exploitation. Burczak, however, does not commit either sin. His Socialism after Hayek is a stimulating book that is grounded in Burczak’s deep appreciation of both the Austrian critique of socialism and the Marxian critique of capitalism. Burczak attempts to answer a critical question: What would a socialism that takes seriously Hayek’s critiques of socialism look like? Before presenting Burczak’s version of an Hayekian socialism, it is worth rehearsing Burczak’s understanding of Hayek’s critiques. Hayek, Burczak writes, really articulated two distinct knowledge problems that a socialist regime would have to overcome. First, a socialist government that hoped to centrally plan would have to overcome what Burczak calls the “factual knowledge problem.” They “must figure out how best to coordinate the actions of scattered individuals, each of whom is in possession of unique, partial, tacit, and potentially erroneous knowledge” (p. 2). Central planning is unable to effectively solve this problem because it is impossible for central planners to get at individuals’ subjective knowledge of time and place. The market, Hayek believed and Burczak understands, is the only effective solution to the factual knowledge problem. According to Burczak, Hayek has also stressed that a socialist government must also solve the “ethical knowledge problem.” This term is intended to capture Hayek’s complaint Rev Austrian Econ (2007) 20:313–316 DOI 10.1007/s11138-007-0022-4