Polemics & Exchanges

On Ludwig von Mises

Thomas Fleming’s criticism of Ludwig von Mises and his student, Friedrich von Hayek (“Abuse Your Illusions,” Perspective, January), overlooks or misinterprets major contributions of both.  In Socialism (1922), Mises was the first economist to show the unworkability of socialist systems.  He based his analysis on the impossibility of establishing a price structure for the various means of production and thus the absence of a mechanism for allocating resources in a reasonably efficient manner.  In other words, he demonstrated the essential character of information—information that no central planner can possibly accumulate because most of it is subjective and fleeting.  This brings up his other important contribution: the subjective nature of value.  The value of something (material, of course) is what someone is willing to pay for it, not, for example, the quantity of labor that went into it. 

Hayek carried the analysis of information dependence further and then began the application of “self-ordering” to any economic system.  Self-ordering or “spontaneous organization” was first proposed during the Scottish Enlightenment (e.g., Adam Smith’s “invisible hand”) but had been forgotten.  Hayek’s revival of the concept was an important...

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