Like Mises, Weber was prompted to make his argument by Otto Neurath’s writings. Weber agrees with Neurath’s contention that a completely socialized, planned economy must be a natural (moneyless) economy. Technically or formally, says Weber, money is the most perfect means of economic calculation. Without money, calculation purely in physical units can be performed where wants “are strictly given” and “so long as the situation does not require a very precise estimate of the comparative utility to be gained from the allocation of the available resources to each of a large number of very heterogeneous modes of use.” Otherwise, scope for accurate calculation is limited, and even the simple, self-sufficient household faces problems, solved partly by tradition and partly by “very rough estimates.”
The problems become more difficult with changes in wants and production conditions, with growing complexity, and with the decline of purely traditional standards. Given monetary calculation, costs can be assessed in money terms, but with moneyless calculation, all the different ways of using all means of production have to be taken into account.
—David Ramsay Steele,
From Marx to Mises: Post-Capitalist Society and the Challenge of Economic Calculation (La Salle, IL: Open Court Publishing, 1992), e-book.
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