The Socialist Commonwealth Is Incapable of Measuring the Needs of Its Citizens and Is Unable to Give Directives to the Producing Units

He [Mises] next disposes of O. Neurath’s new proposal for calculation in physical terms, on account of its inability to add up different goods. There follows a discussion of a book by the exiled Russian economist Boris Brutzkus, who extensively treats the problem of economic calculation under Soviet socialism. Brutzkus concurs with von Mises that without economic calculation, rational economic action under whatever kind of economic system is impossible. He also is of the opinion that the fact that production requires the combination of three factors (land, labor, and capital) retains its validity and importance under socialism. Therefore, a calculation solely in terms of labor values is incapable of providing an indication of the greater or lesser profitability of enterprises. With that the drafting of a uniform plan, the essence of Marxism, becomes impossible. Von Mises quotes Brutzkus to the effect that:

With this the socialist commonwealth, even with the entire instrumentarium of scientific theory and a gigantic statistical apparatus, is incapable of measuring the needs of its citizens and of evaluating them and is therefore not in a position to give the necessary directives to the producing units (N.S., p. 189).

Von Mises finds Brutzkus’s book the first one that deals with the problem of the Soviet Union in a scientific way. All other works are of a descriptive nature and the presentation of the facts either suffers from an uncritical hatred of the Soviet Union (from which he therefore obviously wished to dissociate himself) or from its uncritical adulation.

—William Keizer, “Two Forgotten Articles by Ludwig von Mises on the Rationality of Socialist Economic Calculation,” Review of Austrian Economics 1, no. 1 (1987): 118-119.