Owing to Schumpeter’s Influence, Mises and Hayek Were Considered to Have “Lost” the Rational Economic Calculation Debate

Considering the extent to which Mises’ approach to economics ran completely counter to prevailing views during his lifetime, recent interest in his writings is nothing short of phenomenal. Two striking examples may suffice. For a long time, the most celebrated controversy in comparative economic systems theory — that is, the debate raging during the inter-war period over “rational economic calculation” in a socialist society, which was sparked off by a famous article by Mises — seemed to be a closed chapter in the history of economic thought. Not least owing to Schumpeter’s influence, Mises and Hayek were commonly considered to have “lost” the debate. Indeed, “victory” for the kind of market socialism espoused by Lange and Lerner was held to be so overwhelming that modern treatments of welfare economics do not even care to mention that there ever was such a controversy. (Layard and Walters (1978, p. 27) is illustrative of a general tendency.) Most recently, the standard account of the calculation debate has been seriously called into question, largely as a result of its iconoclastic reexamination by Don Lavoie (1985). 

—Stephan Boehm, “The Austrian Tradition: Schumpeter and Mises,” in Neoclassical Economic Theory, 1870-1930, ed. Klaus Hennings and Warren J. Samuels, Recent Economic Thought Series 20 (Boston: Kluwer Academic Publishers, 1990), 210.