On The Impossibility of Socialism

Over a century ago, in 1920, Ludwig von Mises wrote what is undoubtedly the most important essay in the history of the field of economic science, namely: Economic Calculation in The Socialist Commonwealth. In that essay, Mises utterly destroyed the intellectual foundation of the theory of socialism. Mises definitively demonstrated that socialism is impossible in an advanced economy because of the fundamental deficiencies of calculations in kind.

Until the calculation debate of the 1920s, socialist theorists of the Marxian school had failed to pay any attention to the economic problem of resource allocation in an advanced economic society.

How Prices Are Determined

 

A market price is the exchange ratio between an economic good (or service) and the medium of exchange, viz. money. While the conventional exposition of how supply and demand curves intersect to yield a stable equilibrium market price in order to clear the market is valid, it is necessary to examine the diagram of the intersecting curves from a truly subjectivist perspective.

According to Mises, the "ultimate source of the determination of prices is the value judgments of the consumers."

Capital and Interest: An Introduction to Austrian Capital Theory

In this article, I want to do several things. First, I want to explain what capital goods are and how they enhance the productivity of labour. Secondly, I want to explain the principle of time preference and its role in the determination of market interest rates. And lastly, I want to explain how a general increase in savings shifts the focus of an economy's output from consumer goods to capital goods, thereby increasing the standard of living in society. 

Capital Formation And Economic Growth 

Economic goods are scarce physical objects that can satisfy human wants. Those that directly satisfy wants are called consumer goods, and those that only indirectly satisfy wants (because they contribute to the production of consumer goods) are called producer goods.