Chapter XIII

CHAPTER XIII OTHER SUGGESTED SOLUTIONS-COMPETITION IN THE SOCIALIST COMMUNITY PROFESSOR. HAYEK reports in his book that many of the younger economists, after serious study of the problem of calculation, have lost all faith in the possibility of its being solved in a community governed by a central authority. In its place they suggest restoring competition in as far as that is compatible with the abolition of private ownership of the means of production. Nothing has been published on this subject, but from conversations Professor Hayek has had with younger (English) economists this would seem to be the direction in which they are thinking. A similar proposal has already been made in Germany, and H. D. Dickinson has himself taken a step along the same path. Before discussing this proposal, we must point out, as does Professor Hayek, how significant it is that socialist economists should recom mend competition. That means that they will abandon the idea of a planned economy directed by a central authority, which so far has generally been called the only rational form of society. They began by looking for a form of society that will eliminate "hazard" and "anarchic production" (which they hold to be the result of free competition) and end by proposing that free competition should be copied. "The wheel has gone full round."

With the generally accepted definition of socialism, which is used here, any solution which did away with the central authority would lie outside the scope of this discussion, for such a community would not be socialist. However, it is of such wide interest to examine how such a modified form of socialism might work, that we must devote some space to it. The proposals for making use of competition are vague and for that reason difficult to discuss. Professor Hayek states that H. D. Dickinson has made a small step in the direction of competition, but.in reality, it is a big step. It is true that among his original postulates Dickinson demands that "all production is undertaken by the community", 1 but he later assumes "a free market at each end of the chain of production, for finished goods and for productive services". 2 lOp. cit., p. 238• 20p. cit., p. 242 • K 153 154 ECONOMIC CALCULATION IN THE SOCIALIST SOCIETY Dr. Durbin and Dr. Lerner have obviously assumed that there will be some sort of competition too, but they have been so vague about their assumptions, that it is not clear what kind of competition they had in mind. All the same, it is obvious from Dr. Durbin's answer l to Dr. Lerner's criticism that he envisages the possibility of the simul taneous existence of a socialist planned economy and of independent competing production units. In reality these two forms are incom patible, a fact overlooked by most of those making proposals of this kind. In this answer Dr. Durbin writes that he had not succeeded in making it clear in his original article, that one of his important principles was "the practical ne~essity for retaining as much financial independence for the management units of, and as many management units in, a socialized industry as possible". He enlarges on this in a footnote, saying that it is "the independence, rather than the simplicity, that is valuable". 2 Let us recall in passing that W. Crosby Roper, Jr., who has also insisted on the need for competition, said that the degree of efficiency that can be expected to be achieved in the socialist society will depend on the degree to which it has been able to attain the same competition as in a capitalist society.

G. D. H. Cole, one of the protagonists of Guild Socialism, is well aware of the difficulties in carrying it through. In his Principle of EconomicPlanninghe wrote: "On this issue I remain an unrepentant Guild Socialist, though I am conscious that the way to industrial self-government in any full sense may be longer and more difficult than I used to think." Not even he is very clear about the important question of the autonomy of the· guilds. It is his opinion that "in the long run the aspiration of a planned economy must be to make each industry to the fullest possible extent a democratic self-governing Guild", but almost in· the same breath he says: "I do not, of course, mean that each in dustry or service can be left free to do things which militate against the national plan as a whole". It must be stressed that Cole's proposal comes from an idealistic desire to improve social conditions and is not put forward as a solution of the problem of economic calculation in a socialist society.

He writes in the preface that originally it was· his intention to discuss this and cognate problems, but that he gave it up as the question proved too difficult and theoretical. Between 1922 and 1923 various proposals were made in Germany lEtonomic Journal, September, 1937. 20p. cit., p. ; 80.

OTHER SUGGESTED SOLUTIONS 155 for a socialist community admitting of competition. One of the first was that of Dr. Eduard Heimann, who expressed the opinion! that he was the first to bring up the question of price-fixation in the socialist community.2 Dr. Heimann's point of view is in many respects individualistic. He is a moral philosopher, a Christian Scientist, and suffers, like many others who have taken part in the discussion, from discrepancies between what his ideals and sympathies lead him to desire and what his learning and reason tell him is possible and sensible. Dr. Heimann wants to have "Gleichschaltung"in place of "Gegenschaltung"andspeaks of the "ergriefendeSehnsucht"for better distribution (of wealth). Thus, his instincts and sympathies are against the liberalistic strug'gle of competition. However, he curtly refuses any idea of a moneyless economy. Also he turns against those who use unjustifiable catch words, like "anarchy", for the capitalist form of production, calling it an "Irrlehre" to speak of it as being planless and confused, and in many places he becomes almost panegyrical in speaking of the signifi cance of market prices (e.g., p. 71, Chapter IV). He speaks of "Oppen heimers schriner Lehre vom friedlichen Wettbewerb" and it is this peaceful competition which is his ideal.

For all its interesting ideas and valuable pointers Dr. Heimann's own solution is neither clear, nor satisfactory. Not even he explains exactly what the connection is to be between the central authority and the monopolies. Dr. Heimann has from time to time been classed as a Guild Socialist, yet he characterizes G. H. D. Cole's proposal as "exceedingly superficial and inconsistent". In fact it is doubtful whether Dr. Heimann can be classed as a socialist at all, seeing that he also maintains that there is need for private ownership of the means of production. 3 Dr. Heimann's greatest dilemma is that, while understanding the importance of prices and markets (and also considering private property as necessary) he still wants to have socialism. He considers that the necessary and peaceful competition can be induced between the managers of the socialist concerns. Dr. Heimann's various pleas speak rather of his divided focus and inner doubts as to whether com petition and socialism can really be reconciled. These doubts are understandable when it is remembered that Dr. Heimann was .one of the Erst to draw attention to the existence of the problem of calcula tion, and that, as late as 1930, he said that the difficulties in Marx' and L.enin's problems "in groteskemMasse unterschiitztwiirden".4 IMehrwert und Gemeinwirtschaft, Berlin, 1922.

2"Die Sozialisienmg" in Archiv fur Sozialwiss:enschaftund Sozialpolitik, 1918-19, Vol. 45, p. 569. aop. cit., p. 178. 4"Sozialisierung" in Neue Blatter fur den Sozialismus, Vol. 1, 1930, p. 23.

I 56 ECONOMIC CALCULATION IN THE SOCIALIST SOCIETY A serious objection to Dr. Heimann's solution of the problem by introducing competing monopolies is, as has been stated by Professor Halm, that Dr. Heimann's main argument against the capitalist society is just its "monopolism" and the insufficient competition arising from monopolism. He has also weakened his position by originally maintaining that Professor Cassel was wrong in saying that the formation of interest rates would remain unchanged in the socialist community on the ground that this presupposed "various contracting parties in the market" (see Chapter VIII, p.. 116). In judging Dr. Heimann's theory it should also be remembered that he draws a distinction between "Erzeugungs-und Bedarfsplan-Wirt schaft", which can only be considered untenable and sterile. Reference should also be made to his proposal for "imputation" (see Chapter IX, p. 123). That Dr. Heimann's proposal is of little practical significance is apparent from the fact that he assumes that the community is "mainly" static and, further, that it contains people who build on "ursprungliche Gemeinschaft nicht auf materiellesInteresse".1 Elsewhere he has said that he does not regard his "primitives Denkscheme fur ein praktisches Rezept". His viewpoints and opinions have been discussed and criticized by Professor Halm and-partly on other grounds-by Professor Mises2 and Dr. Clare Tisch. 3 Despite all its defects, defects which are natural enough in view of the difficulty of reconciling the views he advocates, it must be said that Dr. Heimann's plea is very winning in its honest and explicit admission of the advantages of the capitalist system of competition, to which his sentiments ate so strongly opposed.

The problem of calculation in the socialist society has also been discussed by Dr. Karl Polanyi in his treatise SozialistischeRechnungsle gung. He calls it the "key problem of the socialist economy". What he discusses is really a particular problem, for what he wants to find is a method of calculating what humanity's ideals cost it. This is no place to discuss whether or not he has succeeded in solving that task, but what is of interest for us, is that Dr. Polanyi wants to have markets and not a central authority: "We admit out-of-hand that we regard the solution of the problem of calculation in a centrally directed economy as im possible." 4 IMehrwertund Gemeinwirtschaft,p. 204. 2Neue Beitrage zum Problem der sozialistischen Wirtschaftsrechnungin Archiv fur Sozialwissenschaftund Sozialpolitife.,Vol. 51, 192 3. SOp. cit. 40p. cit., p. 378.

OTHER SUGGESTED SOLUTIONS 157 Dr. Polanyi's assumptions and proposals are, like those of many other Guild Socia:lists, somewhat nebulous. For example, one is not told whether the guilds are merely the managers or whether they own the means of production of which they dispose. In the latter even tuality one would no longer be dealing with a socialist, but with a syndicalist community. Dr. Polanyi himself admits that he is dis cussing a "type of socialist transitional economy". Nor is it clear how he imagines prices will be arrived at in this "functionally organized" community. He says that there will be "every form of price-forma tion", yet admits on the same page that this is an inadmissable assumption. An elaborate criticism of his proposal has been made by Dr. Felix Weil, who says interalia: "Hence it will also appear that Polanyi's method of calculation, even if his assumption (functionally organized economy) is accepted, is impossible, even senseless." 1 In a treatise Wirtschaftsrechnungund Gemeinwirtschaft.Zur Mises'-schen These von der UnmijglichkeitsozialistischerWirtschaftsrechnungDr. Jakob Marschak maintains that he has shown that Mises' thesis is not proved.

It is difficult to accept this assertion, although Dr. Marschak makes out quite a good case for individual aspects of the question, among them the difficulties arising out of the dynamic character of economic activity. Dr. Marschak is fully aware of the defects of monopolistic fixation of prices, but his main argument is that monopolistic fixation of prices also takes place in the (private) capitalist society, and that the advantages of monopolies are greater in the socialist community. To say that the fixation of prices is at least just as imperfect in the capitalist society is no real theoretic objection, and, in fact, by his criticism Dr. Marschak indirectly concedes the rightness of Professor Mises' views (for a more detailed criticism of that point, see Dr. Tisch's paper). Added to this, Dr. Marschak's emphasis of the trade-regulating qualities of socialist monopolies is very shakily.founded (see Appendix B).

Dr. Marschak is on firmer ground when he suggests an amplification of the concept of price. If one defines price in such a way that almost any numerical designation becomes "a price", that, of course, seeminglY increases· the theoretical possibilities for calculation. (The question will be further discussed in Chapter XIV, but see also Chapter XI). The form of socialism that Marschak himself suggests· is a kind of Guild Socialism with so large a degree of independence that syn dicalism is the right description of it, and this Ma.rschak himself uses. lSee "Gildensozialistische Rechnungslegung" in Archiv fur Sozialwissenschaftund Sozialpolitik, 1924; also Polanyi's reply "Die funktionel1e Theorie der Gesel1schaft und das Problem der Sozialistischen Rechnungslegung" in the same publication.

158 ECONOMIC CALCULATION IN THE SOCIALIST SOCIETY Now, in actual fact, syndicalism means that the right of private owner ship of means of production exists and, hence, is not socialism. Thus a syndicalist order cannot solve the difficulties of economic calculation in the socialist community. That Dr. Marschak's treatise neither refutes Mises' views, nor solves the problem, does not hinder it from containing much that is interesting and valuable. He also shows a higher degree of psychological realism than many of the others who have taken part in the discussion, when he says: "This much can be said here: Syndicalism is a system that demands the least departure from the contemporary type of economically egoistic man. Within the syndicates there is a far reaching homogeneity of economic interests and in the scales of enjoyment and labour-sacrifice." A further good thing about Dr. Marschak is that he is one of the few in this group putting forward suggestions who would seem to understand the importance that attaches to the form which the socialist monopolies and trusts are given.

One general objection to these proposals for solving the problem of calculation by introducing competition into socialist communities, is that they are far too vague about the kind of competition that is in tended. The shape competition is to take is of decisive importance in determining the solution and, hence, in evaluating it. For example, were they to go so far as to propose the introduction of competition between individuals (or groups of individuals) owning means of production, this would mean that they had given up the attempt to solve the problem within the socialist frame"work. On the other hand, if it is proposed to have planned direction and competition at the same time, this would show that the problem had not been sufficiently thought out. If production is to be in accordance with the plan of the central authority, it cannot be related to price variations and the changing needs of the public. It must either be the one or the other.

There is no reconciling the two principles. One of the most important tasks of the manager of a concern is to expand and diminish production. Inability to make the adjustments required would mean that con ditions of competition and thus market prices, were completely illusory. It is also very important to know whether competition between individual concerns or merely between various trusts is intended, and, in the latter case, whether these are to be horizontal or vertical trusts. In this discussion of the possibility of calculation in the socialist OTHER SUGGESTED SOLUTIONS 159 society there seems to be considerable confusion in the estimation of the importance of trusts and monopolies for the formation of prices. There is a tendency to drop the usual objections to trusts and monopolies, since in the socialist society they are to be owned by the state or the community. One result of this is that it is apparently con sidered of no importance what prices the monopolies (state trusts) demand of their customers. For example, H. D. Dickinson suggests that the pricesshould be such as "the trafficwill bear".l If a monopoly is owned by the community and its profits go to-the community instead of to possible private owners, this will make possible a change of the distribution of the community's income and, of course, a monopolist restriction of production, which can be criticized in the socialist society with as much, or as little, justice, as in a capitalist economy. It does· not mean that monopolies in a socialist society exert a less unhappy influence on price-formation than they do in a capitalist economy. On the contrary, the fact that socialist societies must, by definition, forbid all production and trade for private accounts, means that monopolies in a socialist community will have more power than in a capitalist economy. What interests us here, is not the distribution of possible profits from monopolies, but the possibility of arriving at prices that could serve as data for calculation.

In this respect socialist monopoly-markets will be even more im perfect, than the capitalist markets. For this reason the proposal that there should be competition between trusts or monopolies is no satis factory solution of the problem of calculation. Let us assume that the socialist community with which we are concerned goes in for horizontal trusts and monopolies. This means that there will be a monopoly for each intermediate product within each branch of industry. For that part of the factors of production which are used by all the monopolies there will be competition on the buying side, but not on the selling side, for here there will by hypothesis be a monopoly. One production-factor which all will use to a greater or lesser-extent, is power. The others for which there will be com petition (to buy) will, with the exception of labour, be of smaller significance for the price of _the final product. The important things will be materials, tools, and machinery of a general kind (including office equipment) which can be used in any branch of industry. As regards the market for the supply of power, there will be competition from purchasers, but the market .will be particularly imperfect in character. The monopoly for the supply of power will, like the other monopolies for land and natural power, have no sales-_or cost-data for the provision of its main product, whether this be land, metals, timber, etc. They can take as this basis, prices known to have been used in the lOp. cit.

160 ECONOMIC CALCULATION IN THE SOCIALIST SOCIETY past, or the prices ruling at the time of nationalization (if compensation was paid), yet the changes that are continually taking place in a dynamic society carry with them the necessity for continual revaluation of the factors of production, if hazard and gambling are to be avoided. In a socialist society with horizontal monopolies it will, by definition, be impossible to have competition on the selling side for land and natural power. These monopolies, in contrast to the others, cannot be links between buyers and sellers, but will only have to do with buyers. One may add that, if a mistake is made in price-fixation (or, rather, in the more or less arbitrary valuation) of these production-factors, a mistake in the sense that the price or valuation does not express the relative scarcity of the factor concerned in relation to the preferred alternative uses, this mistake will be felt throughout every link in the chain of production.

An ostensible advantage of horizontal monopolies is that you get markets for goods at every stage of production. However, the price formation obtained from such markets will be the poorest possible for the main product of each monopoly. This will lead to so-called cases of bilateral monopolies: one monopoly-seller against one monopoly buyer (monopsonist). That in such cases prices will be fixed within very wide limits is self-evident and well known from the monopoly theory. Assuming that the monopolies are vertical ones, there will also be competition for those production-forces (including labour) than can be used by all monopolies. One fundamental deficiency, from the point of view of price-formation, is that there will be no markets for the intermediary products typical of the branch of industry con cerned. In this event there will be arbitrariness, not only in fixing the prices of the original factors of production, which are allotted to the various trusts, but also for all intermediary products-right down to the final products, which are typical of the trust concerned. In other words, the formation of prices will be even more imperfect than with horizontal trusts. One has, therefore, to conclude that competition between monopolies will neither give such markets nor such prices and data for calculation, that the problem of calculation can be said to be solved by the proposed introduction of this kind of competition.

The fact that competition between monopolies means that both the competition and the formation of prices will be imperfect, has naturally brought up the question of whether more trustworthy data for cal culation can be obtained by having free competition between individual units of production and trading, whatever the branch of industry. Were this so, we should get a form of community that not everybody OTHER SUGGESTED SOLUTIONS would accept as socialist, and which would conflict with our definition, in as far as it would entail weakening the authority of the central authority and delegation of its power and economic initiative. Such an order would in reality come very close to that which one finds to-day in the capitalist societies. The only difference would be that in the socialist community the means of production would be owned by the community and not by individuals or groups of individuals.!

The introduction of free competition between individual concerns in a socialist society would meet with so many difficulties, that it is doubtful whether such a thing could be carried out effectively. Even though the socialist society had it in its power to eliminate monopolies (including labour-monopoly), there would still be one which, by definition, could not be abolished, that is: the monopoly right to the ground and all that it contains. In that market there cannot be more than one real seller and therefore fixation of prices would be very imperfect. By virtue of the importance of these production factors for prices of all social goods, arbitrariness is at once introduced into the fixation of all prices right from the beginning. There are also other factors militating against the possibility of creating free competition and free markets in socialist societies,. even if the central authority honestly wished to do that. If the community's right of ownership is to mean anything at all, it must be accompanied by a certain degree of control over the surplus (which is to be trans ferred· to the community) and by means for making changes in per sonnel. The central authority can give the managers of concerns complete freedom and full right to do as they think best,. but it must of necessity reserve to itself control of the concern and the appointment of its managers. Such control is all the more natural, since in the capitalist society such changes are automatic, as managers who run their concerns at a loss are sooner or later eliminated, whether they work for their own or another's account.

Unless the positions of manager of concerns are to be made here ditary or for life, the central authority (which in such a socialist comITo most people this difference will seem both great and fundamental. Among those whose opinions ought to count, that is, the owners of means of production in capitalist societies, there seems to be a growing tendency to think that the difference is not so great. It is pointed out that the actual right to own and dispose of means of production is being continuously whittled down: the ability to enjoy and dispose of the surplus is being more and more limited, as the public authorities take a con tinually mounting proportion of the surplus in taxes. It is also objected that restrictions and state interference so greatly restrict the sphere of activities and make business men so dependent on government departments, that they are really be coming a kind of state official. If this view is right, it means that those who want to solve the problem of calculation by having competition between individual links in the chains of production and disposal, are really proposing an order which is approximately what we already have to-day in the capitalist societies. Whether the results, are desirable is another story.

162 ECONOMIC CALCULATION IN THE SOCIALIST SOCIETY petitive society ought to be rechristened the control department) must have a scale for measuring the ability and suitability of managers. The qualities which are needed for managing a concern, such as the ability to assume responsibility and to get things done, are not such as can be determined by either examinations or psycho-technical tests. Thus another yardstick must be found. Maximalization of profits l is a natural yardstick for the efficiency of managers of concerns in a socialist society that aims at competition between individual links in the chain of production and distribution. In practice it will result in managers also aiming at minimizing costs, and this, in its turn, means that what is aimed at is maximalization of the profit-rate. As long as interest is taken into accounta necessary assumption for an economic calculation (see Chapter VIII)-interest must appear as an element of cost, and is thus an invitation to reduce the use of capital or, in other words, to maximalize the total net profit in relation to the capital used. To avoid being misunderstood, it must be explained here that we are only talking of profit-maximalization (based inter alia on maximalization of prices) in those branches of industry where there is free competition between individual links in the chain of manufacture and distribution .. As long as this assumption holds good, one need not scruple to allow managers to increase prices as far as they can, since competition will prevent the consumers being exploited.

However, there is one branch of production where, in socialist societies, there can by definition be no competition between individual concerns, and that is where land is the production factor. Here price fixation must be monopolistic. The significance of this and its de pendent factors for fixation of the prices of all social goods means that in such a community this would afford an opportunity for possible exploitation that could not be eliminated. If maximalization of profits is to be a real measure of managers' efficiency, it is self-evident that one manager cannot be handicapped in relation to others in the same branch. As competing units, they must all have the same opportunity to modernize and expand. This means that they must all have the same access to capital (by which is under stood production factors or purchasing power capable of acquiring production factors). On the other hand the control department can hardly be expected to supply the managers with capital in the dark, without taking their efficiency ·into account (and this is measured by their ability to maximalize profits). A state bank or some other authority must take over the function of the banks in capitalist societies, and decide whether a manager deserves to be given capital or not.

This raises the question of whether the state bank (or the control IFor others, but in this case, impracticable yardsticks, see Professor Ragnar Frisch: Innledningtil produfe.sjonsteorien(stencilled), Oslo, 1937, p. 136.

OTHER SUGGESTED SOLUTIONS department) is to take into account, as well as the manager's efficiency, the other factors that in the capitalist society influence the granting of loans, such as the. concern's prospects for the future. The danger of employing this criterion in the socialist community is that it easily leads to that complete and central direction which is by assumption to be avoided. (This danger is not present in the same degree in capitalist societies, since there are competing loan-institutions and since the existing right to own capital equipment makes it possible to obtain capital in other ways.) The state bank or control department will not only have to decide on the supply of capital to new concerns, but also the extent to which those concerns, .or rather those managers who show the greatest aptitude in maximalizing profits, shall be allowed to increase their capital. As is known, there is in the capitalist society a constant transference of capital from the less efficient to the efficient managers and concerns, because the former show deficits and the latter surpluses.

This amounts to an automatic supply of capital (modified by more or less progressive taxation) to the best risks and to those who have proved the greatest ability to maximalize· profits. If the socialist society is to achieve the same "natural selection", the state bank must not draw all profits from the concerns, but must let them remain there, for the more capital-both absolute· and relative-the greater the surplus. If maximalization of profits is to be a reliable measure. of managers' efficiency, there are other inequalities, such as geographical position, which will have to be reckoned with. Managers must be able freely to move their factories or their shop to another· town or another part of the country, if they consider they can function with greater profit there. The liquidation of a concern will, like its shifting, contain the same element of "waste", of which the capitalist system is accused.

This apparent waste is, however, a consequence of free competition. In reality it is no waste at all, but an adaption necessitated by altered circumstances such as find expression in changed demands of the community or the discovery that it is possible to operate with lower costs elsewhere. Free competition nleans that branches of activity are not exclusive, but open to new competitors, but on the other hand, as the right of private ownership of means of production is by definition abolished in socialist societies, the starting of a new concern, which will demand the right to dispose of means of production, will depend on the state's granting. its· concurrence. There is an element of contradiction here, which is difficu:lt to reconcile· unless all who are regarded as qualified to manage a concern are supplied with money or purchasing-power, thatis to say, access to means of production of which they can have the 164 ECONOMIC CALCULATION IN THE SOCIALIST SOCIETY use. A manager must not only be able to operate where the possibility of maximalizing profits is greatest, but also in that branch of industry where that possibility is considered greatest. Otherwise, the central authority or control department, will reserve to itself such powers of deciding who and how many shall begin new activities, as will be tantamount to abandoning the free competition we assumed to exist.

There are other reasons why it is probable that competition will be illusory and even consciously eliminated. In order to maximalize profits, or, at any rate, to avoid losses, managers will be strongly tempted to form cartels or agree on prices with their colleagues in the same branch of industry, in other words, to exploit, in the last resort, the consumer. It will, in practice, be easier to form cartels and make price agreements in the socialist competitive society, than it is in the capitalist competitive society, since, as a general rule, the difficultyin the way of making private cartel agreements in the latter is that those concerns that are in a superior competitive position have no reason to form cartels. This will not be the case in the socialist competitive society, since the surplus does not go to those who conduct the con cern, but to the community. It has already been mentioned that the socialist society must set aside a certain proportion of the community's production as a risk quota (see p. 84). At that point, it was only pioneer activities that were being discussed. The far larger possibilities for expansion that exist within the individual concerns will not be covered by such a risk-quota. In the capitalist society concerns are developed because there are prospects of greater profits. In the socialist society, however, there is no possibility of profit in the capitalist sense and herein lies a danger of passivity, in so far as expansion always implies an element of uncertainty, being aimed at the future. Managers will have much to lose, when they develop and fake chances, and little to gain.

It has already been pointed out (see Chapter VII) that this danger will persist even if the managers' attitude is one of complete altruism, since expansion or any form of sharpened competition will involve all competitors and make them less favourably regarded by the control department and even lead to their losing their posts, which is some thing an altruis tic manager may be expected to wish to avoid.! For the same reason one can conceive a manager not wanting to strive to minimalize his costs, as this could give his own concern an advantage or produce a better balance-sheet than that of this competitors. Should such opposition to competition ever become general, it would mean in a socialist society where there is competition between autonomous IBarbara Wootton takes the same view in her Lament for Economics, p. 224.

OTHER SUGGESTED SOLUTIONS unit concerns-a serious reduction of the community's level of pro duction and smaller possibility of achieving the maximum production for needs. The conclusion must be that the sort of competition that can be created in the socialist society will be an imperfect quasi-competition and that the data it will provide will be unreliable as a basis for' economic calculation. If one assumes that there is competition between monopolies, the range of prices will be so wide, that they will have little or no value as data for calculation. Even if a form of free com petition between manufacturing and distributing units is chosen, the prices for all goods at all stages of production will be arbitrary, for the simple reason that there will be no competition on the supply side for' land, sites, fuel, power, timber and metals, since such means of pro duction are by definition in the hands of the one owner.

Any attempt to introduce competition into the socialist society will also be countered by a tendency to abolish and restrict competition (which means unreliable prices, unreliable data for calculation and reduced efficiency). One must regard these tendencies as being stronger in the socialist society, than in the capitalist society with its right to private ownership of the means of production; this irrespective of whether the managers of the socialist concerns are assumed to be egoistic individualists or altruists. Finally, it must be stressed that a solution which assumes the existence of competition, irrespective of whether it js between monopolies or atomic concerns, excludes the possibility of a planned economy and of a central authority as the directing organ. For this reason many will deny that proposals of this kind can be regarded at all as solutions of the problem of calculation in the socialist society.