Chapter Ƿ: Ļe Debate over Calculation and Knowledge ȈȄultimate data (often labeled “wants, resources, and technology”). By “cost-
ing,” Salerno presumably (and if so, correctly) means taking account both
of how much of other outputs would have to be forgone to make incre-
mental quantities of a resource available for the line of production contem-
plated and also of how highly consumers would have valued the forgone
alternative outputs. Costing includes, then, taking account of innumer-
able bits of information about production opportunities and processes and
about consumer tastes. Calculating the worth a prospective action requires
knowing “the importance to others of the goods and services one commits
to that action, and the importance to others of the goods one will obtain
from that action” (KirznerȀȈȈȅ, p.ȀȄǿ; quoted in Boettke’s Symposium
contribution, noteȁȁ).
Already it is clear that the calculation problem cannot be distinct from
the knowledge problem.
Unlike Friedrich von Wieser and Hayek, according to Salerno, “Mises
held that the social appraisement of productive factors via entrepreneurial
competition in resource markets, which is the very basis of economic cal-
culation and purposive action, can only proceed in monetary terms” (ȀȈȈȂ,
p.ȀȂȄ). As if Hayek would deny that, as if his stress on the knowledge
problem disparaged money prices and appraisals in money!
Strangely, the “chasmologists” fail to give a clear, precise, and compact
statement of just how they conceive the problem of economic calculation.
Ļeir writings have a curiously allusive tone, at best alluding to points
that they and their readers alike are presumed to have in mind. To demon-
strate—not just assert—that the knowledge and calculation problems of
socialism are distinct, one would first have to state the calculation prob-
lem adequately. Surely it involves more than bits of arithmetic performed
on money prices. I am tempted to speculate—but perhaps the speculation
is wild if not forbidden—that absence of a full statement of the problem
reflects an inadequate grasp of it.
Sure, the dehomogenizers do emphasize that calculation includes
comparing benefits and costs and estimating prospective profits and losses
and that these comparisons and estimates require arithmetic done with
cardinal units of value. Echoing Mises and Hayek both, they place well-
warranted emphasis on the crucial importance of genuine prices expressed
in money, including prices of privately owned factors of production and
capital goods exchanged on genuine markets. Yet their writings are curi-
ously inadequate in explaining what real circumstances are reflected, and
how, in money prices, costs, and incomes. Behind the transactions and