The Review of Austrian Economics, 15:1, 95–102, 2002.
2002 Kluwer Academic Publishers. Manufactured in The Netherlands.
Peter Boettke, Calculation and Coordination: Essays on Socialism and Transitional
Political Economy. London and New York: Routledge, 2001.
This book is a collection of previously published essays by Peter Boettke on three
themes: The contributions of Hayek and Mises to the economic theory of socialism; the
economics of Soviet-type dictatorships, and the political economy of Russian transition.
Boettke’s contributions to these three issues are thought provoking, and, if accepted, would
require considerable rethinking of the way we view the Soviet planned economy and Russian
As someone who considered himself reasonably versed on the “socialist controversy”
—having been brought up on Hayek and Mises’s most famous essays and on Abram
Bergson’s Journal of Political Economy essay—I confess that I had missed the extreme
subtlety, particularly of Hayek’s critique of socialism. Boettke argues (Essay 3) that the
socialist controversy has been wrongly interpreted as being about whether socialism, in
perhaps its market variant, could achieve something approximating equilibrium prices for
the purpose of rational calculation. Boettke explains that Hayek was not particularly inter-
ested in equilibrium prices; rather capitalism’s true superiority lay in its ability to react to
disequilibrium prices, which entrepreneurs took as signals for business opportunities and
investment. Equilibrium prices are, at best transitory. In contrast to other interpretations of
Hayek and Mises as focusing on motivational problems and calculation complexity, Boettke
argues that the heart of the Hayek-Mises critique is the calculation problem—both the in-
ability of socialism to determine what is abundant and what is scarce and to use prices to
react to disequilibria.
Essay 4 deals with Hayek’s overlooked writings on the political economy of socialism,
Boettke argues that Hayek did indeed foresee the political economy consequences of so-
cialism and maintained that socialism will be run not by benevolent dictators but by those
who have a comparative advantage in political brutality. In this manner, Boettke makes a
case that planned socialism will breed ruthless dictators of the Stalin/Mao variety not by
historical chance but as an integral feature of the system itself: “There are strong reasons for
believing that what to us appears the worst features of the existing totalitarian systems are
not accidental by-products but phenomena which totalitarianism is certain sooner or later
to produce.” (Hayek 1944, quoted p. 52). Moreover, Hayek’s 1944 Road to Serfdom antic-
ipated the public choice logic of concentrated beneﬁts and dispersed costs, which applies
to distributional coalitions in planned as well as to market economies.
Boettke devotes Essays 6 and 7 to the initial years of Soviet socialism—the War Commu-
nism period dating from 1918 to March of 1921. War Communism was an abortive attempt
to introduce full communism without going through any preparatory steps—a disastrous
move which socialist writers later dismissed as forced upon a reluctant Bolshevik leadership