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Conceptualizing CapitalismInstitutions, Evolution, Future$
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Geoffrey M. Hodgson

Print publication date: 2015

Print ISBN-13: 9780226168005

Published to Chicago Scholarship Online: January 2016

DOI: 10.7208/chicago/9780226168142.001.0001

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Socialism, Capitalism, and the State

Socialism, Capitalism, and the State

(p.282) Chapter Twelve Socialism, Capitalism, and the State
Conceptualizing Capitalism

Geoffrey M. Hodgson

University of Chicago Press

This chapter turns to the question of socialism, noting the origins of the term in the 1830s. Until the 1940s, socialism meant the abolition of private property. One of the first economists to question the possibility of socialism was the German economist Albert Schäffle. Against Oskar Lange and others, Austrian critics Ludwig von Mises and Friedrich Hayek emphasized the importance of entrepreneurship and knowledge. The chapter notes the neglect of legal and state institutions by both sides in the “socialist calculation debates.” Both sides also downplayed crucial institutions (such as corporations) that span the individual and the state. The Austrians had overly-spacious definitions of property and markets, weakening their defenses of specifically capitalist institutions. While the Austrians were right to emphasize information and knowledge, there are limits to the roles of private property and markets in knowledge-intensive economies. Ironically, after the 1950s, when most nominally “socialist” parties abandoned the original aim of the complete abolition of private property, Hayek was accused of taking a “social democratic” stance. But Hayek did not highlight the problem of economic inequality within capitalism.

Keywords:   socialism, abolition, private property, Karl Marx, Albert Schäffle, Ludwig von Mises, Friedrich Hayek, Austrian school, Oskar Lange, entrepreneurship

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