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Labor Economics in a Planned Economy: F. A. Hayek and John Jewkes on the Impossibility of Democratic Socialism

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  • Makovi, Michael

Abstract

Milton Friedman (1962) is associated with the claim that political and economic freedom cannot be distinguished (cf. Lawson and Clark 2010), using the famous example that there can be no freedom of speech where the government owns the printing presses. Less well-known is F. A. Hayek's example, drawn from labor economics, used to illustrate the same principle. Hayek was joined in this by his less well-known colleague, John Jewkes. Hayek and Jewkes argued that without a freely operating price system, central economic planning cannot function without compulsory regimentation of labor. Similarly, no state may simultaneously fix “fair” wages and demand a given pattern of productive output and employment. It is impossible to both achieve income equality and accomplish an economic plan. Hayek's and Jewkes's examples help explain why democratic socialism is impossible, in the sense that it cannot accomplish what its advocates desire.

Suggested Citation

  • Makovi, Michael, 2016. "Labor Economics in a Planned Economy: F. A. Hayek and John Jewkes on the Impossibility of Democratic Socialism," MPRA Paper 70174, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:70174
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    References listed on IDEAS

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    1. Farrant, Andrew & McPhail, Edward, 2009. "Hayek, Samuelson, and the logic of the mixed economy?," Journal of Economic Behavior & Organization, Elsevier, vol. 69(1), pages 5-16, January.
    2. John Jewkes, 1978. "A Return to Free Market Economics?," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-03542-7, July.
    3. Jesús Huerta de Soto, 2010. "Socialism, Economic Calculation and Entrepreneurship," Books, Edward Elgar Publishing, number 13905.
    4. Lawson, Robert A. & Clark, J.R., 2010. "Examining the Hayek-Friedman hypothesis on economic and political freedom," Journal of Economic Behavior & Organization, Elsevier, vol. 74(3), pages 230-239, June.
    5. Michael Makovi, 2015. "George Orwell as a Public Choice Economist," The American Economist, Sage Publications, vol. 60(2), pages 183-208, September.
    6. Makovi, Michael, 2016. "Interest Groups and the Impossibility of Democratic Socialism: Hayek, Jewkes, and the Arrow Theorem," MPRA Paper 70173, University Library of Munich, Germany.
    7. Ikeda, Sanford, 2003. "How Compatible Are Public Choice and Austrian Political Economy?," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 16(1), pages 63-75, March.
    8. Hayek, F. A. & Caldwell, Bruce, 2007. "The Road to Serfdom," University of Chicago Press Economics Books, University of Chicago Press, number 9780226320540 edited by Caldwell, Bruce, Febrero.
    9. Makovi, Michael, 2015. "Two Opposing Economic-Literary Critiques of Socialism: George Orwell Versus Eugen Richter and Henry Hazlitt," MPRA Paper 66360, University Library of Munich, Germany, revised 28 Aug 2015.
    10. Makovi, Michael, 2016. "The Impossibility of Democratic Socialism: Two Conceptions of Democracy," MPRA Paper 70172, University Library of Munich, Germany.
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    Cited by:

    1. Makovi, Michael, 2016. "The Impossibility of Democratic Socialism: Two Conceptions of Democracy," MPRA Paper 70172, University Library of Munich, Germany.
    2. Makovi, Michael, 2016. "Interest Groups and the Impossibility of Democratic Socialism: Hayek, Jewkes, and the Arrow Theorem," MPRA Paper 70173, University Library of Munich, Germany.
    3. Makovi, Michael, 2016. "The Foreign Policy of a Democratic Socialist Regime: From Intervention to Protection to Warfare," MPRA Paper 70308, University Library of Munich, Germany.

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    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • B24 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Socialist; Marxist; Scraffian
    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • J0 - Labor and Demographic Economics - - General
    • J00 - Labor and Demographic Economics - - General - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J47 - Labor and Demographic Economics - - Particular Labor Markets - - - Coercive Labor Markets
    • P10 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - General
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General
    • P30 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - General
    • P50 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - General

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