Economic Calculation Argument

The Economic Calculation Argument, proposed by economist Ludwig von Mises, argues that without private property and market-based prices, a centrally planned economy cannot efficiently allocate resources. Prices in a free market reflect supply, demand, and related costs, guiding producers to make optimal choices. In a communist or socialist system where the government controls production, these price signals are missing or distorted, making it difficult to determine the true value or scarcity of goods. Consequently, central planners lack the necessary information to allocate resources effectively, leading to inefficiency and waste.