Labor in a Planned Economy: Hayek and Jewkes on the Reliance of Freedom on Prices

Makovi, Michael (2016): Labor in a Planned Economy: Hayek and Jewkes on the Reliance of Freedom on Prices.

Abstract

Milton Friedman (1962) is known for the claim that political freedom presupposes economic freedom (cf. Lawson and Clark 2010). Friedman's famous example is that there cannot be freedom of speech where the government owns the printing presses. Less well-known is F. A. Hayek's and John Jewkes's illustrations of the same principle, both drawing from labor economics. Economic planning – the abandonment of a freely operating price system – cannot function without resorting to compulsory assignment 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. Among Hayek's enduring contributions, therefore, is a demonstration that liberty hangs on the maintenance of the price-system.

• Item Type: MPRA Paper
• Language: English
• Keywords: Hayek; Road to Serfdom; democratic socialism; market socialism; economic democracy; totalitarianism; public choice; government failure; impossibility; corvee; corvée; serfdom; slavery; involuntary; coercive; compulsion; compulsory; labor; servitude
• Subjects: B - History of Economic Thought, Methodology, and Heterodox Approaches > B2 - History of Economic Thought since 1925 > B24 - Socialist ; Marxist ; Sraffian; B - History of Economic Thought, Methodology, and Heterodox Approaches > B2 - History of Economic Thought since 1925 > B25 - Historical ; Institutional ; Evolutionary ; Austrian; B - History of Economic Thought, Methodology, and Heterodox Approaches > B5 - Current Heterodox Approaches > B51 - Socialist ; Marxian ; Sraffian; B - History of Economic Thought, Methodology, and Heterodox Approaches > B5 - Current Heterodox Approaches > B53 - Austrian; D - Microeconomics > D7 - Analysis of Collective Decision-Making; J - Labor and Demographic Economics > J0 - General; J - Labor and Demographic Economics > J0 - General > J00 - General; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J20 - General; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J30 - General; J - Labor and Demographic Economics > J4 - Particular Labor Markets > J47 - Coercive Labor Markets; P - Economic Systems > P1 - Capitalist Systems > P10 - General; P - Economic Systems > P2 - Socialist Systems and Transitional Economies > P20 - General; P - Economic Systems > P3 - Socialist Institutions and Their Transitions > P30 - General; P - Economic Systems > P5 - Comparative Economic Systems > P50 - General

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