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

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

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Milton Friedman (1962) famously argued there can be no freedom of speech where the government owns the printing presses. According to Friedman, political freedom presupposes economic freedom (cf. Lawson and Clark 2010). Less well-known are 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.

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