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Hayek and Arrow's Impossibility Theorem: The Difficulty of Democratic Consensus

Makovi, Michael (2016): Hayek and Arrow's Impossibility Theorem: The Difficulty of Democratic Consensus.

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Abstract

Andrei Shleifer and Robert W. Vishny use Public Choice analysis to criticize market socialism, but they dismiss Hayek's Road to Serfdom as irrelevant. Contrariwise Boettke and Leeson argue that Hayek advanced a form of Public Choice analysis, including an adumbration of Arrow's Impossibility Theorem. This essay elaborates that claim and elucidates the specific implications which the Arrow theorem has for democratic socialism. Democratic socialism is impossible, in the sense that it cannot successfully accomplish the goals of its advocates, because the Arrow theorem implies that democratic political institutions are fundamentally incompatible with socialist economics. Similar problems apply to deliberative democracy.

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