Distorted or absent price signals Criticisms of Marxism

the economic calculation problem criticism of socialist economics, or more precisely central economic planning. first proposed ludwig von mises in 1920 , later expounded friedrich hayek. problem referred of how distribute resources rationally in economy. free market solution price mechanism, wherein people individually have ability decide how should distributed based on willingness give money it. price conveys embedded information abundance of resources desirability in turn allows, on basis of individual consensual decisions, corrections prevent shortages , surpluses; mises , hayek argued possible solution, , without information provided market prices, socialism lacks method rationally allocate resources. many consider refutation of socialism , shows socialist planned economy not work. debate raged in 1920s , 1930s, , specific period of debate has come known economic historians socialist calculation debate. in practice, ussr, north korea, , cuba, example, have used centrally planned economies , have been historically subject frequent shortages, ussr collapsing entirely.