Editing Price system (section)

=== Debate on socialism ===
{{See also|Socialist calculation debate}}
The American economist [[Thorstein Veblen]] wrote a seminal tract on the development of the term as discussed in this article{{tone inline|date=October 2021}}: ''The Engineers and the Price System''.<ref>Harbinger Edition, 1963. LCCCN 63-19639. First Published as a series of essays in [[The Dial]] (1919) then as a book in 1921.</ref><ref>[http://www.faculty.rsu.edu/~felwell/Theorists/Veblen/Papers/Engineers.htm Full Text (HTML)]</ref> Its chapter VI, ''A Memorandum on a Practicable Soviet of Technicians'' discusses the possibility of [[socialist]] revolution in the United States comparable to that then occurring in Russia (the Soviets had not yet at that time become a state (USSR formed in 1922)).

According to Bockman, the original conception of socialism involved the substitution of money as a unit of calculation and monetary prices as a whole with [[calculation in kind]] (or valuation based on natural units), with business and financial decisions replaced by engineering and technical criteria for managing the economy. Fundamentally, this meant that socialism would operate under different economic dynamics than those of capitalism and the price system.<ref>{{cite book |last= Bockman|first= Johanna |title= Markets in the name of Socialism: The Left-Wing origins of Neoliberalism|publisher= Stanford University Press|year= 2011|isbn= 978-0-8047-7566-3|page = 20|quote= According to nineteenth-century socialist views, socialism would function without capitalist economic categories - such as money, prices, interest, profits and rent - and thus would function according to laws other than those described by current economic science. While some socialists recognized the need for money and prices at least during the transition from capitalism to socialism, socialists more commonly believed that the socialist economy would soon administratively mobilize the economy in physical units without the use of prices or money.}}</ref> 

In the 1930s, the economists [[Oskar Lange]] and [[Abba Lerner]] developed a comprehensive model of a socialist economy that utilized a price system and money for the allocation of [[capital good]]s. In contrast to a free-market price system, "socialist" prices would be set by a planning board to equal the [[marginal cost]] of production to achieve [[Neoclassical economics|neoclassical]] Pareto efficiency. Because this model of socialism relied upon money and administered prices as opposed to non-monetary calculation in physical magnitudes, it was labelled "market socialism". In effect, Oskar Lange conceded that calculations in a socialist system would have to be performed in value terms with a functioning price system rather than using purely natural or engineering criteria as in the classic concept of socialism.<ref name="Revisiting the Socialist Calculation Debate">''Revisiting the Socialist Calculation Debate: The role of markets and finance in Hayek's response to Lange's challenge'', by Auerbach, Paul and Sotiropoulos, Dimitris. 2012. Kingston University London, Economics Discussion Paper 2012-6, pp. 1-2: "He readily acceded to the need for efficiency calculations to be made in value terms rather than using purely natural or engineering criteria, but claimed that these values could emerge along lines consistent with neoclassical value theory, without the need for a market in capital goods and without private ownership over the means of production."</ref>