The archive.

Written as the world crisis drove Russia, Italy, Roosevelt's America and Nazi Germany toward state direction of production, these expanded 1935 newspaper essays, here in German translation, ask precisely what 'planned economy' means and where regulation ends and collectivism begins. Engliš distinguishes three rational orders, individualist, cooperative and solidarist, and defines regulated economy as intervention from above that displaces competitive prices while leaving private enterprise and its calculation intact. The decisive threshold is what he calls the critical point: once the state assumes economic responsibility for outcomes, guaranteeing work or absorbing losses, entrepreneurship dissolves and the slide into collectivization begins. Weighing regulation against democratic institutions and Czechoslovakia's dependence on exports, the argument shares its ground with the interwar planning and calculation debates of Mises and Hayek.

Welche Änderungen des Ordnungsprinzipes der Unternehmerproduktion zur regulierten Wirtschaft gehören, ist unsere Kardinalfrage, wir suchen also das Wesen der regulierten Wirtschaft.

English translation: “Which alterations of the ordering principle of entrepreneurial production belong to the regulated economy is our cardinal question; we are therefore seeking the essence of the regulated economy.”

For decades socialism was argued as a question of justice, distribution, and whether citizens would supply the needed virtue—never as a question of whether central direction could actually work. Recovering the distinction between the economic problem, allocating scarce means among rival ends, and the merely technical problem of achieving one given end, Hayek shows that even wholly loyal officials would still confront the need to compare competing uses of resources, a comparison capitalism performs through prices no single mind computes. He traces the long eclipse of this insight through the historical school's suspicion of abstraction and Marxism's faith in historical inevitability, then through marginal utility theory to Mises's decisive claim: without money prices for the means of production, a planning authority has no rational way to calculate at all.

THERE is reason to believe that we are at last entering an era of reasoned discussion of what has long uncritically been assumed to be a reconstruction of society on rational lines.

Criticism had, by 1935, already forced socialists to confront a sharper problem than justice or ownership: whether a planned economy can rationally compare the countless uses of scarce resources without markets in the means of production. Reviewing Barone's simultaneous equations, the mathematical proposals of Taylor, Roper, and Dickinson, and the Soviet record read through Brutzkus, Hayek concedes the formal conceivability of a socialist optimum and then dissolves it into an argument about knowledge. The equations would demand concrete, shifting, particular facts—qualities, locations, methods, transport, changing demand—dispersed among managers, traders, and workers and never gathered in one board's head. Impressive Soviet construction, he warns, may mark waste rather than success, since output alone proves nothing about whether resources were economically used.

The breakdown of “war communism” occurred for exactly the same reasons, the impossibility of rational calculation in a moneyless economy, which Professors Mises and Brutzkus had foreseen.

Long treated as a moral demand or a rational blueprint for society, socialism must instead be judged, Hayek insists in this German-language essay, by whether it can actually coordinate scarce means among competing ends. The distinction he presses is between technical and economic problems: a technician optimizes toward a given end, but a society must weigh forgone alternatives, and only money prices for intermediate goods, capital, and factors of production make such comparison possible. Tracing the debate from Gossen, Pierson, and Barone to its decisive formulation by Mises in 1920, he shows why marginal utility theory made the calculation problem unavoidable, and why historicism and Marxian anti-utopianism had long concealed it. The burden of proof, he concludes, falls squarely on socialism's advocates.

In einer reinen Verkehrswirtschaft denkt niemand über irgendwelche wirtschaftlichen Probleme nach, außer über seine eigenen.

English translation: “In a pure exchange economy, nobody reflects on any economic problems other than his own.”

Add as many mail-coaches as you please, you will never get a railroad by so doing — with that image the essay marks the fault line between growth and innovation that organizes its argument. Reprinted from the Review of Economic Statistics, it brackets the exogenous shocks — wars, weather, gold discoveries — that make every fluctuation historically unique, in order to ask whether capitalism generates an endogenous wave-form of its own. It does, Schumpeter contends: purely economic cycles arise from the clustered insertion and absorption of innovations, financed by credit creation, yielding four phases of prosperity, recession, depression, and revival. From this follows the three-cycle schema of Kondratieff, Juglar, and Kitchin waves, and a sustained warning against monetary and trend-fitting explanations that mistake symptom for mechanism.

If there be a purely economic cycle at all, it can only come from the way in which new things are, in the institutional conditions of capitalist society, inserted into the economic process and absorbed by it.

Where formal precision should have brought clarity, the debate over the elasticity of substitution had instead grown unintelligible, its related but distinct ideas forced under one name. Machlup's clarification separates Robinson's and Hicks's appendix concept—a partial-equilibrium measure of technical substitution—from Hicks's main-text concern with factor shares in the National Dividend. His commonsense rests on substitution within increase: when a factor grows more abundant the economy does not discard the other, but industries rearrange combinations as the community absorbs the larger supply. Distribution theory, he argues, needs an elasticity of total substitution fusing producers' technical substitution with consumers' choice among commodities—and every such elasticity rises with the time allowed for adjustment, since fixed capital yields only slowly.

THE discussion of the “elasticity of substitution” is conspicuous for its unintelligibility.

More consumption need not mean greater prosperity: it may be financed by resources that will no longer support future income. In this 1935 article, Fritz Machlup applies Austrian capital theory to Austria’s economic decline, asking how rising living standards could coexist with severe losses in corporate capital value. His concrete mechanisms include inflationary inventory gains mistaken for profits, depreciation allowances inadequate to replace machinery, and banks sustaining dividends at loss-making firms. He argues that taxation, wage pressures, and social charges also contributed, while acknowledging that their separate effects cannot be precisely measured. The distinction between falling market valuations and physical depletion gives the article its analytical tension. Readers can trace how apparently healthy accounts and continued production may conceal an erosion of the capacity to produce.

Few concepts are invoked so often and interrogated so rarely, Hayek observes, as a 'constant amount of capital'—and once change is admitted, it dissolves. Maintaining capital, the essay shows, cannot mean preserving identical goods or an unchanged money valuation; it is a derivative rule for avoiding unintended encroachment on future income. Sparring with Pigou over physical-loss and index-number criteria, Hayek holds that foreseeable obsolescence must be amortized like ordinary wear, that windfall profits are not freely consumable income, and that no expectation-free standard of 'net' saving or investment survives in a changing world. Foresight thus moves to the centre of capital theory, and the warning carries into monetary policy: in a boom, rising asset valuations mistaken for income invite the quiet consumption of capital itself.

It is not likely that in the whole field of economics there are many more concepts which are at the same time so generally used and so little analysed as that of a “constant amount of capital.”

Cheaper credit can scarcely alter a factory’s running costs yet substantially increase the value of equipment it might build. Fritz Machlup’s 1935 article explains this contrast by separating interest as a production expense from interest as the rate used to capitalize expected returns. His numerical examples sharpen the distinction: a fall from 5 to 4 percent produces only a tiny saving on working capital, but a much larger rise in the present value of long-lived equipment. The reader gains a precise account of why debt relief need not expand output, why durable investment can respond strongly to lower rates, and why that response depends on prospective profits. Machlup’s analysis also identifies a limit to interest-rate policy: cheaper finance cannot stimulate investment where unfavorable costs and selling prices leave no future profits to capitalize.

Industrial growth did not necessarily strengthen trade unions, nor did official worker representation guarantee freedom to organize. These distinctions anchor Karl Pribram’s encyclopedic contribution, first published in 1935 and presented here in its 1954 reprint. Comparing the succession states and Balkan countries, chiefly through conditions in 1932, Pribram gives governmental permission to associate greater explanatory weight than workforce size alone. Hungary’s shrinking independent unions despite industrial expansion sharpen the contrast with Czechoslovakia’s mass organizations and comparatively secure associational rights. His institutional perspective also reveals less obvious pressures: land redistribution could turn potential union members into small proprietors, while unemployment insurance could encourage craft organization. The comparison helps readers distinguish membership, legal recognition, and institutional participation from effective union independence.

Why can unemployment persist even when production becomes more efficient or prosperity returns? In this encyclopaedia article, first published in 1935 and reprinted here in 1954, Karl Pribram tests expectations of automatic reemployment against European and American experience. His comparative perspective resists explanations based on wages alone: technological displacement, cartel prices, unstable lending, and blocked investment can prevent workers from finding new occupations. Equally revealing is his attention to measurement: unemployment figures drawn from benefit records depend partly on who is legally entitled to claim. Readers can discover how administrative categories shape economic evidence, and why Pribram distinguishes policies that provide immediate jobs from those capable of reviving investment.

Hidden inside general-equilibrium theory sits a premise its authors rarely state: that agents foresee the future without error. Morgenstern treats this 'vollkommene Voraussicht' not as a harmless simplification but as a logical fault line running through theories of risk, profit, money, and the business cycle. Pressed for its meaning — whose foresight, of which events, over what horizon — the assumption collapses. In a world of interdependent agents each forecast must include others' forecasts of oneself, and the Holmes–Moriarty regress of anticipated reactions and counter-reactions has no natural stopping point. Unlimited foresight, he shows, is simply incompatible with equilibrium, while total ignorance is impossible too. What remains is a research program: expectations as heterogeneous, fallible, socially distributed variables — an early step toward the strategic reasoning of game theory.

Unbeschränkte Voraussicht und wirtschaftliches Gleichgewicht sind also miteinander unverträglich.

English translation: “Unlimited foresight and economic equilibrium are therefore incompatible with each other.”