The Austrian school of economics is distinguished by its fundamental critique of socialism and communism. As early as 1920, in his article "Economic Calculation under Socialism", Ludwig von Mises formulated a decisive argument: without private ownership of the means of production and without a free market, it becomes impossible to obtain prices that are truly formed by supply and demand. These prices are the indispensable basis of any rational economic calculation.

The first major difficulty identified by Mises, and later developed by Hayek, concerns the very nature of economic information. The amount of information contained in the market - the sum of the individual choices of millions of actors - is too great, too changeable and impossible for a planning committee to know. The only theoretical possibility of carrying out a centralized calculation would be to reach a static equilibrium where nothing changes, but this possibility remains purely conceptual, as economic information is constantly changing.

A second essential idea challenges the centralized organization of the economy. The aim of the production process is to manufacture goods to satisfy end consumers. For the entrepreneur, it's the final price that determines costs, and not the other way around, contrary to what the socialists thought. The price paid by the consumer influences the organization of the entire production structure, from the extraction of raw materials to the final stages of production.

Voluntary exchange between economic actors is the mechanism for setting the true price of intermediate goods. In a socialist economy, the absence of private ownership of production goods makes their valuation impossible. The prices of goods, labor and resources become impossible to determine, as no entrepreneur can transcribe his subjective valuation in the form of a price. As these data are unknown, the organization of the productive system is blind, and surpluses, waste and shortages inevitably abound.

The role of prices in a market economy is to convey information about the relative scarcity of goods, individual preferences and opportunity costs. Without free prices, past results are impossible to analyze, and future production becomes impossible to predict. The logical chain is clear: without private property, there can be no free exchange; without free exchange, there can be no price; without price, there can be no monetary calculation; without monetary calculation, there can be no analysis of past results or future prediction.

Another major problem concerns incentive effects in the absence of private property and entrepreneurial freedom. If everyone gets what they need rather than what they deserve, how can we determine who will do the hard jobs? Personal interest in improving one's situation remains the main driving force behind human action. To suppose that a regime could create a new man entirely devoted to the common good would be to call into question the very nature of human action. Wages are also a signal of individual competence, and equal pay prevents society from discovering the marginal productivity of each individual.

The example of the USSR is particularly instructive. Deprived of private ownership of the means of production, the USSR relied on indicative prices for its resources, often copied directly from prices on American and European capitalist markets. Without private property and free trade, the Soviets lacked the necessary mechanisms for economic calculation. When trading with other nations, the USSR had to align itself with international prices, revealing the low quality of Soviet goods and the abundance of natural resources they sold off for lacking capital goods.

As economist Guido Hülsmann points out, with the collapse of the Soviet empire, Mises' assertion that socialism as an economic system is impossible has found empirical confirmation. A planned economy can only subsist thanks to the capitalist world that surrounds it and enables it to give indicative prices. A truly communist world without any market prices is impossible, and Mises' demonstration remains one of the Austrian school's most important contributions.