Folly of Planning the Economy

"The central question was whether it was possible to make economic calculations in a socialist-planned economy. Lange was a proponent of market socialism with state ownership of the means of production, as embodied in the Soviet planned economy.
Using mathematical models and computers, the planned economy was supposed to be able to imitate the market and thereby solve the problem of economic calculation, according to Lange. Mises and Hayek believed that such a system could never function satisfactorily. They emphasized the importance of private ownership, in particular of the means of production, as a necessary precondition for price formation. Without personal property, there are no markets. If there are no markets, there is no price formation. And if there is no price formation, people lack the information to act in an economically rational way, with large-scale waste of resources as a result.
Thanks to the collapse of communism with its central planned economy, the debate was settled in the late 1980s in favor of Mises and Hayek. But, before that time, even many western economists had great confidence in the forecasting value of economic models. They recognized that these were not yet perfect, but believed that the shortcomings at that time could be remedied through further development of statistics, econometrics and the use of powerful computers. However, especially during the stagflation of the 1970s, economic models demonstrated that they were less and less able to explain and predict economic reality."
-Hans Labohm