Economics 450
Senior Seminar:
The Economics of Capitalism and Socialism
Professor Steven Horwitz
Fall 2015
101 Hepburn Hall
MW 12:50 – 2:20pm
229-5731 (office)
12 Hepburn Hall
Email: [email protected]
Office Hours: T 1:00 – 3:00pm;W 10:30am – 12:00pm; and by appointment
The financial crisis and recession, along with growing concerns about inequality, have given new
life to many of the long-standing criticisms of market capitalism and have renewed interest in
various forms of socialism as an alternative economic system. In this seminar we will explore
what economic theory has to say about strengths and weaknesses of both capitalism and
socialism. We will read the classic arguments for both from people like Smith and Marx, but we
will focus much of our time on more contemporary texts, including the socialist calculation
debate of the 1930s and 40s and its revival in the 1980s and 90s. I have also reserved four class
days toward the end as “student choice” days. As the semester progresses, I will let you all tell
me which topics you’d like to learn more about, or if there are topics we haven’t covered that
you’d like to learn about. I will pick some readings on those topics and we’ll add those in on
those four days. We’ll end with a brief look at the issues raised by Thomas Piketty’s Capital in
the 21st Century.
ASSIGNMENTS AND GRADES
Your work in this course will be comprised of four different elements. Because this is a senior
seminar, the focus will be on the discussion of the readings. You are expected to have not just
“done” the readings before class, but to come to class prepared. Preparation means more than
simply having passed your eyes over the texts. It means that you need to be critically engaging
the readings. You should be taking notes, thinking about questions, and making connections to
other readings or other courses (Economics and otherwise). And you must come to class with the
readings. I do not care if they are physical or electronic versions, but failure to bring readings to
class will affect your class participation grade.
More specifically, over half of our 30 days together will be spend in a structured class
discussion. I will explain more about how this works in class, but there will be nowhere for you
to hide in these discussions. You will be expected to contribute to our exploration of the texts
and to be engaging with each other as you do. Because of the importance of these structured
class discussions, as well as your participation on other days, class participation will count for
30% of your grade.
In addition, each one of you will be responsible for starting our discussion on those structured
days. Your task, detailed in a separate assignment sheet, will be to come to class prepared and
ready to pose questions we might discuss, or point us to passages in the readings that you found
particularly interesting or challenging. You should also frame your questions or the passages of
interest in terms of any connections you see to earlier readings or other issues. Your performance
as discussion leader will count for 10% of your grade.
The third portion of your grade is keeping an interactive electronic journal. This requires that
you create a Word file that includes your reactions/responses to one of the readings or to the
class discussion and send me that file via email so that I can respond to you and send it back.
More on this assignment can be found in a separate handout. Over the course of the semester,
this will be an intellectual journal of your experience in this course, as well as a way for us to
interact one-on-one. I will grade your journals at mid-semester and again at the end, for a total of
15%.
Finally, you will write three 5-7 page papers, at least two of which must be rethought. I will
provide you with the topic(s) for these seven to ten days in advance, and I will try to give you
some scope for choice within them. You can figure one paper per month in October, November,
and December. Before the first paper is due, I will post on Sakai a guide for writing papers that
will indicate what I expect in terms of content, documentation, and presentation. Read that
guide. I will assume that you have read and understood it, and I reserve the right to lower grades
for failure to comply with what is there.
You will also be required to rethink two of the three papers; you may rethink the third. You
may choose the ones you wish to rethink, but keep in mind that I expect significant work on a
second draft. You must also decide to do a second draft before the next paper is due. In other
words, you can’t decide after the next paper to rewrite the previous one. I will also not allow you
to rethink a given paper more than once. As part of your process of rethinking you must
schedule a writing conference with me, outside of class, to talk about your second draft. Your
grade on the rethought draft will replace the original grade. Each of the three papers will count
for 15% of your grade, for a total of 45%.
This is my first time teaching this course and my first time making extensive use of the
structured discussion format. We may have to tinker with the schedule as the semester unfolds. I
reserve the right to make those changes at any time I deem necessary. I will inform you of those
changes in multiple ways as promptly as possible, but it remains your responsibility to be aware
of them.
Important scheduling note: Due to the Jewish High Holidays and some professional travel, there
are four of our regularly scheduled meetings that I will have to cancel. We will make those up by
meeting at our usual 1250 to 220pm time on Fridays on Sept 18th, Sept 25th, and Oct 30th.
Grading Breakdown:
Class participation:
Discussion leader day:
Electronic journal: (3/3 – 7%/8%)
Three 5-7 page papers: (15% each)
30%
10%
15%
45%
Tentative Schedule
Week
Aug 24 –
Aug 28
Aug 31 –
Sept 4
Sept 7 –
Sept 11
Sept 14 –
Sept 18
Monday
Wednesday
Introduction and syllabus
overview
Cohen: Why Not Socialism Brennan: Why Not
(all)
Capitalism?
(chapters 1 and 2)
SD Day #1
Brennan: Why Not
Capitalism?
(chapters 3 and 4)
SD Day #3
NO CLASS
Sept 21 –
Sept 25
Lange: “On the Economic
Theory of Socialism”
Sept 28 –
Oct 2
SD Day #5
Hayek: “The Use of
Knowledge in Society”
Oct 5 –
Oct 9
SD Day #7
Stiglitz: Whither
Socialism? (chapters 5-6)
Oct 12 –
Oct 16
SD Day #8
Lavoie: Rivalry and
Central Planning (chapter
6)
SD Day #2
Smith: The Wealth of
Nations (selections)
Marx: Capital (selections)
Engels: Socialism:
Utopian and Scientific
(selections)
NO CLASS
Mises: “Economic
Calculation in the
Socialist Commonwealth”
SD Day #4
Hayek: “The Competitive
Solution”
SD Day #6
Stiglitz: Whither
Socialism? (chapters 1-3)
Stiglitz: Whither
Socialism?
(chapters 7 and 9)
Cottrell & Cockshott:
“Calculation, Complexity,
and Planning: The
Socialist Calculation
Debate Once Again”
Horwitz: “Money, Money
Prices, and the Socialist
Calculation Debate
SD Day #9
Friday
SD Day #10
Oct 19 –
Oct 23
Oct 26 –
Oct 30
McCloskey: The
Bourgeois Virtues
(pp. 1-53)
SD Day #11
Stiglitz: Whither
Socialism? (chapter 11)
NO CLASS
Hayek: The Road to
Serfdom (chapter 10)
Hayek: The Road to
Serfdom (chapters 11-12)
SD Day #12
Spufford: Red Plenty
(chapters I: 1-2 [pp 839];chapters II:1-2 [pp.
81-119])
SD Day #13
Spufford: Red Plenty
(chapter III:1 [pp. 15880); chapters IV: 1-3 [pp.
205-64])
SD Day #14
SD Day #15
Topic and reading to be
determined by student
interest
SD Day #16
Topic and reading to be
determined by student
interest
Nov 16 –
Nov 20
Topic and reading to be
determined by student
interest
Topic and reading to be
determined by student
interest
Nov 30 –
Dec 4
Piketty: Capital in the 21st
Century (chapters 9-10)
NO CLASS
Dec 7 –
Dec 11
SD Day #17
Horwitz: “Inequality,
Mobility, and Being Poor
in America”
Boettke: “The Soviet
Experiment with Pure
Communism”
Nov 2 –
Nov 6
Nov 9 –
Nov 13
SD Day #18
Wrap-up
Bibliography
Books:
Brennan, Jason. 2014. Why Not Capitalism? New York: Routledge.
Cohen, G. A. 2009. Why Not Socialism? Princeton: Princeton University Press.
Spufford, Francis. 2010. Red Plenty, Minneapolis, MN: Graywolf Press.
Stiglitz, Joseph. 1994. Whither Socialism? Cambridge, MA: MIT Press.
Articles:
Boettke, Peter. 2001. “The Soviet Experiment with Pure Communism,” in Calculation and
Coordination, New York: Routledge.
Cottrell, Allin, and W. Paul Cockshott. 1993. “Calculation, Complexity, and Planning: The
Socialist Calculation Debate Once Again,” Review of Politica1 Economy 5:73- 112.
Engels, Frederick. 1892. Socialism: Utopian and Scientific, New York: International
Publishers.
Hayek, F. A. 1940. “The Competitive Solution,” in Individualism and Economic Order,
Chicago: University of Chicago Press, 1948.
__________. 1944. The Road to Serfdom, Chicago: University of Chicago Press. [chapters 1012]
__________. 1945. “The Use of Knowledge in Society,” in Individualism and Economic Order,
Chicago: University of Chicago Press, 1948.
Horwitz, Steven. 1996. “Money, Money Prices, and the Socialist Calculation Debate,” Advances
in Austrian Economics, 3: 59-77.
_____________. 2015. “Inequality, Mobility, and Being Poor in America,” Social Philosophy
and Policy 31, no. 2, Spring: 70-91.
Lange, Oscar. 1936. “On the Economic Theory of Socialism,” (abridged) in On the Economic
Theory of Socialism, ed., Benjamin Lippincott, New York: McGraw-Hill, 1964.
Lavoie. Don. 1985. Rivalry and Central Planning: The Socialist Calculation Debate Revisited,
Cambridge: Cambridge University Press. [chapter 6]
Marx, Karl. 1871. Capital, New York: Modern Library, selections.
McCloskey, Deirdre. 2006. The Bourgeois Virtues: Ethics for an Age of Commerce, Chicago:
University of Chicago Press. [pp. 1-53]
Mises, Ludwig von. 1920. “Economic Calculation in the Socialist Commonwealth,” reprinted in
Collectivist Economic Planning, F. A. Hayek, ed., Clifton, NJ: A. M. Kelley, 1975.
Piketty, Thomas. 2014. Capital in the Twenty-First Century, Cambridge, MA: Harvard
University Press. [chapters 9-10]
Smith, Adam. 1976 [1776]. An Inquiry into the Nature and Causes of the Wealth of Nations,
Chicago: University of Chicago Press. [chapters 1-3, 7]