The Politics of Rationality in Early Neoliberalism: Max Weber, Ludwig von Mises, and the Socialist Calculation Debate

Abstract:Initiated by Mises and popularized by Hayek, the socialist calculation debate staked a political position on a methodological axiom: the "irrationality" of state planning. This article argues that Weber's typology of "formal" vs. "substantive" rationality at once drew from Austrian School marginalism and helped frame Mises and Hayek's critiques in the calculation debate. In turn, this debate shaped an anti-socialist front among the early neoliberals before their vaunted gatherings in Paris and Mont Pèlerin. Through social scientific interventions, early neoliberalism split economics (qua market rationality) from politics (qua social justice) so as to place the latter beyond the epistemological pale.