Blockchain and the information – calculation problem

Abstract

Ludwig von Mises produced an impossibility theorem indicating that economic calculation in the absence of market prices was impossible. This gave rise to the ‘socialist calculation debate’ in the first half of the twentieth century. This paper makes use of the insights of that debate to shed light on other situations where decision makers are required to allocate resources in areas where there are no market prices. A pertinent example would be most corporate social responsibility programs. In the absence of market prices local information cannot be communicated to decision makers. The paper further argues that blockchain technology can create the institutional environment for markets to emerge and consequently overcome the problem of missing prices.