Criticism of socialism is any critique of socialist economics and socialist models of organization and their feasibility, as well as the political and social implications of adopting such a system. Some critiques are not necessarily directed toward socialism as a system but rather toward the socialist movement, parties, or existing states. Some critics consider socialism to be a purely theoretical concept that should be criticized on theoretical grounds, such as in the economic calculation problem and the socialist calculation debate, while others hold that certain historical examples exist and that they can be criticized on practical grounds. Because there are many types of socialism, most critiques are focused on a specific type of socialism, that of the command economy and the experience of Soviet-type economies that may not apply to all forms of socialism as different models of socialism conflict with each other over questions of property ownership, economic coordination and how socialism is to be achieved. Critics of specific models of socialism might be advocates of a different type of socialism.
According to the Austrian School economist Ludwig von Mises, an economic system that does not utilize money, financial calculation, and market pricing would be unable to effectively value capital goods and coordinate production, and therefore in his view socialism is impossible because it lacks the necessary information to perform economic calculation in the first place. Another central argument leveled against socialist systems based on economic planning is based on the use of dispersed knowledge. Socialism is unfeasible in this view because information cannot be aggregated by a central body and effectively used to formulate a plan for an entire economy, because doing so would result in distorted or absent price signals; this is known as the economic calculation problem. Other economists criticize models of socialism based on neoclassical economics for their reliance on the faulty and unrealistic assumptions of economic equilibrium and Pareto efficiency.
Some philosophers have criticized the aims of socialism, arguing that equality erodes away at individual diversities and that the establishment of an equal society would have to entail strong coercion. Many critics point to the mass killings under communist regimes as an indictment of socialism; some socialists respond that they were aberrations, point to mass deaths they argued were caused by capitalism and imperialism, and some say that they are not the socialist model they support. Economic liberals and right-libertarians view private ownership of the means of production and the market exchange as natural entities or moral rights which are central to their conceptions of freedom and liberty and view the economic dynamics of capitalism as immutable and absolute. As a result, they perceive public ownership of the means of production and economic planning as infringements upon liberty.
Critique of centralized planning
Distorted or absent price signals
The economic calculation problem is a criticism of central economic planning which exists in some forms of socialism. It was first proposed in 1854 by the Prussian economist Hermann Heinrich Gossen. It was subsequently expounded in 1902 by the Dutch economist Nicolaas Pierson, in 1920 by Ludwig von Mises and later by Friedrich Hayek. The problem referred to is that of how to distribute resources rationally in an economy. The free market relies on the price mechanism, wherein people individually have the ability to decide how resources should be distributed based on their willingness to give money for specific goods or services. The price conveys embedded information about the abundance of resources as well as their desirability (supply and demand) which in turn allows—on the basis of individual consensual decisions—corrections that prevent shortages and surpluses. Mises and Hayek argued that this is the only possible solution and without the information provided by market prices socialism lacks a method to rationally allocate resources. Those who agree with this criticism argue it is a refutation of socialism and that it shows that a socialist planned economy could never work. The debate raged in the 1920s and 1930s and that specific period of the debate has come to be known by economic historians as "the Socialist Calculation Debate".