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I. Introduction 9 transaction costs, at least in resolving subsequent problems of externalities. 16 Another utilitarian argument for private property concerns the role of markets in promoting productive efficiency and social prosperity. It is now accepted that a centralized command economy, in which all productive decisions were taken on the basis of the central allocation of scarce resources, would lead, in the conditions of modern industry, to radically inefficient and perhaps catastrophic The locus classicus of this argument is in the work of Ludwig von Mises. Socialist planners, von Mises points out, face two problems: first, the problem of what to produce and, secondly, the problem of how to produce It is conceivable that socialist planners might solve the first problem, particularly if they adhered to some theory of human and social 'need' which was not dependent on the interplay of the subjective preferences of actual consumers. 19 But the second problem, he claims, will be intractable as a problem of planning. How will a planner know where a given quantity of (say) coal or iron ore is best applied, or to what purposes certain machine parts should be devoted? The use of what are called 'production goods' is not related directly to the need for specified consumption goods, since each of the former could go through any one of a series of stages in contributing to the production of the latter. Von Mises' suggestion is that the only way through this decisional morass is via a system of prices, fixed by the interaction of a plurality of entrepreneurs, each risking the capital commodities under his control in production or exchange, and adjusting his Ibid. (This last point, though, raises the question of the transaction costs involved in the actual shift from common to property rights. As James Buchanan notes, Demsetz does not indicate why the latter costs should be substantially lower than those associated with an agreement among owners-in-common to limit the exercise of their common rights. (See Buchanan, Limits of Liberty, pp. 11-3.) We cannot go into this matter in any great detail here, except to note Buchanan's own suggestion that a 'natural' distribution of private control of resources might emerge without agreement from a Hobbesian process of interaction, and that, given Hobbes's arguments about security and Demsetz's arguments about efficiency, everyone would have an incentive to ratify as a structure of private rights that distribution of private control. (Buchanan, Limits of Liberty, 17 For socialist recognition of this point, see e.g. Nove, Economics of Feasible Socialism, and Anderson, On the Tracks of Historical Von Mises, Calculation', pp. 77 ff. 19 Ibid. 77-8.