In his 1945 AER article "On the Use of Knowledge in Society,"  which   
we just read in my Economics Senior Seminar at Wabash College, Hayek   
criticizes Schumpeter as follows:  
  
"Professor Schumpeter argues that the possibility of a rational   
calculation in the absence of markets for the factors of production   
follows for the theorist 'from the elementary proposition that   
consumers in evaluating ('demanding') consumers' goods ipso facto   
also evaluate the means of production which enter into the production   
of these goods.'"  
  
There is a good deal more to the passage (perhaps a clue to the   
dispute is that Hayek says that Schumpeter "is pre-eminent among   
those economists who approach economic phenomena in the light of a   
certain branch of positivism.")    
  
My question is, what is going on here?   What exactly is the nature   
of the disagreement between the two?  Why would Schumpeter say such an apparently dumb
thing?  Is this a momentary lapse by Schumpeter or is
there a deeper disagreement?  
  
Thanks in advance for any help you can give me on this.  
  
Frank Howland