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