a socialist economy that utilized a price system and money for the allocation of capital goods. In contrast to a free-market price system, "socialist" prices would be set by a planning board to equal the marginal cost of production to achieve neoclassical Pareto efficiency. Because this model of socialism relied upon money and administered prices as opposed to non-monetary calculation in physical magnitudes, it was labelled "market socialism". In effect, Oskar Lange conceded that calculations in a socialist system would have to be performed in value terms with a functioning price system rather than using purely natural or engineering criteria as in the classic concept of socialism. Hayek Austrian School economist Friedrich Hayek argued that a free price system allowed economic coordination via the price signals that changing prices send, which is regarded as one of his most significant and influential contributions to economics. In "The Use of Knowledge in Society" (1945), Hayek wrote, "The price system is just one of those formations which man has learned to use (though he is still very far from having learned to make the best use of it) after he had stumbled upon it without understanding it. Through it not only a division of labor but also a coordinated utilization of resources based on an equally divided knowledge has become possible. The people who like to deride any suggestion that this may be so usually distort the argument by insinuating that it asserts that by some miracle just that sort of system has spontaneously grown up which is best suited to modern civilization. It is the other way round: man has been able to develop that division of labor on which our civilization is based because he happened to stumble upon a method which made it possible. Had he not done so, he might still have developed some other, altogether different, type of civilization, something like the "state" of the termite ants, or some other altogether unimaginable type." See also Free price system Regulated market Planned economy Catallactics Economic calculation debate Economic history History of economic thought Lange model Market economy Price mechanism References History of money Economic systems Monetary economics Capitalism Market socialism