The general lines of Ludwig von Mises’s rational-calculation argument ..
.. can be applied not only to a state-planned economy, but also to the internal planning of the large corporation under interventionism, or state capitalism.
Rothbard developed the economic calculation argument in just this way. He argued that the further removed the internal transfer pricing of a corporation became from real market prices, the more internal allocation of resources was characterized by calculational chaos.
The problem is complicated when the same organizational culture—determined by the needs of the managerial system itself—is shared by all the corporations in a state-induced oligopoly industry, so that the same pattern of red ink appears industry-wide. It’s complicated still further when the general atmosphere of state capitalism enables the corporations in a cartelized industry to operate in the black despite excessive size and dysfunctional internal culture. It becomes impossible to make a valid assessment of why the corporation is profitable at all: does the black ink result from efficiency or from some degree of protection against the competitive penalty for inefficiency? ..
.. the environment of pervasive irrationality within the large corporation: management featherbedding and self-dealing; “cost-cutting” measures that decimate productive resources while leaving management’s petty empires intact; and the tendency to extend bureaucratic domain while cutting maintenance and support for existing obligations. Management’s allocation of resources no doubt creates use value of a sort—but with no reliable way to assess opportunity cost or determine whether the benefit was worth it.
The problem is that the state, by artificially reducing the costs of large size and restraining the competitive ill effects of calculation problems, promotes larger size than would be the case in a free market—and with it calculation problems to a pathological extent. The state promotes inefficiencies of large size and hierarchy past the point at which they cease to be worth it, from a standpoint of net social efficiency, because those receiving the benefits of large size are not the same parties who pay the costs of inefficiency.