I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals. ...
Nevertheless, it is necessary to remember that a planned economy is not yet socialism. ... How can the rights of the individual be protected and therewith a democratic counterweight to the power of bureaucracy be assured?
Very interesting. As it happens I'm just reading Hayek's essay 'The Use of Knowledge in Society,' which serves as a useful counterpoint to this.
The question of economic planning as both a problem in the sociology of knowledge and political theory (not to mention economics) doesn't get anywhere near enough attention from leftists. The right-wing polarisation of the debate between totally 'free' decentralisation on the one hand and, monolithic Big Brother-esque central bureaucracy on the other is incredibly important but isn't widely challenged. What we've tended to end up with in policy terms is a Third Way mishmash of centralisation and decentralisation -- a mix that, in some ways, might be the worst of both worlds.
Hayek's discussion of these issues (in the aforementioned essay at least) is actually rather more sophisticated than the manner in which his acolytes have appropriated his ideas. While I find his solutions absurd he raises some very serious problems for socialism, problems that I'm not sure have ever found a decent answer -- something that Einstein himself seems to hint at.