Market Socialism: The Debate Among Socialists.

Scott Arnold's recent paper, “Marx and Market Socialism,” advances a provocative thesis: market socialists are advocating an economic system that has a strong, internally generated tendency to revert to capitalism. They are, in short, “capitalist roaders”.

Can market socialism realize the socialist vision of the good society by ending exploitation and alienation, substantially reducing inequalities of wealth and income, ensuring full employment, and correcting other market irrationalities? A comparative analysis of the organizational forms of capitalism (notably the small owner?operated firm and the large corporation) and market socialism (the self?managed cooperative that rents its capital from the state) reveals the relative efficiencies of capitalism in reducing transaction costs, in turn reducing the (...) opportunities for exploitation. By contrast, the transaction cost inefficiencies of the organizations of market socialism permit and encourage forms of exploitation that are precluded or discouraged under capitalism. (shrink)

One of the paradoxes of recent political and economic theory is that, in spite of a period of extended economic difficulty, there has been a growing consensus concerning the virtues of the market economy. In particular, there has been a trend in socialist theory to argue that not only are socialism and the market not incompatible, but that some version of market socialism is the only feasible, practicable, and ethically and politically desirable form of (...) class='Hi'>socialism. Notable proponents of this view with whom this paper will be particularly concerned are Selucky, Nove and Hodgson. I will not, in this paper, address the question of whether the market and socialism are necessarily incompatible. Neither will I examine the whole gamut of political and ethical issues surrounding the relation of the market to democracy, freedom, individual rights, and so on – not because they are unimportant, but because they require more extended attention than I could give here. My concern will rather be with some of the economic arguments to which defenders of market socialism have appealed. (shrink)

This article reconstructs and reflects on the 1989 debate between Jerry Cohen and myself on market socialism in the light of Cohen's ongoing defence of communitarian socialism. It presents Cohen's view of market socialism as ethically deficient but a modest improvement on capitalism, and outlines some market socialist proposals from the 1980s. Our debate centred on the issues of distributive justice and community. I had argued that a market economy might be justified by (...) appeal to desert based on productive contribution, but Cohen saw effort as the only relevant desert base, and claimed that only non-comparative judgements of economic desert were possible. Market-derived inequalities, therefore, could not be deserved. He also condemned markets for relying on the motives of greed and fear, and therefore as destructive of community. In reply, I asserted that markets also liberated people from fixed social roles, and that market competition could be viewed differently, as providing the most effective way for people to contribute to each other's welfare. In retrospect, this debate can be seen to raise questions about the nature of justice and the purpose of political philosophy that have come to the fore in recent exchanges between ‘realists’ and ‘idealists’. (shrink)

In response to Eric Aarons' `Why Communism failed' (Dissent no. 4, 2001) it is argued that the present "capitalist" system is in fact so regulated as to be a hybrid of capitalist and socialist principles. It has some success in putting economic power into the hands of most people, though it needs restraint to cope with market failures.

Some Aspects of Market Socialism: A Dialogue with David Schweickart.

One feature of socialism that has been little discussed in the recent revival of interest in Marx is the basic form of economic organization that will characterize such a society. Marx's view, to be documented in what follows, is that socialism would not have a market economy. This prediction should be a matter of some embarrassment or consternation to twentieth-century socialists outside of the Soviet bloc who claim a Marxist heritage. Despite the fact that some socialist regimes (...) in the first half of this century did carry out a program of abolishing the market, the abolition of markets is no longer on the agenda for developed and developing countries. On the Left, anyway, some form of market socialism seems to be the preferred alternative; Yugoslavia is often pointed to as an imperfect real world exemplar of what market socialism might be like. (shrink)

What is typical of Hayek's challenge concerning socialism is that he always maintained that this question was for economic theory to decide. Sketching the historical background of what has come to be known as the "socialist calculation debate" (section 1), I try to link this debate with the Menger-Wieser Zurechnungsproblem and show that the Pareto-Barone approach has determined the theoretical form of this economic controversy. I then go on to explore Hayek's 'inapplicability' argument (section 2) and try to show (...) how it is related to Mises' 'logical impossibility’ argument. This is followed by an examination of Hayek's second argument (section 3), which I refer to as 'the evolutionary argument'. I display what is the specific gist of this argument and connect it tightly to the first one. I then discuss certain methodological issues (section 4) pertaining to the allegedly radical difference between Mises' arguments and Hayek's tentative refutation of socialism. Here I challenge the received view that Mises' based his case on the 'impossibility in principle' of socialism, whereas Hayek's own position was to challenge the 'possibility in practice' of a centrally planned economy. This reading (especially by Willem Keizer) of Hayek's contribution to the debate seems to me misguided and unwarranted. I attempt to propose, on the contrary, that both lines of reasoning involve the same kind as arguments since both of them should be interpreted as impossibility theorems. Finally (section 5) I try to give an appropriate and adequate answer to the question raised in the title of this paper. (shrink)

On reflecting about the prospects of advancing the egalitarian cause in the United States, John Roemer makes the case for more traditional strategies than the coupon socialism model he advocated in earlier work. First of all, he suggests, an ethos of solidarity must be developed and the super-rich be subjected to higher taxation. This comment assesses this proposal. On the one hand it is discussed whether the ethos of solidarity Roemer calls for in order to counteract the culture of (...) greed among American elites requires nurturing an undesirable culture of envy among the rest of the population. On the other hand it is considered whether the neoclassical principal-agent model—that Roemer believes must be contested in order to popularize a steep progressive income tax—might be one of the more promising tools to restructure the incentives of economic elites and curb casino capitalism. (shrink)

BL With a new preface by the authors This is an important work of original scholarship by two of the most distinguished East European economists now working in the West. The authors, both of whom were involved in the Planning Office of the Polish economy in the 1950s and 1960s, present here the results of their efforts to develop theoretically a system of economic management which could in practice avoid the worst excesses of both market capitalism and central planning. (...) The conclusions derived from this analysis are shown to open up a new dimension to the `socialism versus capitalism' controversy which has dominated much of the world throughout the twentieth century and which is especially significant as the countries of East and Central Europe re-structure their economies. (shrink)

If the economy consisted of labor-managed firms, so the workplace is democratic, and in addition the benefits and burdens of economic cooperation were shared equitably and the economy operated efficiently, might there still be a morally compelling case for further intervention into economic arrangements so as to increase the degree to which people gain meaningful or satisfying work? ‘No!’, answers a 1987 essay by the author. This comment argues against that judgment, on the ground that morally required perfectionism or paternalism (...) or simple fairness to the worse off might demand such intervention. It is plausible to hold the good life includes meaningful work, and that what we fundamentally owe one another is a fair distribution of good quality of life. However, this comment also takes issue with Russell Keats’s argument against Arneson in his essay in this issue of this journal. (shrink)

Schweickart and I both discuss market socialism. Neither of us accepts the traditional Marxist view that market economies necessarily produce contradictions that drive them toward collapse. Both of us think the socialist experiments of the twentieth century show that markets cannot successfully be eliminated. Thus, for market socialism, we keep a market and we work to prevent it from producing contradictions, alienation, and collapse. One question that arises here concerns the role of labor unions. (...) Should they play a major role in market socialism, or are there respects in which they would obstruct it? There is another important issue that Schweickart should discuss. Market socialism, given its commitment to a market, must face the issue of market generated alienation or fetishism. Can market socialism avoid such problems? And if so how? (shrink)

Can we conceive of a market economy that fulfils the ideals of socialism? In this book, David Miller provides a comprehensive examination, from the standpoint of political theory, of an economy in which market mechanisms retain a central role, but in which capitalist patterns of ownership have been superseded.

N. Scott Arnold argues that the most defensible version of a market socialist economic system would be unable to realize widely held socialist ideals and values. In particular, it would be responsible for widespread and systematic exploitation. The charge of exploitation, which is really a charge of injustice, has typically been made against capitalist systems by socialists. This book argues that it is market socialism--the only remaining viable form of socialism--that is systematically exploitative.

Like Mises before him, Hayek challenges the validity of socialism as a centrally planned economic regime typically characterized by state ownership of all means of production. What is typical of Hayek's challenge is that he holds that this question is fully theoretical in nature and that it has consequently to be raised and decided as a scientific question. Sketching the historical background of the socialist calculation debate of the 1920s and 1930s, I first show how this debate is linked (...) with the Menger-Wieser Zurechnungsproblem, which indeed constitutes the very topic of Hayek’s 1923 Ph. D. dissertation. I recall that the Pareto-Barone approach based on General Equilibrium Theory (GET) has determined the conceptual framework of this controversy. I then go on to explore Hayek's impracticability argument against market socialism and try to show how it is related to, but different from, Mises’s logical impossibility argument. I argue that the contexts of discussion were completely different in both cases: if Mises was criticizing the possibility of rational economic decisions in a moneyless economy, Hayek was debating against the Lange-Dickinson-Lerner model of market socialism where the prices of first order goods were supposedly fixed following a GET simulation of the competetive market process. The core of Hayek’s line of reasoning is shown to be related to a clever analysis of the notion of ‘data’: the data on which a Central Planification Board is suppose to work out a production and distribution schema for the whole economy are simply unavailable to him because this kind of economic knowledge (which Michael Polanyi calls “tacit knowledge”) cannot be accumulated and stored up anywhere in society, as if the global economy could be directed by a super-brain possessing complete knowledge of every particular situation and able to compute a perfect solution to any economic problem whatsoever.. (shrink)

istorical Materialism and the Case for (One Kind of) Market Socialism.

David Schweickart has challenged a number of claims that are central to my argument that market socialism would probably degenerate into something only nominally distinguishable from capitalism. Chief among these is the claim that competitive pressures would force the workers in a worker-controlled firm to create pay and authority differentials that would make such firms structurally homologous to capitalist firms. Schweickart challenges this on two fronts: He argues that there is no good reason to believe that market (...) forces under market socialism would create the pay and authority differentials characteristic of capitalism. He further argues that certain structural features of market socialism would insure that competition would not be as intense as it is under capitalism. Consequently, even if capitalistically structured firms were more efficient, it would not make much difference, since no sword of Damocles would hang over the heads of those firms whose workers prefer more collectivist methods of control. Let us consider each of these points in turn. (shrink)

Christopher Pierson assesses the evidence of terminal decline, but finds rather a whole series of deep-seated challenges to traditional forms of socialist and social democratic thinking. Above all, these problems are to be found in the political economy of social democracy and its commitment to incremental change in the context of an increasingly globalized market economy. The latter chapters of the book are devoted to an assessment of market socialism, one of the most vigorous and innovative attempts (...) to seek to recast socialist aspirations under these quite changed circumstances. In essence, market socialism represents an attempt to reconcile new forms of social ownership with the seeming ubiquity of the market. Having outlined this position, Pierson carefully and systematically critiques it and, in the process, develops a set of distinctive arguments about the nature of social ownership, the potential of the labor-managed economy, and the appropriate forms for an extension of economic democracy. (shrink)

Response to Philip Kain’s “Alienation and Market Socialism: Comments on Schweickart’s ‘Marx’s Democratic Critique of Capitalism’”.

Abstract The recent proliferation of economically informed writings favoring market socialism exhibits dissonances in this evolving theoretical orientation. The ethical presuppositions of classical socialism have often been inherited by those who now embrace markets under socialism. But precisely because it accepts markets, market socialism may prove incompatible with these sentiments.