Market Socialism

MARKET SOCIALISM DESCRIBES a range of models of political economy that combine aspects of free markets with elements of socialism. The necessary philosophical and political basis of market socialism is the belief that neither capitalism nor socialism is adequate or viable. While the dignity of human choice and autonomy is inherent in the free market principle, unregulated economies produce unjustifiable inequalities and injustices. Therefore, some collective standard of provision and guaranteed quality of life must modify and limit those very freedoms that permit choice. However, bureaucratic and centralized structures (associated with 20th-century command economies) are too domineering, inefficient, and restrictive of human freedom.

Market socialism is something of a compromise between the authoritarian excesses of a command economy and the cold injustices of an entirely free market. The historical genesis of market socialist ideals is the period of the late Cold War. Radical critics in both the west and the former communist world searched for models that rejected the worst features of capitalism—waste, greed and exploitation in the workplace and the marketplace—while retaining the attractive elements of relative economic prosperity, freedom, and consumer choice. The old models of socialism as they existed in Eastern Europe, the Soviet Union, and China were unacceptably authoritarian and rigid. Against capitalism, market socialism identifies the waste, inequality, workplace alienation, sexism, racism and environmental despoliation that are the normal, if not always inevitable, concomitants of an entirely unregulated free market. Against communist-style command economies, market socialists point to the oppressive controls, the bureaucratically driven waste, the overproduction of cheap and unwanted goods, the absence of innovation, and the dullness and indignities of life in a consumer market without freedom of choice. Too much power is placed in the hands of bureaucrats, managers, and producers.

In a market socialist political economy, freedom of market choice is combined with public regulation and the provision of certain goods and services through the state or nonprofit organizations. The principal manufacturing and resource industries might be under public control and/or ownership. Public enterprises could include the principal utilities, transportation networks, major manufacturers, and resource extractive industries.

The market socialist economy also advocates the widespread employment of workers cooperatives, a powerful degree of democratic decision making in private corporations, with codetermination (workers sitting on corporate boards) and profit sharing. This is a challenging structure, in that cooperatives do not respond in the same way as private corporations to market signals from without or organizational imperatives from within. Those who advocate market socialism recognize that the challenges of keeping cooperatives lean and responsive are substantial.

The characteristic fiscal strategy of market socialism places strong emphasis on redistributive and progressive taxation. Attention is paid to maintaining full employment, and inflation is controlled through measures of wage and price regulation. There is a strong welfare state and guaranteed provision of basic services from cradle to grave. Moreover, the collective provision of housing, health, safety-net support, education, and age-related needs is not incompatible with the development of strong voluntary networks of community activism in these fields.

Market socialism includes a measure of corporatism at the national and local levels (an arrangement in which the leading economic organizations in society are represented directly in the heart of government) and powerful state regulation of economic externalities. Democratic involvement, with citizens' forums and other consultative bodies, further shapes the decisional architecture of the state.

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