Challenges to Market Socialism: A Response to Critics

The idea of a market-based form of socialism was first given serious attention in the 1920s, when it was promoted by moderates within the socialist movement as an alternative to the marketless form of socialism identified with Marx’s vision of full communism and embraced in principle by the Bolsheviks. The first systematic theoretical exposition of the functioning of a market socialist economy was that of Oskar Lange in the 1930s, who has ever since been recognized as a pioneer of the idea.’ Since then a great deal of work has been done by advocates of market socialism—many of them economists from or interested in the post–World War II Eastern European countries—seeking to improve upon Lange’s model while dealing with various problems raised by critics.

Out of this continuing literature has emerged a variety of different models, but all share the same central goals and the same basic means. Market socialism seeks to promote the tradi- tional socialist goals of equity, democracy, and solidarity while maintaining economic effi- ciency; it proposes to do so by retaining one major feature of capitalist economies—the market—while replacing another major feature of capitalism—private ownership of the means of production. For at least medium- and large-scale enterprises in most sectors of the economy, market socialists propose some form of social ownership rights; and these socially owned enterprises are expected to operate

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