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Market socialism
Market socialism is a type of economic system involving the public, cooperative, or social ownership of the means of production in the framework of a market economy. Market socialism differs from non-market socialism in that the market mechanism is utilized for the allocation of capital goods and the means of production.〔Buchanan, Alan E. Ethics, Efficiency and the Market. Oxford University Press US. 1985. ISBN 978-0-8476-7396-4, (pp. 104-105 )〕〔''Comparing Economic Systems in the Twenty-First Century'', 2003, by Gregory and Stuart. ISBN 0-618-26181-8. (P.142): "It is an economic system that combines social ownership of capital with market allocation of capital...The state owns the means of production, and returns accrue to society at large."〕 Depending on the specific model of market socialism, profits generated by socially owned firms (i.e. net revenue not reinvested into expanding the firm) may variously be used to directly remunerate employees, accrue to society at large as the source of public finance, or be distributed amongst the population in a social dividend.〔''Social Dividend versus Basic Income Guarantee in Market Socialism'', by Marangos, John. 2004. International Journal of Political Economy, vol. 34, no. 3, Fall 2004.〕
Although economic proposals involving social ownership with factor markets have existed since the early 19th century, the term "market socialism" only emerged in the 1920s during the socialist calculation debate. Contemporary market socialism emerged from the debate on socialist calculation during the early-to-mid 20th century among socialist economists who believed that a socialist economy could neither function on the basis of calculation in natural units nor through solving a system of simultaneous equations for economic coordination, and that capital markets would be required in a socialist economy.
Early models of market socialism trace their roots to the work of Adam Smith and the theories of classical economics, which consisted of proposals for cooperative enterprises operating in a free-market economy. The aim of such proposals was to eliminate exploitation by allowing individuals to receive the full product of their labor while removing the market-distorting effects of concentrating ownership and wealth in the hands of private owners. Among early advocates of market socialism were the Ricardian socialist economists and mutualist philosophers. In the early 20th century, Oskar Lange and Abba Lerner outlined a neoclassical model of socialism which included a role for a central planning board (CPB) in setting prices equal marginal cost to achieve Pareto efficiency. Even though these early models did not rely on genuine markets, they were labeled "market socialist" for their utilization of financial prices and calculation. In more recent models proposed by American neoclassical economists, public ownership of the means of production is achieved through public ownership of equity and social control of investment.
Market socialism is distinguished from the concept of the mixed economy, because unlike the mixed economy, models of market socialism are complete and self-regulating systems. Market socialism is also contrasted with social democratic policies implemented within capitalist market economies: while social democracy aims to achieve greater economic stability and equality through policy measures such as taxes, subsidies and social welfare programs; market socialism aims to achieve similar goals through changing patterns of enterprise ownership and management.
== Theoretical history ==
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