Market socialism

Market socialism refers to various economic systems where the means of production are publicly owned, managed and operated for a profit in a market economy. The profit generated in a market socialist system would be used to directly remunerate employees or go toward public finance.[1][2] Theoretically, the fundamental difference between a traditional socialist economy and a market socialist economy is the existence of a market for the means of production and capital goods under market socialism.

Market socialism generally refers to three related but distinct economic systems.

Early forms of market socialism consisted of proposals for cooperative enterprises operating in a free-market economy, so that exploitation would be eliminated and individuals would receive the full product of their labor. Early market socialism was expressed by Ricardian socialists, mutualists, individualist anarchists and syndicalists.

The maturing of neoclassical economic theory led to various new proposals of market socialism in the early twentieth century. The traditional neoclassical market socialist proposals consisted of state-owned industries and a central planning board that sets prices to equal marginal cost, thereby achieving pareto efficiency.

Market socialism has also been used to refer to an economic system that utilizes a free price system for the allocation and distribution of all resources, with public ownership being reserved to "strategic" sectors of the economy. Within this model, the state would utilize market mechanisms to direct economic activity in the same manner governments affect economic decisions in capitalist economies, including the use of (external) regulation over the otherwise autonomously-operating enterprises. This allows for the public enterprises to function in a decentralized fashion.

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