The Philosophy and Economics of Market Socialism: A Critical Study
New York: Oxford University Press, 1994. 301 + xiv pps.

Abstract

The purpose of this book is to argue that the most plausible or defensible version of a market socialist economic system would be unable to realize widely held socialist ideals and values (what the book refers to as the socialist conception of the good society). The reason for this is that it would permit or encourage widespread exploitation--forms of exploitation that are prevented or discouraged in a capitalist or free enterprise system. The charge of exploitation, which is really a charge of injustice, has typically been made against capitalist systems by socialists. This book turns the tables by arguing that it is market socialism--the only form of socialism worth talking about anymore--that is systematically exploitative.

The first chapter seeks to identify exactly what is in dispute between those who favor capitalism and those who favor socialism. It is argued that what is in contention is not only theories of value and/or justice but also empirical issues about the consequences of alternative systems of property rights. The burdens of proof for each side in the capitalism/ socialism dispute are detailed.

The second chapter outlines and motivates a plausible version of a market socialist economic system. It fills in some crucial details that have been omitted in other discussions of market socialism. Each feature of this system is linked to some element of a widely shared socialist vision of the good society. One of the main purposes of the rest of the book is to argue that this type of system would not in fact realize this vision of the good society.

The third chapter gives a general theory of exploitative exchange. This is a traditional piece of conceptual analysis. Chapters 4 through 7 apply this theory to both free enterprise and market socialist economic systems. These chapters make use of recent work in the economics of contracts and organizations. The literature on this topic is unknown among philosophers but is crucial for evaluating economic systems. One of the larger purposes of this book is to bring philosophical discussion of the free enterprise system into contact with this important and highly relevant work in economics. Chapters 4 and 5 give a comprehensive non-technical exposition of this literature and explain its relevance to exploitation. Chapters 6 and 7 offer a comparative evaluation of market socialist and free enterprise systems on the question of exploitation. The general conclusion is that the structure of the economic organizations in a market socialist system (self-managed cooperatives which rent all of their capital from the state) permit and encourage forms of exploitation that the characteristic organizations of a free enterprise system either prevent or discourage.

Chapter 8 considers in a systematic way some alternative types of economic systems that look plausible or attractive from a socialist perspective. It is argued that these systems are (i) also inferior to a free enterprise system on the question of exploitation, (ii) not really forms of socialism, or (iii) unable to realize the socialist vision of the good society. This chapter also contains a philosophical discussion of the values and ideals underlying this socialist conception of the good society. The main purpose of the book is to show that the most defensible extant model of a socialist economic system is deeply and fundamentally flawed and that there are no other plausible options.

This book on market socialism is the culmination of about a dozen years work on socialism and the capitalism/socialism dispute. The author's primary aim has been to create a body of critical work on socialism that is fair, non-polemical, and decisive in the case against socialism. The author's first book reconstructs and critically evaluates Marx's radical critique of capitalist society. It tries to give him the best case possible before showing that his critique is a failure. The current book does the same thing with market socialism. Socialism is fading on the world scene. It has often been said that socialism works in theory but not in practice. A principal aim of this research program has been to show that it does not work in theory either.

Table of Contents

Chapter 1: Capitalism vs. Socialism: An Analytical Perspective
Defining the Terms
The Nature of the Dispute
Criticizing Economic Systems
Defending Economic Systems
Resolution and Progress in the Dispute

Chapter 2: Why Market Socialism?
Motivating the Market
Social Ownership in a Market Economy
The Motivations for Social Ownership

Chapter 3: Economic Exploitation
Exploitation as the Failure of Reciprocity
The Value of One's Contribution
Fair Exchanges and the Value of One's Contribution
The Question of Alternatives

Chapter 4: Exploitation and the Economics of Organizations
Comparing Types of Economic Systems
The Foundations of the Economics of Organizations
An Illustration: The Classical Capitalist Firm
The Empirical Preconditions for Exploitation
Opportunism, Appropriable Quasi-Rents, and Exploitative Exchange

Chapter 5: Transactions Cost Efficiencies of Capitalist Organizations
Some Methodological Considerations
The Classical Capitalist Firm Revisited
The Open Corporation
The Employment Relation in a Free Enterprise System

Chapter 6: Exploitation in a Market Socialist Economy I
More Methodological Considerations
Exploitation among and by the Residual Claimants in the Cooperative
Other Forms of Exploitation in the Small to Medium-sized Cooperative

Chapter 7: Exploitation in a Market Socialist Economy II
Exploitation in and through the Large Cooperative
Exploitation through State Organizations

Chapter 8: Other Options for Market Socialism?
Equity Ownership and Market Socialism
Other Forms of Ownership and Market Socialism
The Socialist Vision of the Good Society

Notes
References
Index

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