Market Socialism: A Case for Rejuvenation

Pranab Bardhan and John Roemer

Journal of Economic Perspectives, 1992, vol. 6, issue 3, 101-116

Abstract: In this paper, we will outline a feasible economic mechanism of "competitive socialism." Our claim is that competitive markets are necessary to achieve an efficient and vigorous economy, but that full-scale private ownership is not necessary for the successful operation of competition and markets. Contrary to popular impression, this claim has not yet been disproved by either history or economic theory. It is the failure of both the political right and the left to disentangle the concepts of private ownership and the competitive market that has led to the premature obituaries for socialism. In the second section, we look at the question of the "soft budget constraint" as an agency problem under market socialism. We then propose two variants of a bank-centric system of insider monitoring as a viable solution to the agency problem. The next section discusses the essential problem of political accountability and the difficulty of credible pre-commitment in avoiding the soft budget constraint problem, and suggests ways of minimizing this problem in our proposed system. We then conclude by addressing some of the other standard objections to a proposal for market socialism.

JEL-codes: P21 (search for similar items in EconPapers)
Date: 1992
Note: DOI: 10.1257/jep.6.3.101
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (43)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/jep.6.3.101 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:jecper:v:6:y:1992:i:3:p:101-16

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

Journal of Economic Perspectives is currently edited by Enrico Moretti

More articles in Journal of Economic Perspectives from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().