Market socialism isn't crazy, so why haven't I ever met a market socialist?

The time I met socialist economist Abba Lerner. This did not happen.

People believe in all sorts of ideologies. Some of those ideologies are reasonable, some are totally nuts. I've met red Tories, libertarians, market liberals, social democrats, Marxists, and anarchists. But I've never met a market socialist. And I think I know why.

I've always found it easy to sympathize with the radical, democratic left. The world isn't as it should be and capitalism is the likely culprit, not only because we have a capitalist economy, but because capitalism treats human beings as a mean to its own ends. And that's the essence of immorality. So it's no surprise that many people want to dismantle capitalism. Unfortunately, no one is sure what should replace capitalism. We know that society is messed up and needs to be radically transformed, but attempts to replace capitalism wholesale with central planning have been a disaster.

Worse still, it is difficult to propose a moderately radical transformation of society. Karl Marx explains in his Critique of the Gotha Program:.

"Do not the bourgeois assert that the present-day distribution is "fair"? And is it not, in fact, the only "fair" distribution on the basis of the present-day mode of production? Are economic relations regulated by legal conceptions, or do not, on the contrary, legal relations arise out of economic ones?"

Marx is criticizing the United Workers Party because they speak of  "the fair distribution of the proceeds of labor" even though their moralistic language implicitly justifies the current distribution of wealth. According to Marx, we must uproot our economic relations if we want to conceive of a "fairness" that could justify equality.

Marx thought that economic relations are the real basis of our society: our social structure and moral beliefs are an epiphenomenal outgrowth of economic relations—Marx's base and superstructure.

Most people don't share Marx's views that our thinking is determined by our economic relations. But we could ask Marx's same rhetorical questions about contemporary policy analysis. Do not the market liberals assert that present-day policy is "good"? And is it not, in fact, the only "good" policy on the basis of the present-day mode of production?

I think the answer is no. But that criticism still packs a punch. From the premises of contemporary capitalism, tax cuts and deregulation make sense—at least some of the time. And it's difficult to analyse a policy change like "socialize the means of production". So it can be hard to square revolutionary fervor with bourgeois policy analysis.

Can we follow Marx's example in policy? If we uproot our economic system, can we find the basis for better and fairer policy?

Market socialism is a system such that the economy is organized through markets, but the firms that participate in those markets are owned by the people.

Let's look at John Roemer's succinct outline of his version of market socialism. [I've separated the quote into paragraphs to make it more readable. The quote is from Roemer's review of Whither Socialism]

There should be a separate currency (call it the ‘coupon’ currency) which could be used only for the purchase of shares of firms in the ‘public’ sector, or of mutual funds of such firms’ stock. Conversely, only coupon currency, not regular money, could be used to purchase such stock or mutual funds. 

Each citizen would receive an endowment of coupons at the age of majority, and would purchase mutual funds/firm stock with it. The shares of these funds/firms would trade on a stock market, with prices denominated (only) in coupon currency. Since no regular currency would be useful on this stock market, the wealthy could not purchase more shares in these firms than the poor. 

The profits of firms in the public sector would be distributed to citizens in proportion to their share holdings. It would be illegal to give shares to others, and at death, a person’s portfolio of such shares would be returned to the state treasury. 

Firms, in turn, would compete for the coupons of citizens, for they would be able to exchange coupons with the state for investment funds; as in the Bardhan proposal and as in Japan and Germany, they would be primarily monitored by banks. The coupon stock market is a mechanism to induce firms to compete for investment funds, to permit citizens to hold diversified portfolios, and to distribute a substantial share of the nation’s profits in a fairly equal manner among citizens.

None of these seem like terrible ideas, but it's hard to imagine who would find them appealing.

From the standpoint of economic policy, Roemer's ideas are at best untested. And they raise many questions about savings and corporate governance. Roemer's ideas are unappealing from a revolutionary standpoint as well. They sound less like the emancipation of human beings, and more like a dull videogame.

But we shouldn't throw up our hands and accept our economic system as it is. Market liberalism doesn't have a monopoly on good policy. Single-payer healthcare isn't necessarily market-oriented. But it's the best policy idea anyone's ever had, and it's a radical transformation of society that's both fairer and more efficient.

In the same vein, I think that the left can make criticisms of capitalism without needing a full-blown replacement. It doesn't require a revolution in our thinking to see that capitalism and our mixed economy are often poorly thought-out, poorly run, and morally suspect. It doesn't require a revolution in our economic relations to see that either. We can take single-payer healthcare as a model and look for a political program that is both inspiring and feasible. For instance, a carbon tax could raise money for state action while saving our environment. And more radically, a guaranteed annual income is easy to understand and easy to manage, and it would genuinely transform people's lives if they didn't have to worry about choosing between a terrible job and starvation.

You could argue that this is just defining socialism down. And there's some truth to that. Socialism is workers' control of the means of production. But when we look at market socialism as a practicable forms of worker's control, socialism doesn't necessarily sate our desire for a new, fair, and workable society.

I don't think we'll ever have market socialism because it doesn't work as a bourgeois policy proposal, and it doesn't inspire as a utopian vision. But there's other ways of achieving both.