A CASE FOR MARKET SOCIALISM: WHAT DOES IT MEAN? WHY SHOULD WE FAVOR IT?

...b) What the consumer is aiming at is, in fact, detrimental to his or her own best interests...

...Third, our proposals would amount to a socialization of capital, and thus to bringing under popular control a major source of power in the present system...

...This is most obviously the case where the items in question have a direct political content...

...with limited resources, she or he is less able to pursue other plans and projects...

...Since the fourth view is at first glance the most congenial from a socialist point of view, we will begin by examining its strengths and weaknesses...

...Nevertheless, it is clear that capital and labor must be treated differently from ordinary consumer goods...

...The second question is less easy to answer...

...But self-management is not merely a matter of giving workers an economic stake in their enterprise, desirable though that may be from the point of view of performance...

...The attractions of workers' self-management are easy to see...

...The organization of work (hours, conditions, etc...

...on the contrary, they are socially defined, on the basis of standards of living that are regarded as "normal" in a particular context...

...nor would such issues enhance the tone of debate in the democratic assemblies arising in a socialist society...

...Clearly there will still be a place for industries that are run as public services under government control—the railways, for example...

...The exceptions are cases in which a particular choice is unrepeatable andjor the costs of making a bad decision are very high...

...The shape of the capital stock accumulated in one period creates the world in which succeeding generations have to make their way...

...It is more likely to succeed in areas with relatively small-scale production processes that rely disproportionately on the skills of the entire labor force (rather than on capital or the talents of a small subgroup), and in relatively well-established markets and product lines...

...Other examples can be cited...

...If the results of those inquiries reveal market failures in the broader sense, we will begin to search for ways either of replacing the market entirely or of intervening to correct undesirable tendencies...

...An elite makes the decisions which significantly affect a large number of lives...

...Second, there is the Croslandite view that capitalist firms are an acceptable component in socialism (perhaps alongside 361 other components) provided that the state uses its powers of taxation and regulation to correct income deficiencies and so forth...

...There would be a large cooperative sector, perhaps a sector in which capital-labor partnerships were formed, perhaps a sector of very small enterprises (restaurants and so forth) taking a conventional capitalist form...

...For some or all of these reasons, cooperatives are prone to invest at a lower rate than their capitalist counterparts...

...It should therefore be apparent that government continues to have a major policy role in our version of market socialism...

...Here people seem one-dimensional just because of their simplicity...

...First, it promises a much greater involvement for ordinary people in the running of their enterprises...

...Ultimately socialists must decide how far their communitarian commitments can be taken, in view of their equally strong commitments to individuality and freedom...

...Markets give their participants a certain kind of freedom...

...The economic analysis shows above all that producer cooperatives react sluggishly to changes in market conditions...

...Whereas my decision to buy salami rather than garlic sausage has at most a marginal effect on anyone else's life, a decision to build or not build a factory in a particular location may have enormous consequences for the local community, and for a future generation...

...There is likely to be a bias within conventional capital markets against the cooperative mode of production which leads to restrictions on the provision of external funds...

...There is, however, one general point that market socialists need to insist upon in their response to neoliberalism...

...We have not taken a dogmatic line on the extent to which this means 364 placing capital under public control (say through a publicly managed investment bank) or on the other hand dispersing capital ownership far more widely in the form of individual holdings...

...Why should this origin be worse than any other...

...Such diversity would be a realistic reflection of the varied types of production that exist in a modern economy...

...left entirely open...

...If there is any community of view among market socialists, it is simply that markets are not automatically to be identified with capitalist markets, and may have a number of properties that all socialists should be willing to find attractive...

...The variations occur in the extent to which producers face market incentives in deciding what to produce...

...If the economy is closed, the welfare burden will fall on domestic consumers...

...Such pluralism would have to be cultivated as a matter of policy, and supported by the appropriate regulatory and investment agencies...

...Second, the worker in supplying labor also hands over a large segment of his or her life to the employer...

...For instance, two people might be, simultaneously, friends, competitors on the tennis court, political allies, and rivals in the marketplace...

...We will also want to look at the distributive results of various markets in terms of ideals of fairness and equality...

...This is another example of potential conflict between the interests of the cooperative members and those of the consumer, who gains from the lower prices arising from the larger scale of production...

...We will want to ask, for example, about the effect that particular markets have on local communities: do they create incentives that will lead, as a byproduct, to the breakup of living patterns that are valued by those who participate in them...

...There seem in fact to be only two broad instances in which the case for consumer sovereignty breaks down: (a) What the consumer is aiming at is beneficial to her or him, but she or he lacks the expertise to make an intelligent judgment about how to obtain it...

...It seems overwhelmingly likely that basic industries requiring massive levels of investment (oil, coal, steel) would be state managed, even though subject to (mainly international) market competition...

...Partnerships of this kind will be more inclined to expand em363 ployment in the face of market opportunities since employment levels will be decided by the representatives of capital...

...IT IS NECESSARY FIRST to dispense with the fiction of "the market" as a single entity...

...Community...

...Protecting people against making damaging choices as consumers and providing for needs outside of market mechanisms can both be regarded as manifestations of a caring society...

...Capital and Labor DRAWING THE BOUNDARIES between market and nonmarket provision is therefore a matter for empirical investigation, and the boundaries themselves may be expected to shift over time...

...but they tell far more strongly against libertarian visions of an all-encompassing market economy than against the circumscribed use of market mechanisms that we have been proposing...

...Can this be avoided without a complete transcendence of markets...

...From a certain point of view, the picture we have painted is anti-utopian and may not seem to differ much from the mixed economy favored by social democrats (of whatever party...

...Investment THIS BRINGS US TO THE SECOND ISSUE investment...

...Patients should be protected at least by a state licensing system and possibly by state funding of doctors...

...Thus there is a powerful tendency for these decisions to gravitate in practice into the hands of experts who are able to spend time acquiring the necessary information, and so control of capital passes effectively into the hands of a small elite...

...So on this ground...

...Since each member has a stake in the profit of the enterprise, there are likely to be substantial gains in productive efficiency...

...In either case (or with a mixed system), large concentrations of capital in private hands are broken up, and power is diffused...

...There is still a choice to be made between diffusing power as far as possible through competition, and regulating it through public authority...

...Even if certain personal rights are indeed sacrosanct, these will not include the unrestricted right to sell and acquire possessions, a right which is liable to have social consequences of serious concern to socialists...

...The economic incentives it provides tend to break down communal relationships...

...It is an appropriate macro-economic policy on the demand side that is needed for full employment, matched if necessary by government creation of the additional cooperatives required to mop up surplus labor...

...Lack of direct competition and the potential social costs of a market-based service together provide a strong reason for taking these services out of the market sector...

...First, the members must regard themselves as belonging to such a community...

...Distributive justice...

...It is also a matter of encouraging active decision-making in an area of daily life that is centrally important to most people...

...Since this bare assertion still provokes dissent in some quarters, we will begin by outlining the essential case for markets before going on to look at many of the qualifications that have to be entered...

...But it is misleading to pretend that capital poses no special problems for the theory of markets...

...A mixed system of this type can be defended against the challenges listed above...

...Self-management is not impossible in large, multi-plant diversified corporations— the Yugoslays approach the problem by breaking the firm up into a loose coalition of selfmanaging subunits—but the costs of democratic management rise while the benefits for the work force diminish...

...The neoliberal case looks most convincing when applied to markets in ordinary consumer goods...

...Far more common are markets in which competition benefits those immediately involved in it but has adverse consequences for a wider constituency or broader social interests...

...and at the same time indicated where the socialist view on these questions would differ from the neoliberal view...

...in particular, political participation should become a more significant aspect of life under socialism, and a major counterbalance to the economic sphere...

...It does not follow that needs, so defined, are infinitely expandable...

...Second, as a result the distribution of income is likely to be very considerably more egalitarian than under the modified version of capitalism that we enjoy at present...

...The market distributes goods and services in a way that is, from a socialist point of view, inappropriate...

...Thus the confluence of plan and market, referred to at the beginning, would reappear here as a deliberate structuring of the institutions of the market...

...367...

...The term "market socialism" has no unique reference...

...Second, this shared attitude must be expressed in the way that people behave to one another, including here the institutions that they establish to govern their formal relationships, as well as aspects like solidarity and mutual aid among equals...

...Furthermore, the social repercussions of investment decisions are likely to be substantial...

...All of these arguments have force...

...too, the market socialist ought to concede that the scope of the market should be circumscribed...

...In the first part of the chapter we outlined arguments for markets that we thought socialists should take to heart...

...Few socialists can now fail to see the attraction of some kind of market in newspapers, books and so forth, even if they are profoundly skeptical about the existing market structure in this area...

...Constraints on the market can be seen as contributing to the realization of this communitarian ideal...

...It is quite feasible to think of a division of social resources between those earmarked to satisfy needs and those serving to reward merit, and to provide the incentives that are required to make a market sector function effectively...

...Skills RELATED TO SIZE IS THE NATURE OF SKILLS required in the production process...

...Since some needs are always likely to fall into the latter category, there will be a good case for non-market provision in these instances...

...Moreover, all the discursive evidence suggests that cooperatives are unhappy about accepting "excessive" external financing because of the consequential loss of control over the future of the firm...

...THE COOPERATIVE FORM may also be inappropriate in high-risk industries and industries subject to rapid technological change...

...This will to some extent be reflected in the operation of labor markets, where working conditions as well as pay can be expected to affect the choice of work, but it is unreasonable to expect all the consequences of labor to be taken into account in this way...

...Consumer sovereignty...

...We should be wary of making too much of case (a...

...The neoliberal strategy is to try to assimilate all markets to these intuitively appealing cases...

...Missing is the creative tension that most actual people experience between the need for selfassertion and the moral demands of their cornmunity...

...It just does not make sense for a central planning board to 359 make decisions about the relative quantities of salami and garlic sausage that its citizens need...

...Where, on the other hand, the extent of need cannot be accurately judged in advance of the treatment that meets it, the only effective policy will be provision in kind...

...In some areas, markets will not work at all, for example where the product is such that two or more competitors cannot remain in equilibrium, and one productive unit tends to establish a dominant position from which it cannot then be dislodged by new entrants...

...There will be many instances where consumers indeed make erroneous choices, but these choices are self-correcting in the sense that, next time around, a better decision will be made...

...Why, then, should it be considered as a significant socialist advance...

...can be altered to suit members' preferences...

...They are meant to suggest only that it may be possible to find a principled grounding for the institutionally pluralistic system that we sketched earlier...

...if their decision turns out to be mistaken (the firm lays off employees or goes bankrupt) the costs are very large indeed...

...The onus, however, is on the critic of market provision to show that one or another of these factors is liable to be present in the case of a particular good and service...

...Are these communitarian elements strong enough to offset the individualism that appears to be inherent in 366 market relationships...

...Such a view is most eloquently expressed in William Morris's utopian fable News From Nowhere.' His vision of human fulfillment has its charms, but it is by no means self-evidently true...

...Both features are often present in the case of medical treatment, for example, and are good reasons for disallowing a free market in medical services...

...Market socialism is therefore not about "rolling back the state" in a blanket sense, though it is possible that in some particular areas market socialists would wish to see the role of the state diminished...

...These operate on the basis of an agreed division of rights and responsibilities between the two sides, and a corresponding division of profits...

...They must also show that their proposals can be reconciled with the core ideals of socialism itself...

...empirical factors, like the number of buyers and sellers and the degree of their organization...

...We assume that the idea of distribution according to need will feature prominently in the thinking of almost all socialists...

...Left to themselves, cooperatives tend to invest less than capitalist firms in the same situation would have done...

...The moral is surely that the cooperative form may be inappropriate if we want to exploit social opportunities in sectors with rapidly changing demand, technological or cost conditions...

...This does not augur well for self-management in sectors in which the production process itself is relatively mechanical and enterprise success instead hinges on the highly specific talents of a small group of workers: in design, in finance, in marketing, or in foreign sales...

...This raises questions about the extent to which socialists should regard people's present preferences as having canonical status in decisions about the allocations of goods and services...

...Although they certainly place constraints on people's behavior ("market forces"), they free people from dependence on particular individuals such as petty bureaucrats...

...Second, does distribution according to need imply the abandonment of markets, or might the principle be met by retaining markets but redistributing purchasing power, say through the tax system...

...When combined with the probable limitations by cooperatives of their size, which will restrict the spreading of risks through diversification, this criterion rules out sectors such as banking, finance, and insurance...

...In fact, no complex society dispenses with markets as means to allocate goods to consumers...

...Two questions then immediately arise...

...Thus there is a strong prima fade case for special protection that does not hold in ordinary market contracts where caveat emptor is the rule...

...In broad outline, market socialists want to have a free market in products, and either no market at all, or a well-regulated market, in labor and capital...

...Other reasons argue against a significant role for self-management in highly capitalintensive large-scale plants or indeed any sectors with major economies of scale in production...

...Power is spread throughout the enterprise, with each member formally having equal voting rights, and a chance to share in managerial functions (e.g., through a rotating committee system...

...That is, a worker acquires a particular skill and works fulltime for a single employer, not many different firms...

...It is equally wrong to think of "market" and "planning" as diametrically opposed processes...

...The sense of community would be fostered through participation at work, and through nonmarket forms of association, especially political assemblies...

...Socialists are concerned not only with economically calculable losses, but also with effects on the general quality of life in a society...

...It is not clear that a stronger form of community than this implies would be desirable...

...Market socialism as we understand it combines market and nonmarket elements in a way that allows for the expression both of individual desires and of communal loyalties...

...Such cases may be comparatively rare...

...if the victims of irresponsible private medical treatment have later to be looked after at the community's expense...

...The familiar Smithian point, that market incentives are a dependable way of getting our bread baked, should be taken seriously...

...Socialists are likely to believe that income equalities above a certain point, however they are generated, are socially damaging, and that skill at investment, though certainly a socially useful talent, is not the kind of skill that should command very large rewards...

...It is a blanket term that has emerged to cover all versions of socialism in which markets are given a significant role to play...

...We would, on the contrary, endorse the presumption that the individual is the best judge of his or her own interests unless there are special factors present that make this implausible...

...The major gains lie in three areas...

...Perhaps, then, the idea of role-playing, and of coping with the dilemmas that arise when role requirements appear to conflict, will seem on reflection to be integral to our idea of a developed human being...

...A socialist will not see this as a corollary of the property rights of individuals, as some individualists would...

...in other areas its role will be a supervisory one—structuring and then regulating the working of a market...

...On the other hand, people in the Marx/Morris view of things seem oversocialized to the point at which their individuality is in danger of disappearing altogether...

...In fact, the desires that markets respond to are very largely created by the market itself, and they are in that sense inauthentic...

...One is that it reintroduces the possibility of conflict between one party whose interests are solely in levels of profit and a second party whose interests are more diverse...

...It is worth bearing in mind, however, that, first, people may positively welcome such safeguards as ways of avoiding onerous decisions: second, a community that recognizes a responsibility for the welfare of its members cannot remain indifferent if they embark on courses of action whose effects eventually drain the community's resources (e.g...

...Compare, for example, the need for food with the need for medical treatment...

...But we have not yet attempted to respond to some basic criticisms that may be launched against our proposals from what might be called the "fundamentalist" position...

...one cannot built a general argument against the market on the basis of a series of special cases...

...So the case for markets must be made in terms of their general consequences...

...For a community to exist, two conditions appear to be necessary...

...In these cases consumer sovereignty can 360 normally be expected to work effectively, and socially damaging side effects will only occur in special cases...

...One of the virtues of markets is that, by transferring these decisions to a small group of sausage makers, it clears the decks for more important discussions...

...This strongly suggests that cooperatives are also inappropriate for the production of goods that require capital-intensive techniques...

...A second consideration is the legitimacy of markets...

...The Structures of Enterprises IF PRODUCT MARKETS ARE TO BE RETAINED under socialism, but capital and labor markets abolished or at least transformed, what ought the structure of enterprises to be...

...At the libertarian end of the spectrum, socialism implies no more than equal entitlement to the means of production, with the question of how people choose to use their endowments (whether in capitalist enterprises, cooperatives, etc...

...Provided that they can keep those roles distinct—that is, they have ways of preventing their economic interests from intruding on their political aims, and so forth— there seems no reason why such a complex relationship should not be stable...

...Yet we do not envisage the market sector in a socialist society as being all-embracing...

...SOME QUESTIONS REMAIN...

...Cooperatives in such sectors could actually lead to significant welfare losses, since the collective membership might choose to sacrifice economies of scale for retaining relatively small size and effective work force control over the firm...

...These criticisms come in various shapes and forms, revealing three major strands in the antimarket case...

...Where needs are largely similar, or where differences in need can easily be estimated by simple observation, it may be possible to respond to them by cash transfers...

...In good times, cooperatives will not adapt sufficiently to high demand or technological changes...

...It is rather about using the power of government intelligently, to carry out those tasks which the state alone can perform...

...They tend to expand the range of choices that may be made, and they give each person a variety of partners with whom to deal, so that no one is forced to interact with people who cause problems of one kind or another...

...The object of production should rather be to meet human needs...

...Criticisms SHOWING THAT A FEASIBLE INSTITUTIONAL structure can be devised for the economy is, however, not the only task facing market socialists...

...The argument for markets falsely assumes that consumers are sovereign...

...At the same time, they ought to be alive to the wide variety of circumstances affecting the operation of markets...

...Forms of planning may be as numerous as kinds of markets, and there are many possible ways in which planning decisions can be linked to the operation of markets...

...It encourages people to think of themselves as isolated individuals and to neglect the ties that bind them together...

...Contrary to the view that economic markets once established necessarily pervade all aspects of existence, it is possible to point to many areas of life, even under capitalism, from which economic considerations are successfully barred...

...The clearest cases will be those in which choices when acted upon change the agent's preferences in a way that is, on balance, undesirable in the light of his or her overall system of desires...

...First, are needs to be defined so extensively that all resources will have to be allocated on this basis...

...and the need to compete in such a market for continuing investment obliges the labor force in each enterprise to pursue overall profit (rather than profit per worker) as its goal...

...This is not because markets have a directly ennobling effect on human nature, but because obstructive individuals can be circumvented, and because competitive pressures tend in the long run to favor the survival of the helpful...

...Markets tend to dissolve personal power...

...The capitalist system is highly responsive to changes in market conditions from both the cost and demand side, whereas cooperatives are interested in the collective welfare of their members, which will include their pay, conditions, hours of work, and size of the group with whom they are employed...

...There may be, for instance, long-term health implications whose seriousness is hard to judge...

...Many separate markets interact with each other, and the operation of each depends on a variety of background conditions...

...On the other hand, there is now abundant literature, both theoretical and empirical, on the functioning of cooperatives, suggesting some significant limits on the potential scope of a self-managed sector...

...Won't the effect of market competition be to break down communal ties and set people against one another...

...Socialists should look for ways of strengthening these areas...

...This is that markets in capital and labor are very different in their implications from markets in most products...

...There is of course an element of insurance as well, in the sense that each person is a potential beneficiary at some point in his or her life, but the idea of mutual aid does not exclude this possibility...

...A second difficulty is that the effects of the partnership system on the distribution of income may in the long term be less desirable than those of the cooperative system...

...Such decisions are of their nature harder to make than (typical) decisions about consumer goods...

...It is certainly true that many consumer demands are stimulated by producers who have an interest in satisfying them, but it is not clear why this should give grounds for objection...

...We have stressed throughout that, for socialists, markets must be offset by government planning, and also by a public sector in which services are provided on a nonmarket basis...

...to be rational they need to be based on complex judgments about the future performance of enterprises...

...It does not follow immediately, of course, that capital markets should be abolished...

...Nonetheless, it is clearly impossible to create a community ex nihilo simply by institutional change, and to that extent all socialists must recognize the practical limits of their proposals in this area...

...It is meant to show that, where markets can be expected to work effectively, there are good reasons for allowing them to operate...

...In some areas its role will be direct, in the sense that an arm of government will administer services directly...

...365 Case (b) takes us into more debatable territory...

...Cooperatives will be most effective where the labor force as a whole, rather than some tiny proportion, has significant contributions to make on the managerial side and least where it does not...

...The concepts of externalities and public goods currently underpin a large amount of state activity aimed either at regulating markets to prevent damaging side effects or at providing goods and services that private individuals have inadequate incentive to produce...

...The internal and external conditions seem naturally to reinforce one another: that is, a communal identity encourages people to practice and support institutions of mutual aid, while on the other hand the practice itself tends to strengthen that identity...

...Here there are broadly speaking three considerations...

...And as Hayek points out, markets allow us collectively to make the best use of the information dispersed throughout a society, though one does not have to elevate this proposition to the status of a universal truth...

...To avoid this kind of conflict, the partnership agreement may need to be quite detailed (otherwise potential investors will be deterred...

...However, capital and labor both have special features that make the assimilation highly problematic...

...To begin with, it is usually impossible for workers to spread their labor among a number of alternatives, as if they were mere commodities...

...normative factors, the customs and conventions governing exchanges in that particular area...

...Socialists ought not to despise efficiency and freedom of choice, and they ought to be fully aware of the defects of officialdom...

...Clearly such participation only makes sense where there are real decisions to be made...

...The state will continue to play such a role under market socialism, as indeed it must under all forms of socialism...

...More controversially, the environment in which people work may affect their personalities and future preferences...

...None of this is intended as a blanket endorsement of market mechanisms...

...A familiar example is addiction, where exposure to a substance or experience has the effect that the person comes to need increasingly large doses to maintain a minimum level of satisfaction...

...Different reasons support the same conclusion in the case of several of the welfare services...

...2 William Morris, News from Nowhere (London: Routledge & Kegan Paul, 1970...

...investment in housing is an obvious example here...

...LABOR POSES PROBLEMS of a different kind...

...The Fabian pamphlet, tract 516, also contains some criticisms and rebuttals of this article, too long to be printed here...

...Take capital first, and consider decisions to invest in this or that productive enterprise...

...In bad times, cooperatives are ill-suited to the hard decisions involved in fundamental capital and labor restructuring...

...institutional factors such as government regulation and the specification of property rights...

...Some socialists would want to deploy a strong theory of human needs, in terms of which felt desires are to be critically assessed...

...Self-management involves the democratic control of the firm by its labor force and its success will hinge on the relevance and capacity of the entrepreneurial group's innate skills...

...It rewards merit and luck rather than need...

...If we accept that cooperative entrepreneurs will be relatively more risk-averse than their capitalist counterparts, they will require a risk premium from projects over and above the market rate of return that would choke off the volume of investment undertaken...

...Assuming that these policies are popularly supported, people are giving up some fraction of their income to protect the vulnerable...

...The remarks in the last paragraph fall far short of a properly worked-out philosophical basis for market socialism...

...Why should this matter...

...Notes 1 See J. Vanek, ed., Self-Management: Economic Liberation of Man (London: Penguin, 1975...

...A socialist, having a general view about the shape of the society she or he would like brought into existence, cannot remain indifferent to such effects even if the individuals in question do not actively resist them...

...IN GENERAL TERMS, a feasible socialist market economy would have to be institutionally pluralistic...

...If the economy is open, domestic cooperatives will be squeezed out of foreign and home markets by more flexible international competitors...

...This does, of course, have a paternalist ring to it, and socialists may differ in the extent to which they wish to see people safeguarded against making harmful market choices...

...One can view this as placing a limit on investment 362 demand at a quantity multiplied up from internal financial sources by a ratio which the membership determines to be consistent with retaining control over the destiny of the cooperative...

...Many analysts have seen this as a source of unemployment under market socialism, but cooperatives are unlikely to fire members in order to increase collective welfare...

...which is to say that it exercises power...

...Most of our desires are in any case socially produced, as Marx himself was eager to point out...

...However, the point can be broadened: if I am buying for cash, I have no need to explain or justify a request for a large consignment of salami, and this freedom to arrange my personal life in the way that I happen to prefer is one whose value should not be underestimated...

...Occupying a subordinate role at work lessens the ability to participate effectively in political arenas, for instance...

...Unless some solution to the under-investment problem is found, for example via the central direction of fixed capital accumulation through cooperative banks, this seems to rule out self-management for the heavy industrial sectors—steel, chemicals, metal-working—sometimes referred to as the "commanding heights...

...This makes workers highly vulnerable...

...This position is less absurd than those standing both to the left and to the right would like to make it seem...

...Readers wishing to obtain the pamphlet should write to the Fabian Society, 11 Dartmouth Street, London, SW1H 9BN, England.—Eds...

...Capital-labor partnerships may be a way of combining the benefits of self-management with some of the economic advantages of the orthodox capitalist firm...

...Clearly the tendency of capitalism (and of unrestricted market relations in general) is to foster self-assertion at the expense of social loyalties...

...Third, the respective rights of capital and labor in the enterprise should be redefined in the form of a capital-labor partnership, with each party being allocated a predetermined share of profit...

...There is, however, a tradition of socialist thought that emphasizes the simplicity and transparency of social relations under socialism, and from this point of view the idea of role-playing, with its suggestion of artifice, may seem alien...

...Improved market conditions permit cooperatives to gratify more fully their collective goals, but to the extent that these conflict with increased production, the effect on output will be dampened relative to that of capitalist firms...

...What Is the Market...

...On the other side, there is no case for a general veto on market mechanisms...

...Difficulties THERE ARE, HOWEVER, at least two difficulties with the partnership idea...

...This could be eliminated by the creation of a cooperative bank to act both as a source of saving and a broader supporting institution for the self-managed sector along the lines proposed by Vanek and to some extent undertaken by the Caja Laboral Popular for the Mondragon group of cooperatives.' But there could still be problems for investment on the demand side...

...Markets are an efficient way of producing and distributing a very large number of mundane items, from tomatoes to transistor radios...

...Finally, the distribution of income, although it must to some extent reflect the market position of those with special skills, is likely to be considerably more egalitarian than in the alternative forms of enterprise canvassed above...

...Communitarian ideals find their practical expression in the shaping of markets to meet social objectives and in social policies which aim to satisfy a range of needs...

...This issue cannot be definitely resolved here, but it is relevant that people seem able to stand in multiple relationships to one another depending on the various roles that they occupy from time to time...

...Needs cannot be defined in an ahistorical, quasibiological way...

...The market breeds competition and destroys community...

...On most understandings of "need," the answer to the first question is "No...

...By setting the parameters of diverse markets, they can be made to advance various public interests yet still cater to different individual tastes...

...As people invest in more or less successful partnerships, any initial equality in the distribution of investment capital is likely to give way to a cumulative advantage for the shrewd investors...

...Forth, enterprises in market socialism should normally take the form of workers' cooperatives, with capital supplied externally and entitled only to receive interest...

...From a socialist point of view, however, externalities and public goods have a deeper significance...

...Since capital is now a risk-bearing factor, there is room for a more conventional capital market...