Types of Socialism - Market Socialism

Market Socialism

Market socialism refers to various economic systems that involve either public ownership and management or worker cooperative ownership over the means of production, or a combination of both, and the market mechanism for allocating economic output, deciding what to produce and in what quantity. In state-oriented forms of market socialism where state enterprises attempt to maximize profit, the profits can fund government programs and services eliminating or greatly diminishing the need for various forms of taxation that exist in capitalist systems.

Some forms of market socialism are based on neoclassical economic theory, with the aim of attaining pareto efficiency by setting price to equal marginal cost in public enterprises. This form of socialism was promoted by Oskar Lange, Abba Lerner and Fredrick Taylor. Other forms of market socialism are based on classical economics, such as those advocated by Thomas Hodgskin, who viewed interest accumulation, rent and profit as deductions from exchange-value, so that eliminating the capitalist element from the economy would lead to a free-market and socialism. The term market socialism has also been applied to planned economic systems that try to organize themselves partially along market-lines while retaining centralized state ownership of capital.

Other types of market socialist systems, such as Mutualism, are related to the political philosophy of Libertarian socialism.

Examples of market socialism include: economic democracy, the Lange Model, the New Economic Mechanism, Ricardian socialism, Liberal socialism and Mutualism.