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A Design for Market Socialism

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Abstract

Socialism is conceptualized as a society in which individuals cooperate, distinguished from capitalism, characterized as involving ubiquitous economic competition. Here, I embed a formal model of cooperation in an Arrow-Debreu model, using the Kantian optimization protocol, and define a Walras-Kant equilibrium, in which firms maximize profits, consumers choose demands for commodities in the usual utilitymaximizing fashion, and the state rents capital to firms. The labor-supply decision of workers, however, is arrived at using the cooperative protocol. Incomes are redistributed through a flat income tax. Walras-Kant equilibria, with any desired degree of income equality exist, are decentralizable, and are Pareto efficient.

Suggested Citation

  • John E. Roemer, 2017. "A Design for Market Socialism," Cowles Foundation Discussion Papers 2090, Cowles Foundation for Research in Economics, Yale University.
    • Handle: RePEc:cwl:cwldpp:2090
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    File URL: https://cowles.yale.edu/sites/default/files/files/pub/d20/d2090.pdf
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    More about this item

    Keywords

    Market socialism; General equilibrium; First welfare theorem; Cooperation; Kantian optimization;
    All these keywords.

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D59 - Microeconomics - - General Equilibrium and Disequilibrium - - - Other
    • D6 - Microeconomics - - Welfare Economics
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

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