Market socialism is an economic system in which the means of production are neither owned nor planned, but are instead mediated by the market. The state or the workers own the means of production in this system, therefore it involves the public, cooperative, or the entire society.
The market's model or structure determines how profit should be distributed: to employees as remuneration, to society as a benefit, or to the general public as social dividends.
(Do you know What Monopoly is in Economics? Read all about it)
Resistance to Change
Neoliberalism's resistance to change is due to the fact that it pervades not only the financial sector, but also electoral politics, academia (particularly economics), and the media. These have an impact on the public's perception. The weakening of the nation-state as a result of capital globalization limits the electoral system's ability to effect change.
The Left has been particularly hesitant to identify an alternative outside of the ruling political classes. Many people have seen the public's dislike of socialism and the socialist movement's weakness as a result of the decline of the labor movement and the loss of the traditional working class.
As a result, market socialist principles have been pushed aside. The Right, which includes the Front National in France, the Tea Party in the United States, and even UKIP, has more radical views and is gaining political clout. Extra political movements (such as 'Occupy Wall Street') express discontent, but there is no logical alternative.
With current austerity policies and rising unemployment, now would be a good time to revive market socialism principles. While such approaches have some disadvantages, they also have some advantages.
(Was Market Socialism a Feasible Alternative for Transition Economies? Read this Journal article)
The Market Socialist Perspective
According to British political scientists Julian Le Grand and David Miller, the central premise is that market socialism preserves the market mechanism while socializing capital ownership. The key tenet of this social-democratic approach is that markets enhance not only efficiency but also freedom and democracy, making them politically appealing.
'Social ownership' can be defined in a variety of ways. Ownership by a group of people is highly favoured. Employee capitalism is defined as a situation in which employees do not own their machines or businesses.
Enterprises have the rights to utilise and profit from their assets in many variations, whereas investment agencies hold the capital and make strategic management decisions. However, every business has a democratic form, and one of them is employee control.
Companies that fail the public and are plainly lacking in public responsibility would be socialised as a result of a market socialism strategy. Currently, the banking, energy, and rail transportation industries are prime prospects.
To restore growth and employment, economic reforms could be implemented within a capitalist framework. It would enable the introduction of types of suggestive planning, which would increase public control.
(Let’s understand the Economy of Switzerland)
While sharing property, the policy would keep much of the attraction of market capitalism while reducing apparent socialist defects. The proposal has a benefit in retaining current market links of productive companies because the socialist ethic is thinly disseminated.
It has the advantage of being applicable in societies where the majority of the media, academics and the general public are opposed to socialism but supportive of democracy. If this approach proves to be effective, it could be expanded to cover other significant corporations.
James Yunker, an American economist, established this line of thinking. He emphasizes how 'pragmatic market socialism' reduces inequality while keeping the current consumer culture.
He recognizes that certain capitalists, whether current or former entrepreneurs, have a legal right to a profit as a reward for their efforts. However, extremely huge capital fortunes are the result of inheritance and illicit rewards for financial capital market speculation. Such earnings are not economically required nor ethically equitable.
All large, established business corporations, according to his proposal, should be owned by the public. Small and medium businesses, on the other hand, are unaffected by private ownership. Retail trade, family farms, professional partnerships, and entrepreneurial companies are among them.
(Do you know how is Deflation different from Disinflation?)
The business owner's motivation would continue to be profit maximization. Profits or bankruptcy would continue to be made as a result of market competitiveness. The goal would be to increase the level of equality in the allocation of capital assets.
The income from the capital property is unearned, and its excessively unequal distribution is a moral obligation.' The property would be surrendered to the government.
Profits from true entrepreneurship and invention, on the other hand, continue to exist and serve as incentives. And cash could be spent whichever anyone wanted - opulent and public lifestyles might remain.
Many parts of capitalism are kept while socialized property and planning are introduced, which is thought to appeal to the public more.
Many people, including politics instructor Christopher Pierson, believe that the viability of market socialism outweighs the loss of the socialist agenda's scope and purity. The economy might be socialized and public control could be implemented piecemeal, resulting in a hybrid society.
(Recommended blog - Economic Theory)
When seen as a final goal, market socialism has a lot of flaws. The capitalist ideals of competitiveness and profit motivation are still in place, and the socialist features brought through social ownership may be defeated.
It's possible that such programmes are a kind of democratic capitalism with socialist overtones. Many on the Left would reject levels of inequality, even if they reflected a beneficial contribution to the economy.
It's possible that market socialists are oversimplifying their plans for a hybrid economic structure. Autonomous businesses that seek market efficiency require incentives, and their success is measured in terms of profit.
As a result, not only is disparity created, but socialist values are also threatened. Even in the case of public ownership, market forces would result in economic instability and unpredictability. The wealthy would benefit at the expense of the poor. Individualism is promoted by competition, which is psychologically beneficial to the winners but depressing to the losers.
The market must also be understood in the context of a global capitalist economy, which complicates the implementation of market socialism on a country-by-country basis. The nation state loses its economic coordinating powers. Even if compensated, transnational firms would not quietly "surrender" ownership of their assets if faced with nationalisation.
(Check out - Capitalism vs Socialism)
Watch this: AskProfWolff: What is the difference between market socialism and centralized socialism?
Market socialism has the advantage of promoting democracy while simultaneously progressing toward socialism within capitalist market societies. There would be good outcomes in terms of capital allocation and income distribution.
Even those who are sceptics of planning and state administration will find it appealing. It would, at the very least, reverse financialization and place public ownership over failed businesses. Finally, it would expand democracy's highly valued social good of cooperative and employee control.