A possible milestone may have been achieved in 1992 when the American Economic Association published John Roemer and Pranab Bardhan's article "Market Socialism: A Case for Rejuvenation' in the summer issue of its Journal of Economic Perspectives. Aside from a handful of articles on the theory of cooperative production in the American Economic Review, the American Economic Association had not published any important work on market socialism since Abram Bergson's article on Oskar Lange's market socialist proposal ("Socialist Economics") in the 1948 Survey of Contemporary Economics. Implied in the concept of market socialism are very serious questions concerning the economic and ethical legitimacy of the capitalist status quo. Such questions were more natural during the ravages of the Great Depression of the 1930s, when Lange's proposal was first put forward. By the time Bergson's essay appeared in 1948, these questions were rapidly evaporating. Two factors may have been at work. World War II thoroughly eliminated the excess capacity problem of the Great Depression, and Keynesian anticyclical policy has effectively precluded any repetition of the problem in the postwar era. In addition, the rapid postwar rise of the Soviet Union to the status of chief menace to Western civilization greatly inhibited socialistic dissent within the United States and its First World allies.
Now that the Soviet Union has been dissolved and its successor republics and erstwhile satellites are apparently making haste to rejoin the world mainstream of democratic market capitalism, conservatives everywhere are celebrating the "death of socialism" in human affairs. Such celebrations are conceivably premature. For a long time, there has been a minority of individuals in the West who have believed that some form of democratic market socialism, as yet unimplemented anywhere in the real world, would provide a superior alternative both to the democratic market capitalism of the contemporary United States and to the oligarchic planned socialism of the ex-Soviet Union. Throughout the Cold War period, interest in democratic market socialism may have been restrained by the association of socialism with a dreaded national enemy. The capitalist economic system has been able to wrap itself up in the flag, to enlist in its own defense the powerful and unreasoning force of patriotism. Now that the Cold War is receding, it may be possible for many people to consider the idea of socialism in a calmer and more objective frame of mind. Thus--however paradoxical it may seem at first glance--it is at least conceivable that the death of Soviet communism will in fact lead to a renaissance of interest in socialism. The publication of the Roemer-Bardhan article in the Journal of Economic Perspectives may be an indication of renewed interest in market socialism within the profession of economics, and renewed professional interest may lead ultimately to a serious real-world reform effort.
This article surveys and evaluates three plans for a profit-oriented system of market socialism that have been put forward in the professional literature during the post-lange period. The first published reference to my own proposal for "pragmatic market socialism" appeared in a 1974 article in the Review of Social Economics; the first published reference to the proposal of Leland Stauber for "municipal ownership market socialism" appeared in a 1975 article in Polity; and the first published reference to the proposal of John Roemer and various co-authors for "bankcentric market socialism" appeared in a 1991 article in Dissent. All three proposals have in common the key principle that publicly owned firms would operate, as a rule, according to a profit-maximization incentive within a competitive environment.
It is probably no accident that all three proposals have been put forward by Americans. There is something peculiarly American in the notion of profit-maximizing …