Academic journal article Independent Review

Has John Roemer Resurrected Market Socialism?

Academic journal article Independent Review

Has John Roemer Resurrected Market Socialism?

Article excerpt

John E. Roemer, a leading socialist economist, has recently proclaimed a "Future for Socialism" (Roemer 1994). His book is advertised as being "measured, highly accessible, and most of all compelling." I have come to the opposite conclusions. Roemer's most provocative assertion is his claim to have found "ways of reformulating the concept of market socialism in response to the Hayekian critique" (2). In his attempt to convince central planners as well as communitarians in the socialist camp of the virtues of the market, Roemer indeed goes a long way in accepting the objections that Friedrich A. Hayek and others put forward during the calculation debate of the 1930s. It is helpful to recall the debate on socialist economics from the early warnings of Ludwig von Mises and Havek to the later analyses of Yugoslav and Hungarian market socialism by Svetozar Pejovich or Janos Kornai. These critiques form the background of what Roemer calls the fifth generation" of market-socialist proposals, which he claims lack the defects of those associated with former generations.

Whether this assertion can be substantiated is the central question of this article. First, we must reconstruct Roemer's model of market socialism. Because Roemer leaves important elements of this system unexplained or unconnected, my account can only mirror his eclecticism, but I shall try to avoid unfriendly misreadings. Next I shall describe Roemer's own normative scheme of reference, finding his concept of "equal opportunities" highly ambiguous. Furthermore, whatever the interpretation of equal opportunities, it is hardly reconcilable with the effects that Roemer's proposals for institutional reform must be expected to have. I analyze these effects in the following sections. They all involve substantial obstructions of market competition in different dimensions and can be summarized as evidence of a fundamental conclusion: spontaneous market competition and egalitarian market socialism are as incompatible as Hayek and other critics always believed them to be.

Four Generations of Socialist Miscarriages: The Debates in Retrospect

According to Roemer (1994, chap. 4), the market-socialism debate has now entered its fifth stage. My recapitulation of the preceding four generations of market-socialist ideas and refutations serves a twofold purpose: (1) to show that the debate was a catalyst in the development of Austrian ideas of the market process; and (2) to show the defects of former market-socialist ideas that Roemer now claims to have avoided.

The Calculation Debate

The theoretical deliberations on the economics of socialism began with "the belief that socialism will dispense entirely with calculation in terms of value and will replace it with some sort of calculation in natura based on some units of energy or some other physical magnitude" (Hayek [1940] 1994, 235). This view, traditionally held by European Marxists such as Friedrich Engels or Karl Kautsky, was first challenged by Mises ([1920] 1994). Mises provoked socialist economists to enter the debate with his "impossibility theorem," usually summarized as follows: there is no basis for rational calculations of value if there are no market prices; and there are no market prices without the voluntary exchange of private property rights. Hence, if socialists want to allocate of resources "rationally" -- sacrificing a less-valued opportunity in favor of a more highly valued one in view of consumers' preferences and producers' capabilities -- they cannot at the same time dispense with production goods as objects of market exchange. Only full-fledged capital markets reveal monetary values of production goods and thus provide information and incentives necessary for a rational use of the means of production. One decisive qualification Mises probably considered unnecessary to dwell on at length. Its due consideration by his critics, however, would have avoided many misunderstandings:

The static state can dispense with economic calculation. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.