The socialism market refers to a centrally planned economy that uses the free market mechanism for allocation of resources in certain economic sectors or under certain conditions.
In market socialism the State reserves the control of sectors that it considers of strategic importance (such as telecommunications, energy, etc.), but allows the free interaction of supply and demand in other economic activities.
An additional alternative is that the State allows a market to be governed by the forces of supply and demand once certain production quotas that are under its control are met.
For example, the State may allow farmers to sell their apple production in the market after they have complied with delivering to the State, or selling at a controlled price, a certain quantity (for example, 500 kilos per month).
Characteristics of market socialism
The basic characteristics of market socialism are:
- The State controls strategic economic sectors: energy, transport, telecommunications, banking, etc. In some cases, a certain group of companies may be allowed to compete in these sectors, but under regulations imposed by the State ( price control, limits on certain behaviors, etc.)
- Tax incentives and freedom in hiring workers are often offered to encourage entrepreneurship and investment.
- Producers in certain sectors must meet production quotas (which they give to the government) and can then sell their surpluses on the market.
- It seeks to attract foreign investment.
- Mixed investment is promoted, that is, the combination of national and foreign capital.
Origin of the concept
The origins of the concept of market socialism can be found in Oscar Lange’s work “The Economic Theory of Socialism” published in 1937, where a system is proposed where the means of production are under state control while labor and Final consumption goods or services are assigned through the market mechanism.
However, it is worth mentioning that, prior to Lange’s work, other authors had already mentioned the idea of incorporating elements of the market economy into socialism. Among these authors are: John Stuart Mill, Pierre-Joseph Proudhon or Eduard Bernstein.
Examples of market socialism
Here are some examples of economies that have applied market socialism to some degree:
- In the Soviet Union of the 20’s with the so-called “New Economic Policy”.
- In Yugoslavia in the 50’s with the so-called self-managed socialism.
- Currently in the People’s Republic of China after Deng Xiaoping’s reforms in the 70’s.