Publication Date: January 2020
Socialism is back on the political agenda in the United States. Politicians and some economists who identify as socialists, however, do not discuss property relations, a topic that was central in the intellectual history of socialism, but rather limit themselves to advocacy of economic reforms, funded through taxation, that would tilt the income distribution in favor of the disadvantaged in society. In the absence of a more precise discussion of property relations, the presumption must be that ownership of ﬁrms would remain private or corporate with privately owned shares. This formula is identiﬁed with the Nordic and other western European social democracies.
In this article, I propose several variants of socialism, which are characterized by diﬀerent kinds of property relation in the ownership of society’s ﬁrms. In addition to varying property relations, I include as part of socialism a conception of what it means for a socialist society to possess a cooperative ethos, in place of the individualistic ethos of capitalist society. Diﬀerences in ethea are modeled as diﬀerences in the manner in which economic agents optimize. With an individualistic ethos, economic agents optimize in the manner of John Nash, while under a cooperative ethos, many optimize in the manner of Immanuel Kant. It is shown that Kantian optimization can decentralize resource allocation in ways that neatly separate issues of income distribution from those of eﬀiciency. In particular, remuneration of labor and capital contributions to production need no longer be linked to marginal-product pricing of these factors, as is the key to eﬀiciency with capitalist property relations. I present simulations of socialist income distributions, and oﬀer some tentative conclusions concerning how we should conceive of socialism today.
Keywords: Market socialism, General equilibrium, Cooperation, Kantian optimization, First theorem of welfare economics
JEL Classification Codes: D3, D6, P2, P5, H4