We collect and republish selected Working Papers and Journal Articles on Exploring Economics.
Abstract: This paper focuses on the debate held in the twenties and thirties of the last century between libertarian economists and socialist economists, following the denial by the first ones of the feasibility of a socialist economy. This controversy is well known to specialists and has been widely commented. It seemed to me useful to initiate non-specialists in an original way: by having the controversy speaking by itself. We review the main contributions and summarise their arguments with, initially, the bare minimum of personal comments. Walrasian general equilibrium serves as a reference for the defenders of market socialism in the controversy. But the concept of competition behind this theory is very incomplete; it is purely passive. It follows that the market socialism which emanates from it is not really a MARKET socialism. It is lacking the competition which innovates. Markets for capital goods are also lacking in theses models. Our paper then turns to a new generation of socialist models involving this real competition. We review two models proposed by Bardhan and Roemer and then exhibit a personal model. This type of model is facing a modern criticism whose central concept is the "soft budget constraint".
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This paper helps to understand an important issue about socialism: the economic one. Primarily, socialism is a socio-political concept about the ownership in the means of production and societal organisation in the absence of abstract labour. That entails the question ever present with socialism since its conception: How to decide what to produce, and in which amount? And how to ensure allocative efficiency or, vice versa, that there is no waste of resources in absence of market-based prices?
That is what this paper analyses in depth, ending on an interesting alternative to a market-based coordination mechanism.