The Case for Market Socialism

The contemporary capitalist economy in the United States faces at least five crises: a drive for growth that has decimated the environment; a dependence upon alienated labor; accelerating economic inequality; entrenched social inequities; and an inability to provide economic security. It is possible for the government to take steps to address these challenges within the current economic framework. However, it is not clear that even the boldest social democratic reforms will enable capitalism to go on without continuing to cause fundamental harms. Because reform may not be enough, I want to consider one possible alternative economic framework: a version of market socialism committed to ecological sustainability.

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I use the term “market socialism” because the system I outline here is concerned with realizing equity and eliminating labor alienation while maintaining a market economy. So far as I know, my model is unique, although it has similarities with other market socialist models described in the Stanford Encyclopedia of Philosophy entry on socialism.

In my conception of market socialism, the government would provide all adults with a fixed income. The income level would be determined by the democratically organized government and would always be sufficient to cover everyone’s basic needs. In my opinion, the salient question determining the level of income should be the ability of ecosystems to support society. Whereas the current growth economic model disregards the natural world, the level of luxury (that is, material wealth above basic needs) in a market socialist society would be determined by the ability of humans and technology to generate wealth without destroying the environment. To be ethical, market socialism needs to be a thoroughly ecological project.

Because government would be the sole provider of income, I wouldn’t go to work because I need the money or because I want to get rich. Instead, I would go to work because I enjoy my work. Rather than the means of surviving, work would become a form of creative self-fulfillment oriented toward serving society. Work would be self-directed, either in the form of working for myself or, probably more commonly, choosing what kind of larger organization to work in (however, there would be no guarantee that I would be hired by any specific company).

One traditional principle of socialism, including market socialism, has been cooperative economic control. However, I propose bracketing the question of social organization at the micro-level of individual businesses. This is because I am not sure that there is one correct model of organization in all circumstances. Instead of mandating collective ownership, I think it would be better to let individuals determine what kind of economic organization they want to be part of. It is likely that the absence of economic coercion will encourage more people to join and build democratically run businesses. In any case, people will work in a set-up of their choosing rather than being forced into a job by the coercion of artificial economic scarcity. On a theoretical level, I view economic coercion as the cause of alienated labor; with coercion removed, people will work for the sole purpose of self-fulfillment within the context of serving society.

Upon receiving income from the government, I would be free to do with it as I chose. This means that the market system of price signals would remain intact. A business could only grow if people chose to patronize it and capital was made available for it. All taxes would be collected from businesses, although businesses would retain a portion of their revenue to be used as capital. Growth would exist in market socialism, but the growth of individual companies would not threaten the environment. The economy as a whole would only grow if the government made the decision to raise the universal income level. While the income level remained steady, there would be an ebb and flow of growth and decline among individual businesses competing for customers. 

There are several tricky questions facing a market socialist system; I’ll outline two challenges here. First, there may be tasks that society deems crucial but which nobody chooses to take on as part of their labor. A common assumption is that, while somebody has to dispose of garbage, nobody would freely choose to be a sanitation worker. If this becomes a problem, work considered essential but unpleasant would likely become the common responsibility of society. Currently, unpleasant work falls to low-income people who are forced by economic necessity to take on an unpleasant job as the totality of their professional life. Rather than this unjust arrangement, market socialism could determine a method of distributing this labor more evenly. Perhaps jobs like garbage disposal could be assigned for short periods of time to all people; it might be dreaded but accepted as a necessary social function. 

A second challenge relates to capital investment. The current mechanisms by which many firms expand their size and capabilities—private venture capitalist investment and public investment through stock markets, both driven by economic incentives to the investors—would not be available in this model of market socialism. I’ll suggest three options for resolving the problem. The first is that there would be no equivalent to stock markets and venture capitalists. Instead, owner(s) would only invest in their business from their personal savings or through business loans provided by banks. The second option is that businesses could apply for capital and the function of venture capitalists would be fulfilled by professionals provided an allotment of cash by the government to independently decide which businesses to invest in. These “sharks” would not receive economic benefits from their investments nor gain an ownership stake in the companies; however, they would have an engaging job and play an important social role. A third option is to replace stock markets with the socialization of capital. Each adult could opt-in to receive a set amount of money (in addition to their income) earmarked for business investment. The concept is similar to proposals for public financing of elections; rather than receiving a given amount of cash from the government for the purpose of backing candidates, adults would receive the money for the purpose of deciding which small or large businesses they want to support. There would be no financial or ownership incentives for backing companies (and so some people may choose not to bother) but there would be no disincentive either because the investment sum would not detract from an individual’s income.

It is clear that market socialism would provide solutions to the crises facing capitalism in the United States. This model protects the environment by limiting consumption and eliminating the drive toward macro-level economic growth. The problem of alienated labor is solved by ending economic coercion. Rampant economic inequality is replaced by relative economic equality. Social inequities cannot be eliminated by changes to the economy, but this system will strike a blow to white supremacy and patriarchy by greatly reducing or eliminating the racial and gender wealth gaps. Finally, by ensuring universal income to all, market socialism will realize the goal of abolishing poverty and any form of economic insecurity.

I remain open to the multitude of other models proposed by market socialists, as well as the systems proposed by social democrats, traditional socialists, and supporters of decentralized, non-market economies. However, I present my model of market socialism as another potential solution. I hope this helps us think creatively about the future even as we act in the present to address the crises caused by capitalism.

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