Editing Market economy (section)

=== Models of market socialism ===
Market socialism traces its roots to [[classical economics]] and the works of [[Adam Smith]], the [[Ricardian socialists]] and [[Mutualism (economic theory)|mutualist]] philosophers.<ref>{{cite book|last=McNally|first=David|title=Against the Market: Political Economy, Market Socialism and the Marxist Critique|publisher=Verso|year=1993|isbn=978-0860916062|page=44|quote=...by the 1820s, 'Smithian' apologists for industrial capitalism confronted 'Smithian' socialists in a vigorous, and often venomous, debate over political economy.}}</ref>

In the 1930s, the economists [[Oskar Lange]] and [[Abba Lerner]] developed a model of socialism that posited that a public body (dubbed the Central Planning Board) could set prices through a trial-and-error approach until they equaled the [[marginal cost]] of production in order to achieve [[perfect competition]] and [[pareto optimality]]. In this model of socialism, firms would be state-owned and managed by their employees and the profits would be disbursed among the population in a social dividend. This model came to be referred to as market socialism because it involved the use of money, a [[price system]] and simulated capital markets, all of which were absent from traditional non-market socialism.

A more contemporary model of market socialism is that put forth by the American economist [[John Roemer]], referred to as [[economic democracy]]. In this model, [[social ownership]] is achieved through public ownership of equity in a market economy. A Bureau of Public Ownership would own controlling shares in publicly listed firms, so that the profits generated would be used for public finance and the provision of a basic income.

Some [[Free-market anarchism|anarchists]] and [[libertarian socialists]] promote a form of market socialism in which enterprises are owned and managed cooperatively by their workforce so that the profits directly remunerate the employee-owners. These cooperative enterprises would compete with each other in the same way private companies compete with each other in a capitalist market. The first major elaboration of this type of market socialism was made by [[Pierre-Joseph Proudhon]] and was called mutualism.

Self-managed market socialism was promoted in Yugoslavia by economists [[Branko Horvat]] and [[Jaroslav Vaněk]]. In the self-managed model of socialism, firms would be directly owned by their employees and the management board would be elected by employees. These cooperative firms would compete with each other in a market for both capital goods and for selling consumer goods.