The Philosophy and Economics of Market Socialism.

• Author: Stanfield, James Ronald

Scott Arnold presents a very elaborate new institutional economic (NIE) analysis of the prospects for market socialism. He arrives at market socialism by way of an examination of the "isms" debate that establishes the socialist criticism of capitalism, thus also indicating the general character of the prospective socialist reformation. In the second chapter, he submits that the bleak experience of formerly existing socialism and the gist of the economic calculation debate have made a compelling case that market socialism is the potentially viable alternative to market capitalism. Arnold also carefully specifies the structure of the market socialist alternative.

In the next three chapters, Arnold uses the NIE theory of organizations and transactions costs to examine the nature of exploitation in market capitalism, having identified exploitation as the least tractable among the problems that socialism seeks to remedy. In the final three chapters Arnold examines exploitation in market socialism and considers various alternative arrangements by which the problem could be addressed.

Arnold's conclusion is a bold one. In his view, not only would a market socialist system fail to eliminate exploitation, it would encompass more exploitation than market capitalism. He reaches this conclusion by defining exploitation as a failure of "reciprocity," meaning that an individual is not receiving some income or wealth that she would receive in the absence of exploitation [p. 65]. (The reader is advised that this notion of reciprocity is a philosophical one that has little apparent relation to the concept as it is used in the institutional analysis of so-called old institutional economists - OIE [8, oh. 3]. Given idiosyncratic asset values, transactions costs, bounded rationality, and the presence of a significant penchant for self-advancement - Oliver Williamson's "opportunism," the presence of exploitation is institutionally assured and the question is how it can be institutionally constrained or restricted to acceptable dimensions. As noted, Arnold argues that the market socialist economy would be inferior to the market capitalist economy in instituting this constraint.

Some readers would likely object to Arnold's reduction of exploitation to individual returns since the thrust of the radical position is that societies, not individuals, produce, and it follows that exploitation is not a matter of individual just desserts but of the invidious and...