A Design for Market Socialism
27 Pages Posted: 1 Jun 2017
Date Written: May 31, 2017
Socialism is conceptualized as a society in which individuals cooperate, distinguished from capitalism, characterized as involving ubiquitous economic competition. Here, I embed a formal model of cooperation in an Arrow-Debreu model, using the Kantian optimization protocol, and define a Walras-Kant equilibrium, in which firms maximize profits, consumers choose demands for commodities in the usual utility-maximizing fashion, and the state rents capital to firms. The labor-supply decision of workers, however, is arrived at using the cooperative protocol. Incomes are redistributed through a flat income tax. Walras-Kant equilibria, with any desired degree of income equality exist, are decentralizable, and are Pareto efficient.
Keywords: Market socialism, General equilibrium, First welfare theorem, Cooperation, Kantian optimization
JEL Classification: D50, D59, D6, P2
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