Markets, Planning and Democracy

Markets, Planning and Democracy

Essays after the Collapse of Communism

New Thinking in Political Economy series

David L. Prychitko

The essays contained herein span over a decade and reflect David Prychitko’s thinking about the role of the market system, and its relation to planning and democratic processes. The collection consists of previously published and unpublished articles written not only for economists but also for an interdisciplinary audience.

Chapter 12: Does Market Socialism Have a Future? From Lange and Lerner to Schumpeter and Stiglitz

David L. Prychitko

Subjects: economics and finance, austrian economics


12. Does market socialism have a future? From Lange and Lerner to Schumpeter and Stiglitz Joseph Stiglitz dropped a bomb on the post-communist literature with the publication of his Whither Socialism? in 1994. I had argued in the previous chapter that the modern welfare state has emerged as the Left’s ideal, and yet Stiglitz, an eminently respectable economist, published a defense of market socialism shortly thereafter. Surely Stiglitz must be taken seriously. In this chapter I shall explore Stiglitz’s general case for a renewed vision for market socialism.1 I think, of course, that Stiglitz still misunderstands the Mises–Hayek case against socialist planning. But I also believe Stiglitz focused too much on Lange’s idealized model of market socialism, and failed to consider Schumpeter’s. In fact, the market socialist models of Lange and Schumpeter seem to be treated as complementary in the literature on socialist calculation. (Perhaps this is one reason why Stiglitz focuses almost exclusively on the Langean variant and offers no citations to Schumpeter’s model.) I shall attempt to disentangle and critically compare the two models. By doing so, we shall find that many of Stiglitz’s present concerns, and flaws, are remarkably similar to Schumpeter’s. We shall also find that Stiglitz is really much more mainstream than the title of his book suggests: he is really trying to save, in the name of ‘market socialism’, the modern welfare state. ARROW, DEBREU, AND STIGLITZ Stiglitz (1994, pp.15–26) argues that market socialism failed in Eastern Europe because it was...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information