Market Socialism

: January 8, 2018

A planned economy is not the definition of socialism, because there is planning under capitalism; the market economy happens under socialism, too. Planning and market forces are both ways of controlling economic activity – Deng Xiaoping

Socialism is defined by its class nature – the rule of the proletariat (or peasantry in Maoism) over the bourgeoisie.  Socialism is not necessarily a command economy.   Socialist regimes have been known to use market forces and capitalist regimes have been known to use planning and commands.  The essential difference between socialism and capitalism is not the command economy / market economy dichotomy.

Lenin’s New Economic Policy utilized market economics and currently China does. What makes these economies still socialist is that the line between the Government and business is blurred or erased.  Mussolini defined fascism as the merging of corporate and state power.  The difference between market socialism and fascism is that under market socialism the Government and business blur into one for the purpose of protecting workers.   In American market socialism, there may still be a McDonalds and a Burger King, but both McDonalds and Burger King would have progressive policies implemented from the inside and progressive institutions would play a role in management as opposed to investors having full property rights.   Under fascism these forces are merged but instead of protecting workers, the combined entity now solidifies the interests of the economic insiders (who may be ethnic minorities or may not).  If McDonalds and Burger King controlled the EPA and stopped all regulation, as well as invaded countries to get potatoes, that would be fascism.  However, looking out for workers under a market economy is not fascism.  Fascism certainly uses planning and fascism is not socialism.   Even American “liberal Democracy” at times uses planned economics.

Socialism can, however, be command oriented as Stalin supported more of a command economy than Lenin.   He grew impatient with the slow progress of industrialization and for technocratic reasons wanted to speed it up.  Mao had similar motivations – China was an undeveloped and primitive country and Mao used centralized planning to  “leap forward.”  Neither of these examples make command economics the definition of socialism.  If it was Mussolini and Hitler would be socialists and Lenin would be a capitalist.

About The Author