A Future for Socialism

by John E. Roemer

Book Overview

Many people point to recent events--the collapse of the Soviet Union, the electoral defeat of the Sandinistas--as proof that capitalism has triumphed over socialism once and for all. In A Future for Socialism, a noted economist argues that socialism is not dead but merely in need of modernizing. John Roemer believes that the hallmark of socialism is egalitarianism--equality of opportunity for self-realization and welfare, for political influence,...

• Format: Paperback
• Language: English
• ISBN: 0674339460
• ISBN13: 9780674339460
• Release Date: January 1994
• Publisher: Harvard University Press
• Length: 184 Pages
• Weight: 0.05 lbs.
• Dimensions: 0.6" x 5.5" x 8.3"

Customer Reviews

Socialism Updated

"A Future for Socialism" is a neat book that analyzes the feasibility and desirability of socialism in light of the failure of Soviet-style economies. In lieu of central planning, the author would retain markets but distribute stock ownership (and company profits) widely, thus blocking concentrated ownership of wealth. With no class deriving most of its income from corporate profits, a market-socialist society would have no lobbies agitating for public "bads" (such as pollution or unfair labor practices) that generate profits even though they reduce overall welfare. The author would also allocate credit through publicly-owned banks to correct the tendency of private firms to under-invest in the economy. These banks would also "monitor" firms to ensure that they remained profitable. The book is based on egalitarian principles and modern micro-economics, not on Marxist notions of "exploitation" or the labor theory of value. It recognizes the strengths of markets, and insists that inter-firm competition is an essential condition for innovation. It argues the case for market socialism on the ground that socialism is needed to correct market failures and promote equality. "A Future for Socialism" provides one hopeful blueprint for humanizing and democratizing modern economies. Written in the 1990s, it seems to have been aimed at Eastern European publics grappling with the need to transform centrally-planned economies and dispose of state-owned companies. Unfortunately, the proposals have limited relevance to the U.S., where the political environment provides little opportunity for radical reform. That said, the book is still a mind-expanding read. Highly recommended.

Bold, but is is possible?

The aim of John Roemer's book is to "sketch blueprints for a feasible socialism, to provide a basis, once again, for daring to believe in the dream" (p. 124). Socialism - the dream - is here defined in terms of equality of opportunities, not outcome. The question is then how he wants to do this. Roemer has two proposals. First, to change the structure of ownership in firms. Second, to increase government control over the investment process. I shall discuss these in turn. In Roemer's scheme large firms are first nationalized, and the ownership is then redistributed to the people. All citizens above 21 are supposed to receive coupons which they must invest in firms, but they are not free to sell or give the coupons to each other. They are, however, free to withdraw their coupons from one firm and invest in another whenever they want to (the price of a stock is given by the number of coupons you have to give. This price is allowed to fluctuate freely). The coupon-holders would then own the firm collectively and receive dividends from the coupons in the same way that owners of stocks receive dividends i.e. according to the profitability of the firm. When a person dies the coupons go back to the state for redistribution, for example to those who have just turned 21. In short, the coupons become a kind of money which can be used to buy stocks, the only difference being that you are not free to sell or give the coupons away. The aim of this coupon-scheme is to increase equality of opportunities by making the income from ownership more equal. Today 10% of the people in a country often owns 70-80% of all corporate wealth. Under Roemer's scheme the distribution would be much more equal, and more people would have the opportunity to live good lives. The second proposal put forth by Roemer, is to increase government control over the investment process. This is to be done, mainly, by creating a system of differentiated interest rates for different sectors. He gives three reasons why state intervention is desirable (p. 90-92). First, because of positive and negative externalities from investment. For example, investment in research and education is under-provided by the market, while investment in processes that pollute is over-provided. Second, to create public goods such as highways and communication systems. This may not be too controversial, but Roemer argues that the government should greatly increase this kind of spending since - he believes - it pays a very high return. Third, to compensate for incomplete markets. For example, there is no market for insurance against unlucky investment decisions. This means that firms do not make enough risky investments - investment which also have a very high potential return. In fact, there is something of a prisoners' dilemma situation: Individually it is not optimal to take a high risk, but socially it is optimal that some firms - more than now - make high-risk investments. These three arguments complete R