1994: Equal Shares: Making Market Socialism Work

John Roemer

London & New York: Verso, 1996

For a hundred and fifty years, struggles for radical egalitarian alternatives to capitalism have be waged under the banner of "socialism." While the precise meaning of this idea has always been the object of intense debate, radical egalitarians have usually believed that an economy based on private ownership of the principle means of production and the overriding search for profit maximization could be supplanted by one organized around the satisfaction of human needs through some kind of public or social ownership. Even among those social democratic reformers whose political efforts were directed mainly towards ameliorating conditions in the existing society rather than working for a rupture with capitalist institutions, socialism still served as a visionary backdrop which kept radical egalitarian values alive.

Increasingly in the last decade, this vision has seemed to many people to be a fantasy. This is perhaps ironic. One might have anticipated that the demise of the command economies in the USSR and elsewhere would have emancipated the idea of socialism from the liabilities the Soviet authoritarianism. After all, for decades democratic socialists in the West had been denouncing the undemocratic practices in the Soviet Union and arguing that socialism should be understood as the extension of radical democracy to the economy rather than bureaucratic control of production. At long last, one might have thought, the ideal of democratic socialism could gain credibility.

That is not what has happened. With the end of authoritarian state socialism, the idea of socialism itself has lost credibility. Capitalism increasingly seems to many people of the left as the only viable possibility. For all of its deep and tragic flaws, the empirical example of the Soviet Union at least demonstrated to people that some alternative to capitalism was possible; capitalism was not the only game in town. Democratic socialists could then plausibly argue that the flaws in the command economies could be remedied with serious democratic reconstruction. Without the practical example of even a flawed, but still radical, alternative to capitalism, capitalism assumes ever more strongly the character of a "natural" system, incapable of radical transformation.

In this context, the left is in vital need of bold and creative new thinking on the question of the institutional conditions for radical egalitarian alternatives to capitalism. Whether or not in the end such alternatives are properly described as "socialism" is not really the important the question; the crucial issue is forging well-grounded ideals of how such egalitarian values can be translated into a politics of radical institutional innovation.

This volume in the Real Utopians Project series is devoted to an examination of one such proposal, John Roemer's innovative and provocative model for how institutions could be designed so as to make "market socialism" a sustainable -- and desirable -- way or organizing an economy. To many people the expression "market socialism" is an oxymoron: either the markets have to be massively curtailed for socialist principles to mean anything, or the socialism has to be deeply corrupted to enable markets to work properly. John Roemer, in his 1994 book, A Future for Socialism (Harvard University Press), challenges this view by elaborating a relatively simple device which, he believes, will both enable an economy to have well-functioning markets and to remain faithful to the egalitarian ideals of socialism. How does Roemer propose to accomplish this? In a nutshell, his proposal involves creating two kinds of money in a society: commodity-money, used to purchase commodities for consumption, and share-money, also referred to as "coupons", used to purchase ownership rights in firms. These two kinds of money are nonconvertible: you cannot legally trade coupons for dollars. Coupons are distributed to the population in an egalitarian manner. Citizens, upon reaching the age of majority, are given their per capita share of the total coupon value of the productive property in the economy. With these coupons they can then by shares from which they derive certain ownership rights, including dividends from the profits of firms and the right to vote for at least some of the people on the boards of directors of firms. There is thus a stock market, but the stocks can only be purchased with coupons, not dollars. Shares and coupons are nontranferrable. You cannot give your shares away, but must sell them at the market coupon rate, and you cannot give your coupons away. At death, all shares and unspent coupons revert to the state for redistribution. The nontransferability and nonconvertibility of coupons prevents ownership from becoming concentrated: the rich (in dollars) cannot buy out the poor. Since stocks are sold for coupons, not dollars, firms cannot directly raise capital by selling stocks. Financial capital is raised through credit markets organized by state banks and through various schemes by which the state converts the coupons acquired by firms into dollars. This involvement of the state allows for a significant degree of "planning the market". The result of this scheme, Roemer argues, is relatively freely functioning market mechanisms along with a sustainable egalitarian distribution of property rights, a roughly equal distribution of profits, and a significant planning capacity of the state over broad investment priorities. Thus: market socialism.

In May of 1994, the Havens Center for the Study of Social Structure and Social Change at the University of Wisconsin, held a two day workshop conference on Roemer's book. This volume in the Real Utopias Project begins with a summary of the core ideas of Roemer's proposal. This is followed by the revised versions of the conference papers which critically examine various aspects of Roemer's model and its normative and practical implications.