N. Scott Arnold Demonstrates that Market Socialist Models Possess Systematic Exploitation, NOT the Classic Capitalist Firm

 N. Scott Arnold’s book does not address the history of real existing socialism and the disappointment of these regimes to deliver on their revolutionary promise. This is a work in political, philosophical and economic appraisal of the model of market socialism as offered by the leading theoretical proponents of that system. The economic framework employed to critically assess the model of market socialism is one of the new institutional economics, with a special emphasis on the work on the theory of the firm and contracting (as represented in the work of Coase, Alchian, Demsetz, Williamson and Milgrom and Roberts, but also including an examination of the political process and bureaucracy (as represented in the work of Terry Moe). This makes perfect sense because the focus of the study is on the market socialist claim that workers’ control systems can eliminate the exploitation endemic to capitalist production. What Arnold demonstrates is that it is market socialist models that possess systematic exploitation, not the classic capitalist firm. The well-known concept of opportunism in the new institutionalist literature is employed here to show that it is cooperatives that offer numerable opportunities for opportunism, while the classic capitalist firm has found ways to police this problem.

—Peter J. Boettke, review of The Philosophy and Economics of Market Socialism: A Critical Study, by N. Scott Arnold, Public Choice 91, nos. 3-4 (June 1997): 417-418.