Summary: The Politics Of Market Socialism

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Referee Report for the paper titled “The Politics of Market Socialism” by Andrei Shleifer and Robert W. Vishny

Summary :

This paper provides an in-depth analysis of one of the rarely discussed drawbacks of market socialism - the assumption that a democratic socialist government pursues efficiency. It argues that :

Even if a government is democratic, it will not place sufficient weight on economic efficiency, irrespective of whether it is socialist or capitalist
If a government ends up pursuing its ‘political’ objectives, the damage will be greater under socialism than capitalism

The former argument is modelled in a two fold manner. First, that socialist dictators cause more economic inefficiency than capitalist dictators due to an added burden of political insecurity;
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To prove the claim of higher efficiency in capitalist democracies through robust empirical evidence.
To examine the effectiveness of James A Yunker's (1992) version of ‘pragmatic market socialism’ as another alternative to the existing version of market socialism.
To research on how a smooth transition can be made with least repercussions, if indeed democratic capitalism is a better alternative than market socialism.

References :
“Socialism, Market.” International Encyclopedia of the Social Sciences. 2008. 21 Oct. 2015
Bardhan, Pranab, and John E. Roemer, "Market Socialism: A Case for Rejuvenation," Journal of Economic Perspectives, Summer 1992, 6:3, 101–16.
Bardhan, Pranab, and John E. Roemer, "On the Workability of Market Socialism," Journal of Economic Perspectives, Vol. 8, No. 2 (Spring, 1994), pp. 177-181
Lipton, David, et al. "Creating a market economy in Eastern Europe: The case of Poland." Brookings papers on economic activity (1990):

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