China’s Socialist Market Economy: Lessons of Success

In the late 1930s Oskar Lange put forward the idea of “Market Socialism,” an economy in which assets (means of production) were owned Socially (by the communist party or State), but which mimicked the supply-demand price adjustment of the competitive market economy. Aba Lerner, Lange and others then debated this issue during the 1930s. The key element that is common to ‘market socialism’ a la Lange and Lerner and ‘Socialism’ (a la Lenin and Stalin) is socialist (i.e. party) ownership and (managerial) control of assets. The key difference is market based allocations versus centrally planned allocations.