Economics of Market Socialism and the Issue of Public EnterpriseReform in Developing Countries (The Distinguishedl Lecture)

Historically state socialism has had dramatic initial successin creating a basic capital goods base in early stages ofindustrialisation and in its spectacular feats of mass literacy andpublic health campaigns made possible by mass-based organisations andforces of human mobilisation unleashed by socialist revolutions in poorcountries like China, Vietnam or Cuba. But from the post-mortem reportsof the collapse of the command economy in different parts of the worldit is now clear that centralised state socialism is largely incapable ofcoping with the technological demands of the increasing sophisticationin product quality and diversity and the needs of quick flexibility indecision-making and risk-taking in a whole range of economic activitiesspanning the technological spectrum from agriculture to semiconductors.There is no doubt that a more decentralised market-mediated allocationof resources and greater competition can correct much of the wastage anddynamic efficiency of the bureaucratic command system and introduce moreagility and flexibility in economic decisions. But the big question ishow effective the stimulus of competition and markets can be withoutlarge-scale private ownership.