Market economy what Is a Market Economy?

Models of market socialism 
Market socialism traces its roots to classical economics and the works of Adam Smith, the Ricardian socialists and mutualist 
philosophers.
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In the 1930s, the economists Oskar Lange and Abba Lerner developed a model of socialism that posited that a public body 
(dubbed the Central Planning Board) could set prices through a trial-and-error approach until they equaled the marginal cost of 
production in order to achieve perfect competition and pareto optimality. In this model of socialism, firms would be state-owned 
and managed by their employees and the profits would be disbursed among the population in a social dividend. This model came 
to be referred to as market socialism because it involved the use of money, a price system and simulated capital markets, all of 
which were absent from traditional non-market socialism.
A more contemporary model of market socialism is that put forth by the American economist John Roemer, referred to as 
economic democracy. In this model, social ownership is achieved through public ownership of equity in a market economy. A 
Bureau of Public Ownership would own controlling shares in publicly listed firms, so that the profits generated would be used for 
public finance and the provision of a basic income.
Some anarchists and libertarian socialists promote a form of market socialism in which enterprises are owned and managed 
cooperatively by their workforce so that the profits directly remunerate the employee-owners. These cooperative enterprises 
would compete with each other in the same way private companies compete with each other in a capitalist market. The first 
major elaboration of this type of market socialism was made by Pierre-Joseph Proudhon and was called mutualism.
Self-managed market socialism was promoted in Yugoslavia by economists Branko Horvat and Jaroslav Vaněk. In the self-
managed model of socialism, firms would be directly owned by their employees and the management board would be elected by 
employees. These cooperative firms would compete with each other in a market for both capital goods and for selling consumer 
goods.