ABSTRACT
This chapter provides some insights into the potential performance of profit-oriented market socialism by examining one of its core issues using the tools of basic neoclassical economic theory. It develops a general equilibrium model of a hypothetical economy which may serve as a template either for the contemporary capitalist economy or for a profit-oriented market socialist economy. The model addresses the allocation of the overall labor force between "ordinary laborers" and "capital managers," and also the allocation of a so-called "residual" between ordinary laborers and capital managers. The meaning of "capital management effort," on the other hand, is any sort of human application not recognized and rewarded by standard labor income, but rather by various forms of property income. The chapter sets forth a simple general equilibrium model adapted to the determination of the socially optimal values of two parameters designated the "assignment coefficient" and the "distribution coefficient".
