ABSTRACT
Marx's Capital was concerned with identifying the laws of motion that brought the capitalistic system into existence and that he expected would, in time, bring about its ultimate destruction by revolution. The question of the nature of the socialist society that would come into being after the revolution was not addressed by Marx. These considerations were thought premature, and anticipation of planning for the new socialist society was viewed as an exercise in utopianism. Nevertheless, Marx clearly understood that resource allocation would be a basic problem under socialism. I Resource allocation, as has already been examined in Chapter 16, is precisely the problem that welfare theory undertook to address. There is, therefore, an important parallel in the development of welfare theory and the economics of socialism. Specifically, welfare theorists used neoclassical price theory to identify the criteria for an optimum allocation of resources and to demonstrate that such an allocation would, in fact, tend to be realized through the operation of the competitive price system. Since the pure theory of welfare economics is unrelated to any particular institutionalist structure of society, it is equally applicable to any type of economic system. It is precisely this aspect
of the theory of resource allocation that led to its adoption as a basis for examining the possibility of rational planning under socialism.
