ABSTRACT
This chapter examines the experience of Hungary and Yugoslavia, whose economic systems are usually thought of as being the closest yet to market socialism in practice, and then considers theoretical models of democratic market socialism, so far unrealized in practice. It is important to keep in mind that what is under discussion is the use of the market mechanism as an instrument of planning. Market socialism is a term it would probably be best to avoid. It has been misleadingly used to describe the family of decentralized planning models which seek to arrive at a Pareto-efficient competitive general equilibrium through an iterative process - what Bliss has called 'the Economics of Fairyland'. Socialism is intended to contrast with capitalism and incorporates a rejection of the exploitation, inequality and injustice associated with capitalism. Relatively few elaborated models of regulated market socialism have been developed and most of them have been by reformers from the East.
