The main goal of market socialists is to socialize markets so that they serve the interests of society as a whole rather than those of large capital owners.
Market socialism addresses one major issue by allowing workers to control their workplaces through self-management. Workers control production and act as the residual claimants of the firm’s output, while investors can still invest freely and receive dividends. However, other stakeholders remain vulnerable. Worker cooperatives still seek to maximize the welfare of their members and therefore have incentives to maximize profits.
As a result, worker cooperatives may still engage in practices such as planned obsolescence, pollution, pricing above marginal cost, or attempts to build monopolies and cartels. Market competition and worker control reduce these problems, but due to information asymmetry, incomplete contracts, market frictions, and economies of scale, they do not disappear entirely.
To address these issues, John Roemer proposed a system of coupon stocks. This system not only mitigates many of the problems above but also increases social welfare and gives citizens greater control over production.
Under this model, every citizen receives a fixed number of coupons each month (for example, 1,000). Coupons cannot be exchanged for money, preventing wealthy individuals from accumulating ownership by exploiting others’ immediate consumption needs. This ensures that ownership remains broadly and equally distributed across society.
Citizens can use coupons to purchase shares. Owning shares entitles them to a portion of a firm’s profits, paid as a social dividend in regular currency. Shares can be traded for other shares at coupon prices, allowing citizens to manage risk and build portfolios, but the underlying coupons cannot be cashed out. Upon death, a person’s coupon portfolio returns to the public treasury and is redistributed to the next generation.
This system creates a more egalitarian distribution of ownership. Wealth cannot be accumulated through inheritance or hoarding; citizens can only increase the value of their holdings through successful investment decisions.
Roemer also argues that the system avoids a free-rider problem found under capitalism. In a capitalist economy, poorer individuals often have an incentive to sell their shares to wealthier investors, concentrating ownership and control in the hands of a small elite. Under market socialism, citizens cannot liquidate their ownership claims, ensuring that ownership remains widely distributed. This can reduce the influence of concentrated wealth and lead to better social outcomes.
The coupon stock market also serves as a disciplinary mechanism for firms. Share prices signal expected performance to citizens and public investment banks. If a firm’s coupon share price falls significantly, public banks can increase oversight and monitor management more closely to ensure the firm remains competitive and efficient.
Finally, the system gives every citizen a claim on the economy’s profits throughout their lifetime. Estimates suggest that the resulting social dividend could substantially increase the income of lower-earning groups while preserving one of the key advantages of capitalist stock markets: allowing individuals to choose how they wish to bear risk through portfolio selection, but without generating extreme concentrations of wealth and ownership.
I recommend reading the chapters “§8 A Model of a Market-Socialist Economy,” “§9 The Efficiency of Firms under Market Socialism,” and the appendix “The Value of the Coupon Dividend in the United States” from the book A Future for Socialism by John E. Roemer. https://drive.google.com/file/d/1X9F-1pL1Zqqy1iJ3xp3At1KfWef9STKC/view?usp=sharing