John E. Roemer

Document Type

Discussion Paper

Publication Date

6-1-2017

CFDP Number

2090

CFDP Pages

26

Journal of Economic Literature (JEL) Code(s)

D50, D59, D6, P2

Abstract

Socialism is conceptualized as a society in which individuals cooperate, distinguished from capitalism, characterized as involving ubiquitous economic competition. Here, I embed a formal model of cooperation in an Arrow-Debreu model, using the Kantian optimization protocol, and define a Walras-Kant equilibrium, in which firms maximize profits, consumers choose demands for commodities in the usual utilitymaximizing fashion, and the state rents capital to firms. The labor-supply decision of workers, however, is arrived at using the cooperative protocol. Incomes are redistributed through a flat income tax. Walras-Kant equilibria, with any desired degree of income equality exist, are decentralizable, and are Pareto efficient.

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