For a hundred and fifty years, struggles for radical egalitarian alternatives to capitalism have be waged under the banner of "socialism." While the precise meaning of this idea has always been the object of intense debate, radical egalitarians have usually believed that an economy based on private ownership of the principle means of production and the overriding search for profit maximization could be supplanted by one organized around the satisfaction of human needs through some kind of public or social ownership. Even among those social democratic reformers whose political efforts were directed mainly towards ameliorating conditions in the existing society rather than working for a rupture with capitalist institutions, socialism still served as a visionary backdrop which kept radical egalitarian values alive.

Increasingly in the last decade, this vision has seemed to many people to be a fantasy. This is perhaps ironic. One might have anticipated that the demise of the command economies in the USSR and elsewhere would have emancipated the idea of socialism from the liabilities the Soviet authoritarianism. After all, for decades democratic socialists in the West had been denouncing the undemocratic practices in the Soviet Union and arguing that socialism should be understood as the extension of radical democracy to the economy rather than bureaucratic control of production. At long last, one might have thought, the ideal of democratic socialism could gain credibility.
 
That is not what has happened. With the end of authoritarian state socialism, the idea of socialism itself has lost credibility. Capitalism increasingly seems to many people of the left as the only viable possibility. For all of its deep and tragic flaws, the empirical example of the Soviet Union at least demonstrated to people that some alternative to capitalism was possible; capitalism was not the only game in town. Democratic socialists could then plausibly argue that the flaws in the command economies could be remedied with serious democratic reconstruction. Without the practical example of even a flawed, but still radical, alternative to capitalism, capitalism assumes ever more strongly the character of a "natural" system, incapable of radical transformation.
 
In this context, the left is in vital need of bold and creative new thinking on the question of the institutional conditions for radical egalitarian alternatives to capitalism. Whether or not in the end such alternatives are properly described as "socialism" is not really the important the question; the crucial issue is forging well-grounded ideals of how such egalitarian values can be translated into a politics of radical institutional innovation.
 
This volume in the Real Utopians Project series is devoted to an examination of one such proposal, John Roemer's innovative and provocative model for how institutions could be designed so as to make "market socialism" a sustainable -- and desirable -- way or organizing an economy.  To many people the expression "market socialism" is an oxymoron: either the markets have to be massively curtailed for socialist principles to mean anything, or the socialism has to be deeply corrupted to enable markets to work properly. John Roemer, in his 1994 book, A Future for Socialism  (Harvard University Press), challenges this view by elaborating a relatively simple device which, he believes, will both enable an economy to have well-functioning markets and to remain faithful to the egalitarian ideals of socialism. 
 
How does Roemer propose to accomplish this? In a nutshell, his proposal involves creating two kinds of money in a society: commodity-money, used to purchase commodities for consumption, and share-money, also referred to as "coupons", used to purchase ownership rights in firms. These two kinds of money are nonconvertible: you cannot legally trade coupons for dollars. Coupons are distributed to the population in an egalitarian manner. Citizens, upon reaching the age of majority, are given their per capita share of the total coupon value of the productive property in the economy. With these coupons they can then by shares from which they derive certain ownership rights, including dividends from the profits of firms and the right to vote for at least some of the people on the boards of directors of firms. There is thus a stock market, but the stocks can only be purchased with coupons, not dollars. Shares and coupons are nontranferrable. You cannot give your shares away, but must sell them at the market coupon rate, and you cannot give your coupons away.  At death, all shares and unspent coupons revert to the state for redistribution. The nontransferability and nonconvertibility of coupons prevents ownership from becoming concentrated: the rich (in dollars) cannot buy out the poor. Since stocks are sold for coupons, not dollars, firms cannot directly raise capital by selling stocks. Financial capital is raised through credit markets organized by state banks and through various schemes by which the state converts the coupons acquired by firms into dollars. This involvement of the state allows for a significant degree of "planning the market". The result of this scheme, Roemer argues, is relatively freely functioning market mechanisms along with a sustainable egalitarian distribution of property rights, a roughly equal distribution of profits, and a significant planning capacity of the state over broad investment priorities. Thus: market socialism.
 
In May of 1994, the Havens Center for the Study of Social Structure and Social Change at the University of Wisconsin, held a two day workshop conference on Roemer's book. This volume in the Real Utopias Project begins with a summary of the core ideas of Roemer's proposal. This is followed by the revised versions of the conference papers which critically examine various aspects of Roemer's model and its normative and practical implications.
 

Archon Fung and Erik Olin Wright 

As the tasks of the state have become more complex and the size of polities larger and more heterogeneous, the institutional forms of liberal democracy developed in the nineteenth century — representative democracy plus techno-bureaucratic administration — seem increasingly ill-suited to the novel problems we face in the twenty-first century. “Democracy” as a way of organizing the state has come to be narrowly identified with territorially-based competitive elections of political leadership for legislative and executive offices. Yet, increasingly, this mechanism of political representation seems ineffective in accomplishing the central ideals of democratic politics: facilitating active political involvement of the citizenry, forging political consensus through dialogue, devising and implementing public policies that ground a productive economy and healthy society, and, in more radical egalitarian versions of the democratic ideal, assuring that all citizens benefit from the nation’s wealth.

The Right of the political spectrum has taken advantage of this apparent decline in the effectiveness of democratic institutions to escalate its attack on the very idea of the affirmative state. The only way the state can play a competent and constructive role, the Right typically argues, is to dramatically reduce the scope and depth of its activities. In addition to the traditional moral opposition of libertarians to the activist state on the grounds that it infringes on property rights and individual autonomy, it is now widely argued that the affirmative state has simply become too costly and inefficient. The benefits supposedly provided by the state are myths; the costs—both in terms of the resources directly absorbed by the state and of indirect negative effects on economic growth and efficiency—are real and increasing. Rather than seeking to deepen the democratic character of politics in response to these concerns, the thrust of much political energy in the developed industrial democracies in recent years has been to reduce the role of politics altogether. Deregulation, privatization, reduction of social services, and curtailments of state spending have been the watchwords, rather than participation, greater responsiveness, more creative and effective forms of democratic state intervention. As the slogan goes: “The state is the problem, not the solution.”

In the past, the political Left in capitalist democracies vigorously defended the affirmative state against these kinds of arguments. In its most radical form, revolutionary socialists argued that public ownership of the principle means of production combined with centralized state planning offered the best hope for a just, humane and egalitarian society. But even those on the Left who rejected revolutionary visions of ruptures with capitalism insisted that an activist state was essential to counteract a host of negative effects generated by the dynamics of capitalist economies -- poverty, unemployment, increasing inequality, under-provision of public goods like training and public health. In the absence of such state interventions, the capitalist market becomes a “Satanic Mill,” in Karl Polanyi’s metaphor, that erodes the social foundations of its own existence. These defenses of the affirmative state have become noticeably weaker in recent years, both in their rhetorical force and in their practical political capacity to mobilize. Although the Left has not come to accept unregulated markets and a minimal state as morally desirable or economically efficient, it is much less certain that the institutions it defended in the past can achieve social justice and economic well being in the present.

Perhaps this erosion of democratic vitality is an inevitable result of complexity and size. Perhaps we should expect no more than limited popular constraint on the activities of government through regular, weakly competitive elections. Perhaps the era of the “affirmative democratic state” — the state which plays a creative and active role in solving problems in response to popular demands — is over, and a retreat to privatism and political passivity is the unavoidable price of “progress.” But perhaps the problem has more to do with the specific design of our institutions than with the tasks they face as such. If so, then a fundamental challenge for the Left is to develop transformative democratic strategies that can advance our traditional values—egalitarian social justice, individual liberty combined with popular control over collective decisions, community and solidarity, and the flourishing of individuals in ways which enable them to realize their potentials. 
This volume explores a range of empirical responses to this challenge. They constitute real-world experiments in the redesign of democratic institutions, innovations that elicit the enerergy and influence of ordinary people, often drawn from the lowest strata of society in the solution of problems that plague them. Below, we briefly introduce four such experiments:

• Neighborhood governance councils in Chicago address the fears and hopes of inner city Chicago residents by turning an urban bureaucracy on its head and devolving substantial power over policing and public schools.

• Habitat Conservation Planning under the Endangered Species Act convenes stakeholders and empowers them to develop ecosystem governance arrangements that will satisfy the double imperatives of human development and the protection of jeopardized species. 

• The participatory budget of Porto Alegre, Brazil enables residents of that city to participate directly in forging the city budget and thus use public monies previously diverted to patronage payoffs to pave their roads and electrify their neighborhoods. 

• Panchayat reforms in West Bengal and Kerala, India have created both direct and representative democratic channels that devolve substantial administrative and fiscal development power to individual villages.

This volume of the Real Utopias Project lays out an abstract model of Empowered Participatory Governance that distills the distinctive features of these experiments into three central principles and three institutional design features. This is followed by four detailed discussions of the case studies by scholars who have studied them extensively, and then a series of commentaries on both the general principles of EPG and the cases.