Can market socialism realize the socialist vision of the good society
by ending exploitation and alienation, substantially reducing inequali
ties of wealth and income, ensuring full employment, and correcting ot
her market irrationalities? A comparative analysis of the organization
al forms of capitalism (notably the small owner-operated firm and the
large corporation) and market socialism (the self-managed cooperative
that rents its capital from the state) reveals the relative efficienci
es of capitalism in reducing transaction costs, in turn reducing the o
pportunities for exploitation. By contrast, the transaction cost ineff
iciencies of the organizations of market socialism permit and encourag
e forms of exploitation that are precluded or discouraged under capita
lism.