Taylor, Fred Manville (1855–1932)

Abstract

Taylor made his chief contribution to economic theory in his 1928 presidential address to the American Economic Association, in which he laid out the basic principles of market socialism (Taylor 1929). He argued that rational allocation of resources could be achieved in a socialist state if three conditions are met: citizens obtain income from the state in exchange for services; income is freely spent on goods offered for sale by the state at given prices; prices are set at full costs of production. The third condition can be met through a trial-and-error method in which prices of factors of production are set at levels that clear the market. Given these costs and consumer demand, markets for finished products can be cleared by adjusting levels of output and inventories. Such a system could achieve results similar to those of a competitive private enterprise economy.

This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume