If the government and other nonprofit institutions are to compensate for the underallocation of resources to invention by private enterprise, two pro… - Kenneth Arrow

Collective action is a means of power, a means by which individuals can more fully realize their individual values.

There are two approaches to a theory of general equilibrium in an imperfectly competitive environment; most writers who touch on public policy questions implicitly accept one or the other of these prototheories without always recognizing that they have made such a choice. One assumes that all transactions are made according to the price system, that is, the same price is charged for all units of the same commodity; this is the monopolistic competition approach. The alternative approach assumes unrestricted bargaining; this is the game theory approach. The first might be deemed appropriate if the costs of bargaining were high relative to the costs of ordinary pricing, while the second assumes costless bargaining.

What can be concluded? We cannot be sure that the principles of democracy and socialism are compatible until we can observe a viable society following both principles. But there is no convincing evidence or reasoning which would argue that a democratic-socialist movement is inherently self-contradictory. Nor need we fear that gradual moves in the direction of increasing government intervention will lead to an irreversible move to “serfdom.”