1) Market socialism as an alternative: If market socialism is going to be socialist as well as market, then you usually end up with something not being decided by markets -- maybe the banks are publicly owned or you have investments companies or some such. At any rate some critical part of the decision making process is outside the market -- at which point if you really accept the need for markets, the whole criticism applies again, price signals not right, incentives wrong, too high transaction costs. I think these critiques are nonsense, but if they are not then they apply to most market socialist proposals. The one way I've heard of trying to get around this is by leaving everything to the market and confiscating and redistributing the results. Same critique -- instead of screwing a critical part of the economy totally, you are screwing up every part of the economy a lot. 2) Let's deal with the actual critiques marketeers make of non-market mechanisms. There are three theoretical arguments they use: A) price signials wrong. Of course there are lots of ways markets get price signals wrong too -- any transaction cost not included in the price is not counted -- hence the million and one hidden ways in which costs to workers are not included in the price of capital,intermediate and consumer goods. Also market mechanism tend to be biased against collective consumption even when it would be preferred. But there is a sense in which the marketeers have a point that needs to be dealt with. You do need to get prices right in order to run an economy. No matter how much we may hate commification, we need some way of figuring out how much plastic is worth a pound of rubber. And since no method is perfect you need an iterative process that compares expected to actual use of inputs and adjust prices accordingly.
The only thing is, there are lots of ways to do this. Albert and Hahnels mechanism has been discussed as one. Cockshott and Cocktrells have also been mentioned on this list in the past. For that matter, although I dislike a permenant body of central planners for reasons of democracy, a central planning group could simply watch the flow of goods in stores, and compare the use of capital and intertmediate goods to predicitions and keep raising and lowering prices until supply and demand come into balance. After all, that is how capitalists do it. Corporations plan what they think sales will be. If sales rise significantly above their predictions they take advantage of this by raising profits. If they fall they lower prices. (There are exception to this; but I've spent my life in the business world and it often does happen.) Their suppleirs of course do the same thing. In short the claim that a planned economy cannot get prices right is absurd. I'm not going to take part in the "Is N. Korea really socialist argument" -- but just point out that poor economics is neither a neccesary nor sufficient explaintaion for what went wrong. At any rate this argument, on price is from Mises.
B) The seocnd argument, by Hayek is from transaction costs. There are actaully several sub-arguments here. One is that under plannign decison must be made consciously that pricing mechanisms in a market make automatic. However, all a market does to "get prices right" is to raise them if demand is higher than expected, and lower them if demand is lower than expected. Prices keep adjsuing until either an equilibrium is reached, or a state of extreme boredom. Certainly, to the extent it is desirable to make decisions uncomciously, we can use some mechanism other than the amrekt to do this.
The second sub-argument Hayek makes is that the transaction costs of dwmocratic decision making are somehow higher than leaving decisions to manager and corporate boards of directors. I sersiously doubt this; I think there is great deal of information to be gained by having people take part in decison whcih affect their lives. But if I am wrong, and people just found they hated to make decisions, they could always delegate them to elected bodies, or to managers appointed by elected bodies. I would be very disapointed if in a socialist economy this was the way people, decided to go, but then again if we had a socialist economy, I doubt anyone would care whether or not the disappointed me or not.
C) The third point is one where Hayek and Mises converge -- and one where contemporary capitalism pretty much serves to disprove them. They worry that lacking individual ownership, the peoople at the bottom the people at the ground would have little incentive to convey informatrion to their higher ups. Under our current system the people at bottom receive wages, not share in their companies. It is simply aburd to claim that democraticlaly planned socialism would give them less incentive to convey what was going on than our present system. In general the whole Mises and Hayeks critique of incentive under socialism was a critique of wage labor. I never understood how they thought capitalism was inferior to socialism in this regard.
Alright that is the short version...