Socialism: Definition, Characteristics and Weaknesses

What is Socialism?

The term socialism is often used interchangeably with communism. There are different perspectives and definitions of socialism. Based on its dictionary definition, socialism refers to a theory of social organization which advocates for the ownership, distribution and exchange of the means of production by the community as a whole. It is also defined as a political and economic ideology which advocates for the collective or common ownership of the means of production. Socialists postulate that central planning and shared ownership of wealth and resources leads to more equal distribution of goods and services.

As opposed to capitalism and the free market economic system, socialism allows governments to own and control the means of production. In a free market and capitalist economic regime, individuals have rights to own and control means of production. Individuals in a socialist society can own property only in the form of consumer goods. In a capitalist society, individuals can own capital goods for the production of other goods and services. Socialist countries also allow public officials to regulate trade and flow of capital as opposed to free trade among individuals in a capitalist market.

History of Socialism

Socialism emerged when people started to oppose capitalism for its excesses and abuses. The first capitalism in the 18th and 19th centuries led to rapid economic growth which contributed to income inequalities as some individuals became amassed more wealth than others.

Some famous socialist thinkers such as Henru de Saint-Simon, Karl Mars, and Robert Owen opposed capitalism for its weakness of creating income inequality in society. Vladimir Lenin put socialist ideals into practice following the Bolshevik Revolution of Russia in 1917. China later adopted the same socialist ideals through Maoism in the mid-20th century.

What is the Difference between Socialism and Communism?

Based on Marxist theory, socialism is a transitional state between capitalism and communism. After a revolution, a capitalist regime is overthrown, leading to a socialist society. Communism is an extreme form socialism where there is nothing like private ownership.

Under socialism, individuals can still own property; but industrial production or means of generating wealth is owned by the community and managed by a democratically elected government.

On the other hand, communism has a central planning system which controls all aspects of economic production. The central government provides citizens with their basic necessities such as food, healthcare and education; and each individual receives a share of economic output based on what they need.

Another important difference between communism and socialism is the means of political transition involved in achieving them. Communism is achieved through violent revolution in which the working class rise up against the ruling class as a necessary part of class struggles to a achieve a communist state. On the contrary, socialism is a more flexible political system which is open to political and economic reforms. Socialists often encourage reforms and change to be achieved through democratic processes within the existing political and social structures rather than overthrowing the existing regime.

Socialism rewards individual effort and aims at social reforms and redistribution of wealth. A socialist regime can coexist with capitalist economic system, hence forming an aspect of social democracy. In economics, socialism allows governments to develop robust economic policies to enhance change and increase income distributions to members of society.

Characteristics of Socialism in Economics

  • Public ownership of the means of production
  • All legal production and distribution processes are managed by government
  • Government determines pricing and quantity levels
  • Citizens rely on government for all subsistence
  • Its adherents believe that socialism enhances equal and fair distribution of wealth
  • Production is done for subsistence or use rather than for profit.

Weaknesses of Socialism

Major weaknesses and disadvantages of a socialist economic system are propagated by capitalists. Proponents of capitalism and free market systems argue that socialism leads to shortages, surpluses and political corruption. This would in turn cause poverty. Socialism is also dismissed by its opponents for being impractical and inefficient.

One of the major weaknesses of socialism is that it is affected by the incentive problem. There is no incentive for a socialist worker to take dangerous or uncomfortable jobs.

Another disadvantage of socialism is that it lacks a proper pricing mechanism. There is no way of determining costs of production, hence it becomes difficult to calculate prices for output.

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