Socialism

Socialism

Definition

Socialism is an economic system, which implies state ownership of instruments of production. The management of business and industry is reduced to the monopolistic control of the government. What is produced is equally divided among those who helped produce rather than having anything into profits. Thus, economy is run for social benefit rather than private profit.

Salient Features

1. State Ownership of Means of Production
The means of production are the property of the state and not of private individuals. The profits of all enterprises go to the state exchequer to be utilized for the benefit of society rather than for the benefit of few private individuals.

2. No Private Enterprise
production is to be initiated and conducted by the state, which will pay wages and other costs and keep profits to itself. Interest and rent as payments respectively to the capitalists and the landlords will disappear, the for the state will by the capitalist, landlord and entrepreneur.

3. Economic Equality
Remuneration for work is to be according to the nature of work and is not to be equal. Earnings will vary according to ability.

4. Equality of Opportunity
Every individual, whether he belongs to a rich family or a poor family has an equal opportunity to rise in life under socialism. Every young person is given equal opportunity to receive education or training according to his aptitude os that he can enter a profession of his choice.

5. Economic Planning
The state is in charge of both production and distribution. The allocation of the productive resources of the community will be determined according to the direction of a central authority.

6. Social Welfare and Social Security
It is social welfare consideration, which guides productive activity in the economy rather than private profit. Commodities and services of such type and in such quantities are produced which are essential for promoting social welfare.

7. Classless Society
The socialists believe in a classless society where the distinction between the rich and the poor and the “haves” and the “have-nots” has completely disappeared.

Merits of Socialism

1. Social Justice
Under socialism, the inequalities of income are reduced to the minimum and the national income is more equitably and evenly distributed.

2. Better Allocation of Resources
The productive resources of the nation are more economically and optimally allocated among the various productive uses. A central planning authority determines the allocation of resources among the various uses who is in a better position to assess the basic needs of the people and the intensity of their desires.

3. Rapid Economic Growth
A socialist state promotes rapid economic growth. The task of promoting economic growth is not left in the hands of free private enterprise or market mechanism. A socialist state adopts economic planning and makes it possible to use potential productive resources in the most effective and fruitful manner.

4. Improving Productive Efficiency
Under socialism, improved techniques of production and scientific research are made freely available to all organizations that may need them. Also, under socialism, concentrating production in big firms results in improvement of production techniques. A socialist state makes the fullest use of productive activity.

5. Social Security and Welfare
The socialists believe that people should be given protection against uncertainties relating to income work and living conditions and the burden of this provision should be borne by the entire society. That is why modern socialists include in their programme, schemes of the social insurance covering unemployment, accidents, sickness, old age pensions, death grants, etc.

6. Economic Stability
Socialism eliminates trade cycles, We do not come across depression, unemployment and idel productive capacity in socialists economies. Since the means of production are owned and controlled by the state, the level of investment and the level of aggregate demand can also be effectively determined. This ensures economic stability.

7. Equality of Opportunity
Every individual, whether he belongs to a rich family or a poor family has an equal opportunity to rise in life under socialism. Every young person is given equal opportunity to receive education or training according to his aptitude so that he can enter a profession of his choice.

8. Social Welfare and Social Security
It is social welfare consideration, which guides productive activity in the economy rather than private profit. Commodities and services of such type and in such quantities are produced which are essential for promoting social welfare.

9. Classless Society
The socialists believe in a classless society where the distinction between the rich and the poor and the “haves” and the “have-nots” has completely disappeared.

Demerits of Socialism

1. Bureaucracy and Red Tapism
The most important set of arguments advanced against socialism is one against the bureaucratic running of the economic machinery. The civil servant does not feel the same keen self-interest as the employee of a private corporation, where his tenure is not so secure. His main concern is to lot things go on somehow without a positive break down. Bureaucracy will further mean bossism, loss of individual liberty, Gestapo, etc.

2. Not Successful in Business
The government personnel are not such as can conquer new fields. The conditions in government services are not congenial for the display of extraordinary ability.

3. Insufficient Resources
It is also urged that government cannot raise the huge amounts of capital, which are necessary for the efficient running, and expanding of all industries and trades.

4. Mis-Allocation of Resources
Under socialism, there will be no automatic indicator like price mechanism for the most economical allocation of the resources of the community among different industries. Some commodities will be produced in excess and wasted, whereas there may be a shortage of others resulting in unsatisfied demand. As such a chronic maladjustment in demand and supply is feared.

5. Lack of Incentives
It is also feared that incentive to hard work and stimulus to self-improvement will disappear altogether when personal gain or self-interest is eliminated. Inventive ability, enterprising spirit and the go-ahead attitude will languish.

6. Loss of Economic Freedom
A serious charge against socialism is that, when freedom of enterprise disappears, even the free choice of occupation will go. Workers will be assigned certain jobs and they cannot change them without the consent of the planning authority.

7. No Economic Equality
Socialism has failed to bring about economic equality. The dream of a classless society is far from being realized. Some degree of skepticism in the efficacy of socialism as a panacea for all social ills has grown and damped the armour of some enthusiastic socialists.

8. Concentration of Power in the State
Under socialism, the State is not merely a political authority but it also exercises unlimited authority in the economic sphere. The State is everything and individual is nothing. He may not count at all.

9. Loss of Personal Liberty
That under socialism there is no unemployment is conceded out. Critics regard a socialist State as one big prison-house and they do not think that employment is any compensation for the loss of liberty.