Socialism is an economic system where the means of production, such as money and other forms of capital, are owned to some degree by the public (via the state). Under a socialist system
Contrary to capitalism, socialist market economies produce goods based on usage values, with collective ownership shared by the entire country. In socialist economies
Socialism is a social system that
has never existed
. In socialism there will be no property; that is, private, corporate or state property ownership. … As a consequence of there being no exchange in socialism there will be no money.
The workers spend their wages on consumer goods
. … Thus money helps in the circular flow of goods and services in a socialist economy. To conclude, the role of money in a socialist economy may be less important as compared to a capitalist economy due to state regulation and control.
KEY Points. Disadvantages of socialism include
slow economic growth
, less entrepreneurial opportunity and competition, and a potential lack of motivation by individuals due to lesser rewards.
A socialist economy is a system of production
where goods and services are produced directly for use
, in contrast to a capitalist economic system, where goods and services are produced to generate profit (and therefore indirectly for use). “Production under socialism would be directly and solely for use.
| Rank Country 2021 Population | 1 Brazil 213,993,437 | 2 Turkey 85,042,738 | 3 Germany 83,900,473 | 4 United Kingdom 68,207,116 |
|---|
| Socialism Pros Socialism Cons | Better education opportunities Government failure | Minimum wage Socialism may take away incentive to work | Socialism can provide minimum basic income Sovereign default | May improve conditions of the general public Politicians can get too much power |
|---|
No country has ever experimented with pure socialism because of structural and practical reasons. The only state that had come the closest to socialism was
Soviet Union
and it had both dramatic successes and dramatic failures in terms of economic growth, technological advancement and welfare.
In theory, based on public benefits,
socialism has the greatest goal of common wealth
; Since the government controls almost all of society's functions, it can make better use of resources, labors and lands; Socialism reduces disparity in wealth, not only in different areas, but also in all societal ranks and classes.
The U.S. is a mixed economy
According to the Austrian School economist Ludwig von Mises
There is a very common myth about socialism, which says that socialism would give everyone the same wage, and therefore no one would have a reason to work hard. This is
false
. … There are a number of socialists who do advocate equal wages but they always propose some other type of incentive to replace wage differences.
(1) what to produce, (2) how to produce, and (3) for whom to produce
. What is produced? based on custom and the habit of how such decisions were made in the past.
Capitalism is based on individual initiative and favors market mechanisms over government intervention, while
socialism is based on government planning and limitations on private control of resources
.
| Country Since Party | People's Republic of China 1 October 1949 Communist Party of China | Republic of Cuba 1 January 1959 Communist Party of Cuba | Lao People's Democratic Republic 2 December 1975 Lao People's Revolutionary Party | Socialist Republic of Vietnam 2 September 1945 Communist Party of Vietnam |
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