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
In a socialist economy,
the government
owns and controls the means of production; personal property is sometimes allowed, but only in the form of consumer goods.
In socialist economies, the government owns and manages the economic resources such as money and other forms of capital. … In business and economics, the two most common types of capital are financial and human..
The citizens of the country work to generate wealth
, which is then distributed to everyone.
Money in Socialist Economies
First, a
form of socialist quasi-money (s-money)
or labour certificate is introduced, called ‘labour-money'. Second, another form of s-money is possible without accounting for labour-time but with publicly determined prices. Third, money exists in a market socialist economy.
The U.S. is a mixed economy, exhibiting characteristics of
both capitalism and socialism
. Such a mixed economy embraces economic freedom when it comes to capital use, but it also allows for government intervention for the public good.
Communism is usually distinguished from socialism since the 1840s. The modern definition and usage of socialism settled by the 1860s, becoming the predominant term among the group of words associationist, co-operative and mutualist which had previously been used as synonyms.
In socialism, inequality of wages may remain, but that will be the only inequality.
Everyone will have a job and work for a wage
and some wages will be higher than others, but the highest paid person will only get five or 10 times as much as the lowest paid – not hundreds or even thousands of times more.
(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.
- Reduction of relative poverty. …
- Free health care. …
- Diminishing marginal utility of income. …
- A more equal society is more cohesive. …
- Socialist values encourage selflessness rather than selfishness. …
- Benefits of public ownership. …
- Environment. …
- Reduced hidden taxes.
Socialists generally aim to
achieve greater equality in decision-making and economic affairs
, grant workers greater control of the means of production and their workplace and to eliminate exploitation by directing the surplus value to employees.
It should be pointed out that, unlike the situation with capitalism, under
socialism a fall in prices has inflationary effects as it may create excess demand
(other things being equal).
Certain other countries such as
Croatia
, Hungary, Myanmar, and Poland have constitutions that make references to their communist and socialist past by recognizing or condemning it, but without claiming to be socialist in the present.
Disadvantages of socialism include
slow economic growth, less entrepreneurial opportunity and competition
, and a potential lack of motivation by individuals due to lesser rewards.
Denmark is far from a socialist planned economy. Denmark is a market economy.”
| 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 |
|---|
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
.
