Socialism: Meaning, Characteristics, Advantages, Disadvantages

Meaning Of Socialism

Socialism is an economic system under which every individual in the community has an equal share of the various elements of production, distribution, and exchange of resources. According to the socialist view, individuals do not live or work in isolation but cooperate. Such a structure of proprietorship is accorded through a democratic system of governance. Under a socialistic environment, each individual contributes and receives according to his or her ability and capability. Thus, every person in the socialistic community is motivated to work harder.

Firstly, a share, we can also say that a fraction of the National pie is taken with the intention of communal development and then the rest of it is given out to the members of the community. The main areas and heads under which the fraction of the national pie is channelized include defense, education, and transportation.

In simple terms, socialism can be defined as a democratic economy and political system based on combined, common, or general ownership of the means of production. Those means of production include the machinery, tools, and factories used to produce goods that aim straight away to satisfy and meet human needs.

Characteristics Of Socialism

Socialism in the economic environment holds the following characteristics and features –

1)     Public ownership

All means of production and distribution in the socialistic economic system are completely owned by the public. In such a system, the prime motive of the government is not to give rise to profits but to get the intended targets.

2)     Equal opportunity for all

Under the socialistic economic system, an individual receives and contributes according to his or her skills and capabilities. Thus, there may not be a guarantee for equal income but socialism guarantees to provide equal opportunities for all. Every individual’s economic rights are protected by their duties and thus no one is deprived of their basic needs.

3)     Planned economy

Planning of all economic activities like production, distribution, exchange, and consumption is the sole responsibility of the state. Since the law of demand and supply does not function in the socialistic economic environment, the nation is geared to speedy economic growth. Since the government is solely responsible for the distribution of wealth, society as a whole prospers.

4)     Non-existence of competition

Under this system the state has full control over the production of goods and services and the competition in the market is completely zero. Primarily, this system focuses on necessities in life, and choice in a consumer product is limited.

5)     Class-less society

Unlike the capitalist society under which the community is divided into classes like the upper, middle, and lower classes according to their living standards, everyone is considered of equal social status under a true socialistic economy.

6)     Pricing mechanism

The pricing process works under the control and regulation of the government or central planning authority. There are two types of prices existing in this system:

  1. Market prices: prices for consumer goods.
  2. Accounting prices: prices that help managers to decide on the production of consumer and investment goods and production methods.

7)     State is responsible for all necessities of life

All the six necessities of life stated as food, shelter, clothing, education, health, and employment are provided by the state without any discrimination.

Types Of Socialism

Socialism in the economic environment prevails in the following types:

1)     Democratic socialism

Under this variable, the management of the elected administration takes charge of the factors of production. Other important goods and services like energy, housing, and transit are distributed through proper centralized planning, while a free market is used to disperse consumer products.   

2)     Revolutionary socialism

Such a system believes that a pure socialistic system cannot be achieved with capitalism still prevailing in the economy. In this system, the factors of production are owned by the workers themselves and run through a planned and centralized setting.

3)     Market socialism

The ordinary workers own or control the production process under market socialism. They produce the goods and sell or give the excess to the members of the society, who then distributes it to the other members of the community on a free market basis.  

4)     Libertarian socialism

This system works on the belief that people are always rational and if the capitalistic system vanishes from the economy it will automatically shift to a socialistic economic system.

5)     Green socialism

This system advocates natural resources. Under this system, the production is motivated to ensure that all the members get all the basic goods and the members are guaranteed a sustainable wage.

Advantages Of Socialism

Socialism holds the following benefits –

1)     Non-appearance of exploitation

Under the socialistic system, all individuals are guaranteed access to minimum basic goods, even those who are not able to contribute. Thus no worker is exploited in this system of the economic environment. As a result of this, the poverty levels in society reduce, and society as a whole flourish.

2)     No discrimination

A socialistic economic system discourages discrimination in society. Each person performs his or her job according to the capabilities and skills inculcated in the person. If there are jobs present that needs to be done but the economy lacks resources then higher wages are provided for the same job.

3)     Absence of private monopoly

As all the factors of production are owned and regulated by the individuals of society, there is no space for private monopoly in the socialistic economic environment. Thus, there are no big or small players in this system.

4)     Guaranteed jobs for the citizens

The state is responsible for the necessities like employment which makes the jobs for the people in this system more secure and guaranteed.

Disadvantages Of Socialism

Despite tons of positive aspects of the socialistic economic environment, there are some negative sides of it as well. These are mentioned below –

1)     Lack of choice and innovation

As entrepreneurial ventures are not encouraged in the socialistic economic environment there is a lack of competition and thus innovation is not that much promoted in such a system. Eventually, lack of competition results in a limited choice of products for the consumers and they have to satisfy themselves with whatever is present in the market.

2)     Reduces individual initiative

As the state is responsible for the availability of all the necessities to every individual, the initiative from the side of the community reduces as they depend completely on the government in this system.

3)     Lack of specialization

As there is no division of labor in this system of the economic environment, a high lack of specialization is observed in the workers.

4)     Dependence on cooperative pooling

This is the major drawback of the socialistic economic environment. This system is completely reliant on the cooperation of individuals and people with competitive nature are seen in a negative light. According to the socialistic environment, competitive people create unwanted disturbances in the economy.