The ruling methods are of various kinds in various countries and socialism is one of them. Socialism refers to the concept of giving ownership to the government as a whole, regarding all activities of that particular country. Similarly, if the government controls the economic activities, then it is termed as a socialist economy, and the system, which is following it, is called a socialist financial system.
Scholars give the socialist economy's definition in various ways. However, the concept of socialism refers to giving the authority of controlling and regulating all economic activities to ensure national equality. Karl Marx had introduced this idea in his “communist manifesto".
Suppose a country is following various principles and norms which direct to the socialist economy's meaning. In that case, those characteristics are considered as features of a Socialist Economy, and the government is socialistic. Let us have a glimpse of the features.
Ownership Should be Collective: It is the primary feature of socialism that explains the ownership of all the goods of production is for the government and not for any individual.
Equality: Socialism aims to attain equality between rich and poor. The eradication of class, caste, skin-colour, will be achieved with the principles of socialism.
Planning: As the government has the power, it sets some goals and makes necessary plans to achieve the goals. It helps in the growth of the economy.
Competition: Compared to a capitalist country, there is no place for competition in the concept of socialism. It looks like solo business and profit are sharable to the whole country.
Positive Power: As the government plays a vital role in all the activities like decision making, financial issues, policies, production, it should be utilized positively. The government should not misuse it.
Work and Wages: In socialism, the government should delegate work based on the individual's ability and provide wages according to their needs, to achieve and maintain transparency.
Social Welfare: The motto of socialism is to achieve social welfare. It refers to the growth of society, especially for poor people. There should be no lower class and higher class.
Absence of Marketers: If the government plays monotony, there is no scope for marketing and advertising sales. If the options are less, then the occupancy will be more.
Income Distribution: The equal distribution of income among all the citizens will discard the difference between rich and poor. Education, hospital, and other facilities are open and equal to the entire nation.
These are the several features of the Socialist Economy. Whenever a country follows all these, then it is the best socialist country and stands top of the world.
The countries which can understand what a socialist economy is and implement it in their systems, are treated as socialist economy examples.
Many of the countries follow the principles of combined economies. Some states are capitalistic, but countries like Norway, Sweden, Denmark, Iceland, and Finland follow socialism strictly. They are purely socialistic countries.
These five Nordic countries are examples of the Socialist Economy. They distribute the income equally according to their hard work and contribution. They consider health and education are more critical subjects for utilizing the maximum of savings. The best part is the involvement of common people in decision making.
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We have several types of socialism. Every type focuses on various aspects of socialism.
Democratic Socialism: Here, the produced goods can be managed by the elected committee. They will plan for the distribution of consumer goods provided by the government.
Revolutionary Socialism: The revolution should be on capitalism and need not be violent.
Libertarian Socialism: People should gain freedom from colour, caste, creed, and also be equal economically, socially, and politically.
Fabian Socialism: It is a completely non-violent method used in the 19th century by the British government. They adapt to socialism through peace.
Utopian Socialism: Its main motto is equality. They will give priority to high scale industrialization.
Christian Socialism: The teachings of Christianity implies brotherhood, and the same bonding is encouraged by socialism.
Green Socialism: It is another type of socialism that focuses on improving natural resources to a great extent. So that the scarcity of food does not occur, and the country may have peace forever.
Market Socialism: In this Socialism, as the workers got control over production, they can sell at the free market at affordable prices and can share the profit among all—no space for creating artificial demand.
These are the various types of socialism, but none changes the socialist economy's meaning. Thus, every country should come forward to adopt socialism and achieve peace and harmony for the nation.
1. What is Socialism? Explain the advantages of Socialism.
Ans: Socialism is a term that refers to the entire allocation authority to the government to look after all the activities of that country. It is very beneficial to the economy of that country.
It eradicates poverty.
It establishes equality among the people.
It helps to sell the goods directly in the open market.
It increases the level of employment.
Workers can get their wages properly in socialism.
Health and education are available to all equally with socialism.
The preservation of food starts through socialism.
It helps to improve the natural resources.
There is no place for discrimination based on colour, caste, and creed.
2. What are the limitations of Socialism?
Ans: Besides several benefits, the concept of socialism also has a few limitations. Knowing these limitations will help us to be cautious. The limitations of socialism are as follows.
It cannot guarantee to change the mindset of all.
It cannot be practiced by people with rivalry thoughts.
Socialism lacks in extracting innovation and creativity. If there is no special appreciation, rarely one gets the urge to create.
Giving full power to the government has a high risk of misusing it. We cannot guarantee that the attitude of a leader will change for the better.
It fails in profit distribution because people may have their share of profit without doing any work.
3. Differentiate between Socialism and Capitalism.
Ans: The capitalist economy has less power to the government, and many firms have ownership. Also, production depends on demand and supply. The economy won't be static, and innovations are encouraging and providing awards too. It can give a chance to establish private firms, and the income will not be equally distributed.
On the other hand, socialism is utterly different from capitalism. Here, everything is owned by the government, and the price will not change. The workers can sell on an open market and distribute the income equally. There is no scope for innovations. All sorts of discrimination are completely discarded, and the importance of natural resources increases.