Chapter-Socialism: Features of Socialism & Socialist Beliefs

Chapter-Socialism
Features of Socialism & socialist beliefs:
The features of socialism are as under.

1. Public Ownership:
A socialist economy is categorised by public ownership of the means of production and
distribution. There is collective ownership whereby all mines, farms, factories, financial
institutions, distributing agencies (internal and external trade, shops, stores, etc.), means of
transport and communications, are owned, controlled, and regulated by government
departments and state corporations. A small private sector also exists in the form of small
business units which are carried on in the villages by local artists for local consumption.
2. Central Planning:
A socialist economy is centrally planned which operates under the supervision of a central
planning authority. It lays down the various objectives and targets to be accomplished during
the plan period. Central economic planning means "the making of major economic decisions
such as type of goods and quantity is to be produced, how, when and where it is to be
produced, and to whom it is to be allocated by the conscious decision of a determinate
authority, on the basis of a wide-ranging survey of the economic system as a whole."
The central planning authority establishes and utilises the economic resources by deliberate
direction and control of the economy for attaining definite objectives and targets laid down in
the plan during a specified period of time.
3. Definite Objectives:
A socialist economy functions within definite socio-economic objectives. These objectives
"may concern aggregate demand, full employment, satisfaction of communal demand,
allocation of factors of production, distribution of the national income, the amount of capital
accumulation, economic development." To accomplish, these objectives laid down in the
plan, priorities and gallant targets are fixed to include all features of the economy.
4. Freedom of Consumption:
In socialism ideology, consumer's independence infers that production in state- owned
industries is generally governed by the inclinations of consumers, and the available
merchandises are distributed to the consumers at fixed prices through the state-run
department stores. Consumer's autonomy under socialism is limited to the choice of socially
beneficial commodities.
5. Equality of Income Distribution:
In a socialist economy, there is great equality of income distribution as compared with a free
market economy. The removal of private ownership in the means of production, private
capital accumulation, and profit motive under socialism avert the accrual of large wealth of a
few wealthy persons. The unearned incomes in the form of rent, interest and profit go to the
state which utilises them in providing free education, public health facilities, and social
security to the people. "As far as wages and salaries are concerned, most modern socialists do
Chapter-Socialism
not aim at complete and rigid equality. It is now generally understood that the maintenance
offered choice of occupation implies wage differentials."
6. Planning and the Pricing Process:
The pricing process under socialism ideology does not operate freely but works under the
control and regulation of the central planning authority. There are administered prices fixed
by the central planning authority. There are also the market prices at which consumer goods
are sold. There are also the accountings prices on the basis of which the managers decide
about the production of consumer goods and investment goods, and also about the choice of
production procedures.
Merits of Socialism Ideology:
There are numerous advantages of socialism ideologies in society.

Prof. Schumpeter stated many arguments to support socialism.
1. Greater economic efficiency

2. Welfare due to less inequality
3. Absence of monopolistic practices
4. Absence of business fluctuations.
1. Greater Economic Efficiency: Economic efficiency under socialism is more than under
capitalism. The means of production are controlled and regulated by the central planning
authority towards chosen ends. The central planning authority makes thorough survey of
resources and utilises them in the most effectual manner. Increased productivity is protected
by evading the wastes of competition and by undertaking expensive research and production
processes in a synchronised manner. Economic efficiency is also attained by utilising
resources in producing socially useful goods and services which satisfy the basic wants of the
people, like cheap food, cloth, and housing.
Chapter-Socialism
2. Greater Welfare due to Less Inequality of Income: In a socialist economy, there is less
disparity of income as compared with a capitalist economy because of the absence of private
ownership of the means of production, private capital accumulation, and private profit. All
people work for the welfare of the state and each is paid his salary according to his ability,
education and training. All rents, interests and profits from various sources go to the state
which spends them for public welfare in providing free education, cheap and congenial
housing, free public health amenities, and social security to the people.
3. Absence of Monopolistic Practices: Major benefit of socialism is that it is free from
monopolistic practices to be found in a capitalist society. Since under socialism, all means of
production are owned by the state, both competition and domination are disregarded. The
misuse by the monopolistic is absent. Instead of private monopoly, there is the state
monopoly of the productive system but this is operated for the welfare of the people. In the
state-owned factories, socially useful commodities are produced which are of high quality
and are also reasonably assessed.
4. Absence of Business Fluctuations: A socialist economy is free from business instabilities.
There is economic stability because production and consumption of goods and services are
regulated by the central planning authority in accordance with the objectives, targets and
priorities of the plan. Therefore, there is neither overproduction nor joblessness.
Demerits of Socialism Ideology:
A socialist economy has also certain drawbacks:
1. Loss of Consumer's Sovereignty: There is loss of consumers' dominion in a socialist

economy. Consumers do not have the liberty to buy whatever commodities they want. They
can consume only those commodities which are available in department stores. Often the
quantities which they can buy are fixed by the state.
2. No Freedom of Occupation: Consumers do not have freedom of choosing profession in
such a society. Every person is provided job by the state. But he cannot leave or change it.
Even the place of work is allotted by the state. All occupational movements are authorized by
the state.
3. Misallocation of Resources: Under socialism, there is random allocation of resources. The
central planning authority often commits mistakes in resource allocation because the entire
work is done on trial and error basis.
4. Bureaucratic: A socialist economy is a bureaucratic economy. It is operated like a machine.
So it does not offer the necessary initiative to the people to work hard. People work under
pressure and fear of higher authorities and not for any personal gain or self-interest.
There is no uncertainty that a socialist economy is better than a capitalist economy because of
its awesome merits. But it is disliked for the loss of political, economic and personal
autonomies.

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Chapter-Socialism

Features of Socialism & socialist beliefs:

The features of socialism are as under.

Merits of Socialism Ideology:

There are numerous advantages of socialism ideologies in society.

1. Greater economic efficiency

Demerits of Socialism Ideology:

A socialist economy has also certain drawbacks:

1. Loss of Consumer's Sovereignty: There is loss of consumers' dominion in a socialist

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