What is Socialism
In socialist economic system means of production are owned and managed by the State. Ownership of means of production is not allowed. In socialism economic activities are carried on mainly for social gains and personal interest is of less significance. In this economic system the anti social activities like smuggling and hoarding find no place. Economic activities are planned with the motive of social benefit by a central planning authority.
The individuals in socialistic society surrender their economic freedom in exchange of assurance of freedom from wants by the State. It is the responsibility of the State to provide food, lodging and clothing besides other requirements, by assigning a suitable job to each one of them.
Characteristics of Socialist Economic System
Following are the Characteristics
- In socialism means of production are owned by the State
- Economic activities are planned by the central planning authority
- Absence of competition
- Equal opportunities to all
- No economic freedom to the people
Advantages and Disadvantages of Socialism
Following are the merits and demerits, advantages and disadvantages of socialism.
Advantages of Socialism
Following are the benefits or advantages of socialism
Economic efficiency under socialism is greater than under capitalism, the means of production are not left in the market forces rather they are controlled and regulated by the central planning authority towards chosen end. The central planning authority makes an exhaustive survey of resources and utilizes them in the most efficient manner.
In a social economy, there is less inequality of income as compared to capitalist economy because of the absence of private ownership of means of production. In socialist economic system every one works hard and paid as per his skills & ability.
Absence of monopolistic practices
One of the benefits 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, the exploitations by the monopolist are absent. Instead of private monopoly, there is state monopoly over the productive system but this is operated for the welfare of the people.
Absence of business fluctuations
A socialist economy is also superior to a capitalist economy that is free from business fluctuation. Generally planned economy co-ordinates the action of various producing units, prevents discrimination between saving and investment and make full use of available resources. It is able to control over production and avoid general deflationary trend.