Socialism

Within the wide spectrum of socialism, there is indeed a variety of systems. At one end there are the communist countries characterized by State capitalism, and at the other, there are democratic socialist nations with a dominant private sector. It is, therefore, very difficult to clearly define the socialist system. It is, therefore, very difficult to clearly define the socialist system. Socialism, however, is generally understood as an economic system. Socialism however, is generally understood as an economic system. Socialism, however, is generally understood as an economic system where the means of production are either owned or controlled by the state and where the resource allocation, investment pattern, consumption income distribution, etc. are directed and regulated by

Features

The salient features of a socialist system are:

(i) Government Ownership Control:

In socialist countries, the major means of production are either owned by the Government or their use is controlled by the Government. In communist countries like the USSR and China, the means of production are mostly owned by the state. In some socialist economics, the private sector also plays a very important role. In such case, the Government directs and regulates investment allocation and production pattern in accordance with national priorities. In some countries, such as India, some of the basic sectors, including a major part of institutional finance, are in the public sector so that the resource allocation and investment pattern of the private sector may be regulated by regulating the flow of the basic inputs to the private sector. When the state owns almost the whole of the means of production, it is much easier to achieve the desired pattern of resource allocation. State capitalism, of courser, has its own defects. Communist countries like China have how wide opened their doors to foreign private capitalists to foster, development.

(ii) Central Authority:

The socialist economics generally have a central authority like General planning agency to formulate the national plan for development and a direct resources mobilization, allocation and investment to achieve the plan targets. Socialist economics are sometimes called command economies because the central planning authority commands the pattern of resources utilization and development.

(iii) Restriction on Consumption:

In communist countries, there is no consumer sovereignty because the state decides what may be made available to consumers, unlike in the market economics where the consumer have the freedom to choose from a wide variety. The consumers in a communist system, thus, have to content themselves with that the stat thinks is sufficient for them.

(iv) Restriction on Occupation:

The freedom of occupation is absent or restricted in socialist countries. An individual may not have the freedom to choose any occupation he is qualified for. Similarly, individual freedom of enterprise is absent or regulated.

(v) Fixation of Wages and Prices:

The wages rates and prices in communist economy are fixed by the Government and not by market forces. Non-communist socialist countries may also fix wages and prices or regulate them by certain means.

(vi) Distribution of Income:

An equitable distribution of income is an important feature of the socialist systems aim to perfect equality in income distribution. Wage differentials, depending on the nature and requirements of the job, are recognized in socialist countries. The objective of equitable income distribution may be achieved by fixing the wage rates and other economic rewards or by means of fiscal and other appropriate measures.