What is Socialism? Examples of Socialist Countries

What is Socialism?

Socialism is an economic system in which the government is in full ownership and control of all means of production. The economic system is after basic needs rather than being self-centered. Earning personal profits is not the sole aim. Socialism considers basically the needs of society. As a result of this, there is no competition for profit among individuals. They work for the good of everyone. Under socialism, the government has full control over the economy. It is a centrally planned or a command economic system. In a pictorial view, the outcome is classless though not fulfilled.

In a pure socialist economy, the government makes every legal production and distribution as well as other economic decisions.

Under socialism, individuals may possess little property. They do not have the right to own large means of production such as factories or companies. This implies that they cannot employ people to work for them. The attributes of a socialist economy are directly the opposite of capitalism. Since it is a centrally planned economy, the government gives answers to the basic economic problems in the society. That is what to produce, how to produce, for whom to produce, and efficiency in the use of resources. They also decide the price to charge for the goods and services.

The engagement rule under this system is that every individual receives and gives in his effort or contributes according to his ability. This is why individuals in the socialist economy work very hard. When we say that the socialist system works for the good of everyone, it means to take care of people who are not able to contribute to economic development. This set of people includes the children, disabled, less privileged, caretakers, and the elderly.

The focus of government on the good of society usually leads to more efficiency in the use of resources. The government decides the amount to pay workers. The government is responsible for the provision of basic necessities such as healthcare schemes and education for free. Examples of socialist countries are the Soviet Union, Cuba, China, and Venezuela.

Who is a socialist?

A socialist is someone who practices, advocates, or supports socialism. The ideology of socialists bases on the collective/public ownership and control of productive or capital resources. This category of people believes that making everything in society is successful through the corporate efforts of the people/citizens. They have this mindset that the government should be responsible for the provision of every essential or basic need. Also, they come up with the idea that since members of an economy work collectively to achieve production, they should all have equal access to them.

The origin of socialism

The economic system of socialism came about as a result of the excesses and the abuse of monopoly power that accompanied capitalism. In the late 18th and 19th centuries, there was industrial growth as well as compounded growth in the economy in Western Europe. This economic growth and industrialization became rapid. While some families and individuals became rich so quickly, others became very poor thereby creating income inequality and other concerns in the economy.

Karl Marx, Robert Owen, Vladimir Lenin, and Henri de Saint were the most famous socialist thinkers at that time. Primarily, Lenin was the one who examined and unveiled the thoughts of earlier socialists. He helped in bringing socialist planning to the national level after the Russian revolution of Bolshevik in 1917.

After the failure of socialism in Maoist China and the Soviet Union during the 20th century, many modern socialists were able to adjust to a high regulatory/redistributive system. Sometimes this system is referred to as democratic socialism or market socialism.

So in essence, the reactions to the injustice of early capitalism brought about the socialist economic system.

Socialism examples

Recently, it is difficult for an economy to be purely socialist though there are countries we can identify as socialist in major terms. Most countries that seem to be socialist adopt some form of capitalism and communism.

Which countries are socialist?

  1. USSR
  2. Cuba
  3. North Korea
  4. China

Countries that are Socialist

USSR

Before the USSR collapsed in 1991, it was a socialist state where the state owns and controls all means of production. For instance, if you wish to consume bread in the morning, you have to get it from the government. During that period, things like gas were supplied to each household by the government through a specified channel. If you want gas, you will pay for it and get it through the channel connected to your household directly from the government. The state owns the land, cows for milk production, gas, etc. Owning a gas, cow, land, etc for commercial purposes would be considered a criminal offense.

Cuba

Another outstanding example of socialism is Cuba. The government is in full control of the economy, that is housing, food supply, utilities, education, health facilities, and entertainment as well. A major indicating factor that Cuba is not a capitalist country is that it has no stock exchange. Over 80% of the working class in this country work directly under the state.

North Korea

North Korea is another example of a socialist country where the state runs several programs. This economy also does not have a stock exchange market and this is a major socialist feature.

China

Though China is not a pure socialist, it has some characteristics of socialism. Although the country nullified the state running the healthcare aspect, most regions in China are socialist.

Countries with socialism

  1. Vietnam
  2. Syria
  3. Venezuela
  4. Zambia
  5. Belarus
  6. Turkmenistan
  7. Laos

These countries are also considered as countries with socialism because the government strongly intervenes in different sectors of their economies such as healthcare, manufacturing, social programs, and the mass media.

Types of socialism

What is Democratic socialism?

Democratic socialism is a type of centrally planned economy or political philosophy that supports democracy. The system places its emphasis particularly on economic democracy and workplace democracy. Also, it places its emphasis on the self-management of workers within the socialist environment. In this case, the workers manage the means of production and the government is democratic in nature, the people elected the government into power. Democratic planning has to do with the common goods of the people such as housing, energy, and mass transit.

Revolutionary socialism

This form of socialism places its emphasis on the idea of social revolution. The philosophy emphasizes that social revolution is of high necessity in order to facilitate structural changes in society. Usually, socialism emerges in this case after overthrowing capitalism but this revolution must not necessarily be a violent one. In other words, the philosophy states that socialism cannot be in place while capitalism still exists. The workers own the factors of production but manage them through the central planners and a well-developed centralized structure. Also, this system believes that the pathway to pure socialism requires a lot of struggles. Though it looks like socialist democracy, it is not the same. What then is a socialist democracy?

Socialist democracy

Socialist democracy is a political doctrine that argued for a peaceful evolution of an economy from capitalism to socialism using well-established political processes. It places part of its emphasis on social revolution. This closely relates to democratic socialism but the difference is that social democracy is a political doctrine while democratic socialism is a type of socialism.

Libertarian socialism

This form of socialism comes with the assumption that individuals are rational in nature, self-determining, and independent beings. The individuals will naturally chase after socialism to meet their needs when the set of rules defining capitalism are being taken away.

Market socialism

This is an instance whereby the workers own and control production and decide to distribute among themselves. Here, these workers sell the surplus of their products to the members of society by taking them to the free market. In other words, they turn over excess products to society and distribute them on the basis of a free-market system.

Green socialism

This form of socialism places a high value on the proper maintenance of natural resources. It lays much emphasis on public ownership of large corporate businesses, public transit, and locally sourced food. Production under system places much focus on ensuring that everyone has sufficient basic needs met instead of just consumer goods that do not really meet needs. The system guarantees a sustainable wage for everyone.

Christian socialism (religious socialism)

Christian socialism is religious socialism. Religious socialism bases on religious values, they fit in the religious beliefs about human society to the principles and ideas of socialism. For Christian socialism, they see Christian teachings of brotherhood in accordance with the values socialism expresses.

Utopian socialism

Utopian socialism is the socialist system that believes that the economy can achieve production when property owners voluntarily and peacefully surrender their properties. In other words, this philosophy believes that if an individual or a group of individuals willfully surrender their property (means of production) ownership to the state or state workers, they can successfully abolish poverty and unemployment.

Fabian socialism

The British organization (called the Fabian Society) extolled this type of socialism in the late 1880s. to be precise, it was founded in London in 1884 with the goal of establishing a democratic socialist state in Great Britain. This system argued for a gradual process of change to socialism through elections, laws, and other peaceful devices.

Characteristics of socialism

Central planning

The governments are the central planners. They decide what to produce, the quantity to produce and how to produce them. Because of this, the working price is minimal-at the affordability of the citizens.

The concentration of power

Only one existing political party has all the economic and political power in its hands. This makes the government very powerful.

Lack of profit motive

Workers tend to lose their personal drive due to the absence of a profit motive. This drive on a normal case is what businessmen have when working for themselves.

The aim of this collective ownership of the means of production is not fair personal gains. The aim is for the people’s interest as well as social welfare.

Collective ownership

Collective ownership is the most important attribute of socialism. The government owns all the means of production such as large producing firms, commercial transportation, healthcare facilities, etc.

Absence of exploitation

The government employs all the citizens. Under socialism, there is no exploitation as it is under capitalism. This is because the government is fully in charge of every production.

No work, no food

For everyone who is not disabled has to work, whoever does not work will not receive any payment.

Egalitarian/classless society

The opposition of and the reactions to the injustice and economic inequality that accompanies the capitalist system brought about socialism. Socialism is meant to foster equality, which is a classless society. In ideal terms, everyone under the socialist system should have economic equality.

Price Control

It is the state that controls and regulates the prices in a socialist economy. That is, the state is responsible for both the market price for consumer goods and the accounting price. This helps managers in making decisions pertaining to the production of goods.

Social Welfare

Socialism focuses on the basic needs of the people as well as ensuring that every working-class enjoys protection from exploitation. Exploitation is usually absent under this system. The state is responsible for taking care of employees through minimum wages, trade union recognition rights, and employment protection.

Advantages of socialism

Absence of exploitation

The government ensures that no one experiences exploitation. Each person receives and contributes according to their potentials. There is guaranteed access to basic necessities for every individual. Those who are not able to contribute especially the disabled also enjoy this access. This, in turn, helps to reduce the level of poverty in the economy. Everyone has an equal right to healthcare and other social welfare.

Minimize poverty

The fact that those who are unable to contribute also enjoy some level of access to basic needs helps to minimize poverty since everyone is equal. That is, everyone has an equal right to social welfare.

Rejection of discrimination

Since everyone has equal rights, socialism disapproves of discrimination. Under this system, everyone does what he or she is best at with higher pay for those jobs that no one is available to do but yet should be done.

Encourages selflessness and social welfare

Socialism focuses more on the needs of society. While capitalism bases on production based on the purchasing power of consumers thereby making the poor to be worse off, socialism tries to prevent such happenings. It is a selfless system that bases its production on the basic needs and necessities of the people. The socialist system puts the needs of the people first. There is less reason for people to worry about tomorrow and this leads to an increase in productivity.

Workers under the socialist system are being provided with a conducive working environment to reduce the risks attached to the job as well as creating a comfortable avenue for them. The state takes responsibility for any accident that occurs in the process of one carrying out his job.

Reduced hidden taxes

Hidden taxes are those taxes on consumer goods. Firms transfer these taxes to consumers without their knowledge. A proper socialist economic system does not have taxes. The government takes everything and pays allowances to the people.

Social justice 

Social justice is of great advantage because it reduces inequalities and facilitates the equitable distribution of national income. Every individual is entitled to his own share of the national wealth as well as equal opportunities. This greatly helps to eliminate exploitation. In other words, there is an equal distribution of wealth and income.

Rapid and balanced economic development

Because this economic system is centrally planned, the state decides promptly and plans the use of resources. By this, the system fosters efficient usage and utilization of resources thereby minimizing wastage. This usually amounts to rapid growth in the economy. A notable example is a development that the USSR made in those early years.

The system makes available balanced economic growth and development. This also means that there is no imbalance in focusing on development. The central planners will not focus on some areas while leaving other areas behind. There is commensurate economic growth and development in all areas.

Minimal exploitation and class conflict

Socialism aims at creating a classless society that fosters equality for every member. The scenario whereby the rich will exploit the poor does not exist. There is no favoritism and discrimination if the government is transparent since everyone is equal. In turn, this eliminates class conflicts and struggles which is prominent in capitalist economies.

Disadvantages of socialism

Over-dependence

Depending on corporate pooling to get things done is a great disadvantage of socialism. Society expects everyone to cooperate without competing with one another. Competitive individuals seem to find ways to cause social catastrophe for their personal interests.

It kills innovation

As a result of the absence of competition, the system discourages innovation. There is no reward for competitors and business ventures under this system. The economic system does not encourage innovation as capitalism does.

No choices and freedom

Unlike capitalism, socialism does not provide choices to the people in terms of the products to purchase as well as the brands. The monopolistic nature of this system coerces people to buy a particular product at a particular price. Also, the system takes away people’s freedom of enterprise and free choice of occupation. It is the central planning committee that assigns jobs to workers and no worker has the right to change his job without the consent of the state.

Lack of incentives

A high progressive taxation rate can cause disincentives to work and set up businesses. Entrepreneurs may have the feeling that the government is taking a high percentage of their profits. This makes most people avoid risk and work abroad instead. Also, for the fact that socialism is against one accumulating wealth for himself, extra efforts will not constitute an added advantage. Because of that, there is no incentive for innovation and hard work.

Government failure

Though the idea is that the government will succeed in the regulation of every sector in the economy. Government intervention is prone to government failure and inefficient resource allocation. For instance, the regulation of the labor market such as minimizing g or maximizing the working period can lead to unemployment. Lack of flexibility can surface as well. Because the government regulation on firms is high, it discourages investment thereby lowering economic growth and development.

Subsidies

It is difficult to remove subsidies/government benefits.

No suitable basis for calculating cost

Under capitalism, market forces (demand and supply) determine the cost of production as well as the subsequent prices of commodities. Under socialism, this is not the case. The government owns and controls everything, that is the role of an entrepreneur. This means that the means of production do not have a market price. So because of this, there is no suitable basis for calculating the cost of production as well as the price of goods and services.

Importance of socialism

Socialism is important both to the government and the individuals. The state will be able to gear investment towards key industries to avoid wastage of resources. The system eases the extension of public funding and benefits to the wider inhabitants of a nation. The economic system is relevant in reducing economic inequalities as well as improving social welfare.

It is obvious that socialism bases on social benefits, having the greatest goal of the commonwealth. This fosters the efficient use of productive resources (factors of production). The state controlling the means of production tries to avoid insufficient production and overproduction. The government is able to control prices to some extent.

Still, on social benefits, workers receive health insurance benefits, and the state places its priority on the disabled, aged, sick, children, and the less privileged.

Because this system aims at reducing economic and income inequality, it adopts social justice, thereby reducing consumer exploitation as well as reducing hidden taxes, and class discrimination. It has a way of reducing class disputes.

The drawbacks of capitalism led to the emergence of socialism, that is, socialism aims at eliminating these drawbacks. There exists little or no abuse of monopoly power under this system. The system minimizes poverty.

Socialism Vs Communism

Most times, people use socialism and communism interchangeably but they do not mean the same thing. The two terms are distinct from each other, not the same philosophy. The reason for this confusion is that both socialism and communism seek to establish a classless society where everyone has equal opportunities. Also, both systems have to do with the public ownership of capital or productive resources as well as the contribution based on one’s ability. These features mentioned above made the two terms look like the same thing.

The differences between socialism and communism

There are outstanding differences between the two systems thus;

Under socialism, the central authority is in total control of the economy, it is a liberal system. The central authority is elected by the people and that gives the people a say in running the economy. On the other hand, communism is more authoritative in nature. This means that the people have no say when it comes to the running of the economy.

Secondly, socialism gears towards the distribution of the wealth which the economy produced according to the productivity of each individual. The workers earn their wages and they have the right to spend on anything they want thereby encouraging them to work harder. Communism on the other hand distributes wealth to the people based on the assessment of the needs of individuals by the government. There is little or no incentive to be innovative as well as to achieve more. Because of this, communism usually possesses the attribute of low productivity, no advancement (or limited), and massive poverty.

The approach of property ownership also makes the two systems differ. Though under socialism, the government/state owns and controls all means of production, the system still allows individuals to enjoy ownership of personal properties. For example, an individual can own furniture but cannot own a furniture-producing factory.  Communism, on the other hand, everything is publicly owned but individuals only have the right to use these properties. The state still owns every property, this implies that there is no right to private ownership of property whether capital resources or not. This system looks like when one is living in a military barracks.

This implies that the state can assign a house for you to live in and a motor vehicle to use, but you do not personally own these properties. Going back to the example of a military barrack, when you leave these properties, the military will still be in control of the properties and assign them to another military personnel.

Socialism Vs Democracy

We looked at democratic socialism and socialist democracy above. It is important that they are not the same.

What is the difference between socialism and democracy?

While democracy is a political concept usually describing a system of government, socialism is an economic concept basically describing a type of economic system.

Democracy expresses the right the eligibility of citizens to carry out political exercises. It promotes political freedom and the equal right of every individual to self-development. Socialism on the other hand argues that the distribution of means of production should be among every individual in the economy. In simple terms, socialism focuses basically on collective ownership of production resources.

Socialism Vs Capitalism Vs Communism

Capitalism, socialism, and communism are concepts in economics describing the different types of economic systems.

Under capitalism, private individuals own and control all means of production, under socialism, it is the state/government that owns and controls all means of production, while under communism, the community owns and controls the means of production.

While socialism and communism are characterized by a classless society, capitalism is not a classless society. Class distinction and disputes exist in the capitalist economy.

Capitalism is a free and competitive market while socialism is centrally planned. Under socialism, the people have a say in running the economy. Communism on the other hand is more authoritative in nature where people do not have a say in running the economy.

Under capitalism, the profit incentive is the factor that drives firms to be innovative and bring in new ideas. Though there is little incentive to work harder under socialism because to some extent, wealth distribution bases on the productivity of an individual. Communism distributes wealth to the people based on the assessment of the needs of individuals by the government. There is little or no incentive to be innovative as well as to achieve more. Because of this, communism usually possesses the attribute of low productivity, no advancement (or limited), and massive poverty.

The state is primarily the employer under the socialist and communist economic system while under capitalism this is not the case.

Finally, we can conclude that capitalism is a free market economy, socialism is democratic to some extent while communism is more authoritative in nature.

Frequently asked questions

What does socialism mean in simple terms?

Socialism simply refers to the economic system in which the government or state owns and controls all means of production. The government decides on basic economic issues like what to produce, how to produce, and for whom to produce. Another name for the socialist economic system is the centrally planned economy.

What is socialism’s example?

Countries/economies like China Vietnam, Syria, Venezuela, Zambia, Belarus, Turkmenistan, and Laos are also considered examples of socialism. This is because the government strongly intervenes in different sectors of their economies such as healthcare, manufacturing, social programs, and the mass media.

Why is socialism bad for society?

Socialism has some disadvantages like over-dependence on the government, little or no innovation, lack of freedom and choice for the people, and the government may fail especially when it is a corrupt government. It is disastrous for a corrupt government to rule in a socialist economy. See the disadvantages of socialism above.

What is the difference between communism and socialism?

Communism is more democratic in nature than communism. In other words, communism is authoritative. Under socialism, the people can enjoy ownership of private property but are not allowed to own capital resources for further production. On the other hand, under communism, everything is publicly owned and the people only have the right to use the properties. See Socialism Vs communism above.

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