Characteristics of a Socialistic Economy

 

Characteristics of a Socialistic Economy

Characteristics of a Socialistic Economy

What is socialistic economy 

A socialistic economy indicates an economic system where the main control of economic activities are under a central authority and the factors of production such as land, labor, capital, and organization are under the control of the government.

The Proponents of socialistic economics are Karl Marx, the father of German scientific socialism, and philosopher and thinker Friedrich Engels. After the Russian Revolution in 1917, under the leadership of Vladimir Ilyich Ulyanat (Lenin), socialism was first established in Russia. According to Nobel laureate American economist Paul A Samuelson, “A Socialistic economy is an economy in which society owns the means of production other than labor.” North Korea, China, Vietnam, Cuba, and Eastern Europe (Poland, Hungary, Romania) are included in Socialistic economical countries.

 

Characteristics of a Socialistic Economy

The main features of a directive or socialist economy are discussed below-

1. State Ownership of Resources:

State ownership remains on Land, Factories, Mines, and Other Resources in a Socialist Economy. In this case, there is no private ownership of assets.

2. Class Exploitation Absent:

As wealth is owned by the state or collectively by society, the working class is not exploited.

3. Absence of free competition in the market:

In a socialist economy, prices are not determined by competition between supply and demand. The price of each product is fixed by the central authority.

4. Central Economic Planning:

In socialism, consumer or buyer demand is regulated. In such a system, what products will be produced, and how they will be produced, all questions are decided by the central planning authority, and the buyers are bound to buy the same products.

5. Equitable distribution of income and wealth:

The principle of distribution of theoretical socialism is that everyone will get according to his needs (to all according to his needs).

6. Distribution of Wages according to Quantity and Quality of Work:

According to the Demand and Supply of Labor in Socialism as in Democracy Wages of workers are not fixed. Rather, the wages of workers are paid according to the quantity and quality of work.

7. Spontaneous Production System:

There is no such thing as an owner-worker with socially recognized ownership of materials. As a result, there is no conflict between productive force and production relations.

8. Maximizing Social Welfare:

In socialism, production activities are social welfare rather than profit driven by growth. That is the goal of production is not to achieve profit, but to achieve maximum social welfare.

9. Social Security:

Basic human rights in socialism include food, clothing, shelter, education, and medical care Guaranteed. Society and the State protect all members of society against all common risks of life and financial security is provided.

10. Exploitation-Free Society:

Socialism establishes a classless and exploitation-free society. There is no private ownership of wealth in socialism. There is no scope for exploitation as it is not recognized.

11. Balanced Development:

The policies and programs of development activities are adopted by the Central Planning Commission.

Therefore, balanced development is ensured here as the Central Planning Commission conducts all activities based on the information and data of the Regional Planning Commission.

12. Inflation:

Socialism maintains state control in all spheres. Hence the presence of inflation cannot be observed here as neither over-production nor under-production can occur.

13. Guarantee of employment:

In socialism, as production is centrally planned and belongs to the citizen The government bears the responsibility of all kinds of security, so no citizen's employment is neglected.

14. Control over consumer demand:

In socialism, the demand for goods does not depend on the choice or preference of the consumer. Commodities are produced and released for sale in the market as per the plan of the central planning authority. The prices of these goods are also fixed by the government and the buyer is forced to buy the goods at the price fixed by the government.

15. Harmonization of socio-economic and political goals:

The main goal of a socialist financial system is the socioeconomic development of the country. It is not in the individual's interest to maximize social welfare by ensuring production and distribution in the social context.

Neither pure capitalism nor a pure socialist economy indeed exists in the present world. In addition, in this economic system, the wastage of resources is reduced, the welfare increases and the basic economic problems of people are solved.

Content Writer:

Nawrin Zahan Lamia

Department of Education

Noakhali Science and Technology University