The primary concept of socialist economics is entirely based on perspectives. In case you are wondering why, it is to be mentioned that the socialists view commoditisation of labour as an inhuman practice, whereas, the capitalists hold a completely different perspective in this matter.
Before we delve deeper into the nitty-gritty of the economic structure, it is crucial for us to get the hang of the definition, comparisons, examples and other aspects.
Socialist economy refers to the national financial system based on the cooperative or public ownership and administration of primary production capabilities. Production, in a socialist economy, involves the goal of producing fruitful services and goods that can add value to the lifestyle, usage and ethical aspects of the consumers. A socialist economy typically employs central planning and the use of accounting systems based on the labour hours spent in production.
Before you know how a socialist economy works, it is important for you to get the hang of “socialism”. The phenomenon refers to the government ownership of the modes of production, planning, and proceedings regulated by the government and income distribution. The idea of socialism was first introduced by Fredric Engles and Karl Marx in their book, “The Communist Manifesto”.
A socialist economy works on the fundamentals of goods and services that are produced directly for use. The concept of socialist economics is also applied to the analysis of existing and former economic systems that were implemented in socialist states.
In a socialist economic organisation, the means of production are owned by the entire community and operated by the representatives of the people.
Now that you know about the meaning and origin of the socialist economy, let’s delve deeper into the aspects that define its features.
A socialist economy is primarily based on the following characteristics:
There’s no denying that capitalism vs. socialism is one of the much-debated topics of discussion. There are several significant contrasts and technical differences between the two. Most of them are primarily based on the dimensions of pricing, competition, means of production and the likes.
Take a look at the chart illustrated below.
Capitalist Economy |
Socialist Economy |
The capitalist economy is based on the principle of individual rights. |
The socialist economy is based on the principle of equality with regards to the public interest. |
Capitalism advocates innovation and individual goals. |
Socialism advocates equality and fairness in society. |
There are privately owned means of production in a capitalist economy. |
The means of production in a socialist economy are socially owned. |
The competition tends to remain very high in a capitalist market. |
Socialist economy has no competition at all. |
In a capitalist economy, every individual work in order to create his/her wealth. |
Socialism fosters the idea of a uniformly distributed wealth by all the people of the country. |
The capitalist economy does not involve the interference of government. |
The government decides everything in a socialist economy. |
You are free to follow any religion in a Capitalist economy. |
Even though you are free to practice any religion, a socialist economy encourages secularism. |
Table 1: Difference between a Capitalist Economy and a Socialist Economy
As per the opinions put forth by the Socialist Party of the United Kingdom, no country claims to have a socialist economy. However, if we are to cite examples of strong socialist systems, then here are the major countries that get a special mention.
Denmark, Sweden, and Norway: The socialist economic systems prevalent in these countries foster healthcare, pensions and education.
North Korea, Russia, Vietnam, China, and Cuba: These countries are said to incorporate the characteristics of socialism and communism as well.
New Zealand, Belgium, Great Britain, and the Netherlands: The government in these countries provide a high level of social support. However, there is an exception in this context. There are businesses across these countries that are privately owned.
Apart from these countries representing a strong socialist economy, I would like to talk about the eight prominent examples of a socialist economy that emphasizes different aspects of the phenomenon.
Active socialists argue that the economic system prevalent in a particular country must support basic human nature and necessities. And each of the examples mentioned above follows a similar convention where people’s right and basic necessities are given utmost importance.
Now that you are aware of the broader picture, use this informative blog as a piece of reference while composing scholarly papers on Socialist economics. You may also choose to explore further avenues by picking interesting slants from the write-up.
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