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What is Socialist Economy | Definition and Features

The nineteenth century is considered to be the century of capitalism and the twentieth century is considered to be the century of socialism. In the twentieth century, socialism was born as an alternative to the capitalist economy. In this article, we will know What is Socialist Economy and what are the Definition and Features of socialist economy.

What is Socialist Economy | Definition and Features

The first experiment of socialist economy was done in Russia. After the Second World War, China, Yugoslavia, Cuba, Poland, Hungary, Bulgaria, Romania, etc., saw the progress of the socialist economy in Russia. Later, socialist economies spread to Eastern Europe and Southeast Asia.

What is Socialist Economy

“An economy in which the means of production and property are owned by all members of society and used to create economic equality in society through the use, production, consumption and distribution of those means is called a ‘socialist economy’.”

Definition of Socialist Economy

The definitions given by some economists are as follows:

(1) According to HD Dickinson: “Socialism is an economic organization of society in which the whole society owns the material means of production according to a common plan and all sections of the society enjoy the benefits of production through social planning on equal basis.”

(2) According to Prof. Webbs: – “Socialism is an economic condition in which the whole society has ownership and control over the means of production instead of individual ownership and control.”

(3) According to Prof. Pigou: – “Socialist economy is a system where the main part of the productive resources is involved in the industries controlled by the society.”

(4) According to Maurice Dobb: “A socialist economy is a classless society as well as a system in which society owns land and capital.”

Features of Socialist Economy

(1) Government ownership of productive resources

In a socialist economy, the government owns the entire land, industries, banks, means of transportation and these means are used for the benefit of the society as a whole.

(2) Control of Central Power

In a socialist economy, it is controlled by the central government. Deciding on and implementing economic transactions in the country as a whole requires a dual task. The government of the country runs the entire economy.

(3) Planned economy

In a socialist economy, since all the means of production are owned by the government, planning is adopted to make proper use of the means. The government decides on which items in the country, how much and where to produce and how to distribute the products etc. In a socialist economy, planning has to be adopted to achieve certain goals in a given period of time.

(4) Equal opportunity for all

In a socialist economy, equal opportunities for development are provided to all the citizens of the country without any discrimination on the basis of caste, religion, creed, ethnicity etc. In this system, everyone has the opportunity to develop according to their ability without making any distinction between rich and poor, superior and inferior. Therefore, those who have intellectual and physical strength, can easily develop.

(5) Economic equality

In a socialist economy, the means of production belong to the society, that is, alternatively to the government. Therefore, there is no room for exploitation in this economy. Equal employment opportunities are provided to all citizens and deliberate efforts are made to prevent income inequality. This shows economic equality in the country.

(6) Priority to social welfare

In a socialist economy, personal gain is given priority and social welfare is neglected. In the socialist economy, on the other hand, social interests are given priority and personal interests are considered secondary. In this economy, all economic activities from production to distribution are carried out with the objective of social welfare in mind.

(7) Classless society

In a socialist economy, all means of production are owned by the government. Therefore, two classes are not formed in the society, rich and poor, capitalist and laborer, owner and laborer or exploiter and exploited.

(8) A society free from exploitation

In a socialist economy, production, exchange and distribution are all under government control and their main objective is ‘social welfare’. Therefore, in this economy, the producers do not exploit the consumers by charging higher prices and the capitalists do not exploit the workers by paying lower wages.

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