Table of Content

Socialist Economy; Features, Advantages and Disadvantages

Socialist Economy
 

Socialist Economy

Socialist Economy

  A Socialist economic system is an economy where all production and production activities are decided by the government or state.
Read More: Capitalist Economy; Features, Advantages, and Disadvantages

A socialist economy is a type of economic system where all distribution and production credit goes to the government or is owned and controlled by the state. The government controls all prices of goods and services. A socialist economy is also known as a command and planned economy because the government primarily focuses on the development of the country. A socialist economy is an economic system where the government decides what to produce, how to produce, and what to produce. Demand and supply were determined by the government. All the credit goes to Karl Marx because he introduced the concept and idea of ​​the socialist economic system. Use the means and resources in the interest of social welfare in a socialist economic government.
According to P.A. Samuelson, "Socialism is a political theory which holds that all the means of production, other than labour, should be owned by the community."

According to S.J. Grant, "A Socialist economy is one in which the government make the decision on what to produce, how to produce, and, whom to produce."

Features 

i. Resources owned by the state: The major feature of socialist economics is the means of production are owned and controlled by the state or government. Under socialism, state control over all entries, economy, and resources is used for the whole society. This type of economy ensures equality of opportunity for all citizens. The aim of a socialist economy is to fully and efficiently utilization of a country's resources.


ii. Planned economics: Economic planning is the essential feature of socialist economics. So, this economy is a fully planned economy. There is a central planning authority in every country to ensure a socialist economic system. The main function of the central planning authority is to formulate the short-term, and long-term for the economy.  All the economic decisions, regarding production, consumption, distribution, and utilizing the resources for the future need are controlled by the government.

iii. Economic equality: Economic equality is the most important feature of a socialist economy. In the country, all citizens are equal in terms of income, and welfare. In socialist economics, there is no private property, private enterprises, and business, so there is no economic inequality in the economy of the country, and the government provides equal rights in every sector to the citizen.   The Socialist economy believes in social justice, not in perfect equality.

iv. Social welfare: Social welfare is the most important feature of socialist economics. In the Socialist economic system demand, and supply is not important but price policy is guided by social welfare motive.

v. Absence of private ownership: As you know, in a socialist economy, all production and production activities are controlled and decided by the government and the state. So, there is no chance to establish private organizations, private companies, etc. All production of means and resources is conducted by the government or state. While the main aim of a capitalist economy is the price motive but in a socialist economy, the price motive is not important.  

Advantage

➡The main advantage of a socialist economy is to make the rapid development of the economy.
➡Another advantage of the socialist economy is to make economic stability.
➡Socialist economics aim of providing equal opportunity for all citizens in generating income. 
➡The main benefits of socialite economic to no exploitation and class struggle. 
➡Social welfare is a slogan of a socialist economy to provide social security, and other many benefits to citizens of the nation.

Disadvantage 

➡In the socialist economic system there is no proper basis for cost calculation.
➡All the activities are controlled and decided by the central planning authority, there is no significant role to a private organization or company. it means that there is a loss of economic freedom and consumer sovereignty.
➡In a socialist economy, there is a lack of adjustment between prices and wages.
➡There may be corruption, bureaucracy, red-tapism, and favoritism, under the socialist economy.

Post a Comment