Socialism is an economic system in which the means of production are socially owned and used to meet human needs, not to create profits.
Learning Objectives
Discuss the various implementations of socialism, from reformism to revolutionary socialism
Key Points
Socialists critique capitalism, arguing that it creates inequality and limits human potential. Socialists maintain that capitalism derives wealth from a system of labor exploitation and then concentrates wealth and power within a small segment of society that controls the means of production.
As a political movement, socialism includes a diverse array of political philosophies, ranging from reformism to revolutionary socialism, from a planned economy to market socialism.
A planned economy is a type of economy consisting of a mixture of public ownership of the means of production and the coordination of production and distribution through state planning.
Market socialism consists of publicly owned or cooperatively owned enterprises operating in a market economy.
Socialists argue that socialism would allow for wealth to be distributed based on how much one contributes to society, as opposed to how much capital one owns. A primary goal of socialism is social equality and a distribution of wealth based on one’s contribution to society.
Key Terms
planned economy: An economic system in which government directly manages supply and demand for goods and services by controlling production, prices, and distribution in accordance with a long-term design and schedule of objectives.
market socialism: Market socialism refers to various economic systems where the means of production are either publicly owned or cooperatively owned and operated for a profit in a market economy. The profit generated by the firms would be used to directly remunerate employees or would be the source of public finance or could be distributed among the population through a social dividend.
socialism: Any of various economic and political philosophies that support social equality, collective decision-making, distribution of income based on contribution and public ownership of productive capital and natural resources, as advocated by socialists.
Socialism is an economic system in which the means of production are socially owned and used to meet human needs instead of to create profits. The means of production refers to the tools, technology, buildings, and other materials used to make the goods or services in an economy. Social ownership of the means of production can take many forms. It could refer to cooperative enterprises, common ownership, direct public ownership, or autonomous state enterprises. Social ownership contrasts with capitalist ownership, in which the means of production are used to create a profit. In a socialist economic system, the means of production would instead be used to directly satisfy economic demands and human needs. Accounting would be based on physical quantities or a direct measure of labor-time instead of on profits and expenses.
Although socialism is often associated with Karl Marx, it has evolved to take a variety of forms. As a political movement, socialism includes a diverse array of political philosophies, ranging from reformism to revolutionary socialism, from a planned economy to market socialism. In a planned economy, the means of production are publicly owned and the government is in charge of coordinating and distributing production. By contrast, in market socialism, the means of production may be publicly or cooperatively owned, but they operate in a market economy. That is, market socialism uses the market and monetary prices to allocate and account for the means of production and the products they create. Just like in capitalism, the means of production generate profit; however, that profit would be used to remunerate employees or finance public institutions, not to benefit private owners.
The Significance of Socialism: Karl Marx helped to create the system of social thought now called Marxism.
Socialists critique capitalism, arguing that it derives wealth from a system of labor exploitation and then concentrates wealth and power within a small segment of society that controls the means of production. As a result, society is stratified, split into classes according to who owns the means of production and who is forced to sell their labor; as a result, individuals do not all have the same opportunity to maximize their potential. A capitalist society, they argue, does not utilize available technology and resources to their maximum potential in the interests of the public. Instead, it focuses on satisfying market-induced wants as opposed to human needs. Socialists argue that socialism would allow for wealth to be distributed based on how much one contributes to society, as opposed to how much capital one owns. A primary goal of socialism is social equality and a distribution of wealth based on one’s contribution to society, and an economic arrangement that would serve the interests of society as a whole.
Socialism in Europe: Europe has far more socialist democracies than the United States. François Hollande won the French presidency on the Socialist Party ticket in 2012.
