Economic Philosophies: Socialism

• Socialism is one of the two left-leaning economic philosophies
• It is at the core of most countries that are led by left-wing politicians
• Indeed some of its principles have been adopted even by capitalist societies
• At its heart is the belief that there ought to be social equality egality among citizens of society

Features of socialism

• It is a spawn of left-wing politics
• The word left wing comes from the French Revolution (1789–1799) where proponents of ideas similar to those expounded in socialist ideology sat on the left side of what was the equivalent of the French parliament back then
• The economy is driven by the desire to create a socially equal society where there are no social classes
• This is known as Egalitarianism
• The term comes from the French word égalité
• It means equality in everything including social, economic and legal equality
• Egalitarianism is the belief that all society should be equal including an equal distribution of wealth
• Socialism, therefore, aims for the creation of an egalitarian society
• Socialist ideology is mainly driven by populism and populist policies
• Unlike in capitalism, all factors of production are owned by the government
• The belief is that the government would better suited to act in everyone’s interest as opposed to private individuals who are likely to act in their own selfish interest
• The main aim is to provide everyone with what they need rather than to make a profit
• Socialism often results in a Centrally Planned Economy
• Aspects of socialism are also seen in the public sectors of Mixed Economies
• The government sets the prices and decides:
  • What to produce
  • For whom to produce
  • How much to produce
• Production is made according to the needs of society based on the plans and commands of those in charge (the government)
• Consumer/Customer choice is limited as there is often just one brand of a given product
• They cannot demand what they want, they must choose products from what the state produces
• Instead of supply and demand, the government chooses the prices at which products ought to be sold
• The belief here is that the government will set a fair price that people can afford, bear in mind the goal is not to make a profit
• This is often known as administered pricing
• Policies are created to make sure that there is an equal distribution of wealth so there is a very small gap between the rich and the poor
• This involves things like equal wages and worker’s rights
• There are various shades of socialism:
  • Market socialism something akin to China’s economic system
  • Democratic socialism
  • Authoritarian socialism
  • Libertarian socialism
  • Utopian socialism
• Socialism predates Communism and is sometimes confused with it
• The two have similarities and differences
• To learn more about the disadvantages and advantages of socialism go to this post

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