Socialism is a political and economic system whose main foundation is equality. The system’s objective is the transformation of society through the distribution of income and property to reduce social inequality.
Features of Socialist Economy
The main characteristics of socialism are:
1. State Intervention
The State intervenes permanently and efficiently in carrying out economic and social activities and controls the prices and wages of workers.
State intervention is important to guarantee equal opportunities and means of production for all citizens.
2. Balanced Distribution of Income
Income distribution means that everything produced by society must be distributed equally among all people. The profit from production is controlled by the state and divided among the workers.
The main objective of state-controlled income distribution is to eliminate the inequalities that exist due to the great difference in economic power between social classes.
3. Socialization of the Means of Production
The entire productive structure of land, companies and machines is collectively owned by cooperatives or public companies. This structure is administered by the State, as well as the entire process of production of goods and services.
All wealth and values that result from socialized production must be equally shared among citizens or invested for the benefit of society. Thus, in socialism there is no private property.
4. Lack of Class System
As a result of the means of production belonging to everyone, in socialism there must be only the social class of the proletarians (workers).
There are no rich or poor, no bosses and employees, and the economy’s resources belong to everyone. There are no social classes with opposing interests or representing social inequality.
5. Planned Economy
It means that the country’s economy and production are controlled by the state so that they function as equitably as possible. The State is responsible for controlling all aspects of the economy, such as controlling what is produced, prices and sales.
It is also the responsibility of the State to control the value and payment of salaries. The planned economy is also called the nationalization of the economy.
6. Opposition to Capitalism
Since its emergence in the Industrial Revolution, the socialist ideal was born as a reaction to social inequalities generated by capitalism.
There are many differences between the two systems. In socialism there is state intervention in the economy, production and wages. In capitalism there is little intervention and prices and wages are defined by the movement of the economic market.
Another difference concerns social classes. Socialism seeks a society without class division, whereas in capitalism there are different social classes that demonstrate the existence of social inequalities.
7. Subordination of Individual Interest to General Interest
Part of the functioning of the socialist ideal is the idea that the collective interest or that of society is more important than individual wills.
This means that the interests of each individual must take second place to the interests that are common to all.
