Disadvantages of Socialism

What is Socialism?

An economic system in which every person in a community has an equal share of the various components of production, distribution, and exchange of resources is called socialism. This type of ownership is guaranteed through a democratic system of governance. Socialism has been indicated through a cooperative system in which every member of a society owns an equal share of communal resources.

The act of engagement in a socialistic system is that every person receives and contributes according to his ability. For this purpose, members of the socialistic society tend to work hard. All the members of the society receive a share of the national pie once a proportion is taken for the purpose of social development. The areas into which resources are transferred are education, defence, and transportation. For the common good is a term that is translated to mean taking care of people who can’t contribute to social development, like children, the elderly, and caretakers.

Example

The democratic socialism, a form of socialism, was advocated by socialist parties in Western Europe. For example, in Nordic countries, government spending is between 40 and 50% of the total GDP. Democratic socialism believes in:

Redistribution of wealth and income through a progressive tax system and welfare state in order to reduce income inequality.

There is public ownership of basic utilities, like electricity, gas, water, and railways, etc.

There are privately-owned enterprises and the private ownership of other non-essential industries.

Free public education and free healthcare should be provided through direct taxation.

Minimum wages, support for trade unions, or labour market regulations should be made to protect workers.

There must be government regulations of environment, housing market, and monopolies.

Historical Background

A new type of economic theory emerged in the literature circle, which was known as “The Communist Manifesto” in the 1840s. This theory was written by Karl Marx and Friedrich Engels. This theory proposed a new and unique concept of an economy in a country, which was later known as a socialist economy.

Types of Socialism

There are many kinds of socialism in the world, and they all are different when it comes to ideas on how best to integrate capitalism into a socialistic structure. Additionally, the different types of socialist systems highlight various aspects of social democracy. Here are some forms of socialism:

Democratic Socialism

In this type of socialism, all factors of production and production units are under the management and control of an elected administration body. Major essential services are distributed through centralised planning, and a free market system is used to distribute consumer products. These products are housing, energy, and transit.

Revolutionary Socialism

This type of socialism is based on the philosophy that a socialistic system can’t emerge and sustain itself in the presence of capitalism. The proponents of this system believed that the path to a specialised socialist system needs hard work and struggle. In the revolutionary socialism system, means of production are owned and run by workers through a well-developed and centralised structure that promotes social equality through the removal of economic inequality.

Market Socialism

In market socialism, factors of production and all production processes are under the control of ordinary workers. Workers are the main party who decide the allocation and distribution of economic resources. These workers sell off what is in excess or give it to the other members of the society, who then distribute these resources based on a free market system.

Libertarian Socialism

This type of socialism works on the assumption that people are always self-determined, rational, and autonomous. If capitalism is taken away from a society, people naturally turn to a socialistic system because it is able to meet their desire needs.

Green Socialism

This type of society focusses on the protection and preservation of natural resources. In green socialism, giant corporations are owned, controlled, and run by the public sector. This system encourages the development and use of public transit, along with the processing and sale of locally grown food. In this system, the production of goods and services is focused on ensuring that everyone has equal access to basic necessities in an environmentally friendly way. Moreover, the members of the workforce are given a sustainable wage.

Advantages of Socialism

The following are some advantages of socialism:

Absence of Exploitation

An advantage of the socialist system is that it ensures that no worker is exploited. Although, each worker in a community has the right to tell about how resources are managed, and each individual contributes and receives based on an individual’s potential. According to this system, each person is given access to basic goods, even to those who are not able to participate in production. This system helps reduce poverty levels in a society. In addition, everyone in a society has an equal right to have basic necessities and essential services such as education and healthcare.

Rejection of Discrimination

The socialist system rejects discrimination in a society. Each person has the right to do what he is good at or what he enjoys the best. If there is a job that should be done and no one is willing to perform it, a higher remuneration is provided. Natural resources are also protected and preserved for the common good.

Collective Ownership of Resources

The whole foundation is based on socio-economic objectives in a socialistic economy. People’s welfare is given priority over the profit objective. As all major resources and factors of production are in state-ownership, only some small firms like farms and trading businesses are in private ownership.

Central Economic Planning

In socialism, the resources are allocated by using central planning. The authority is the one who will decide what is to be produced using the resources of a state, along with the quantity and method of production. The main aim of this kind of authority is to fulfil the socio-economic aims of the state.

Equal Distribution of Income

Another advantage of a socialist economy is that it does not allow a single person to accumulate a lot of wealth. In this way, the gap between poor and rich becomes shorter, and all citizens enjoy equal opportunities and facilities, such as healthcare, education, etc. In  socialist states, there is no discrimination against its citizens.

Disadvantages of Socialism

The following are some disadvantages of socialism:

Lack of Innovation and Competition

A major disadvantage of socialism is that it does not reward or appreciate entrepreneurial ventures or competitiveness. A socialistic system also does not support or encourage innovation like capitalists do.

Dependence on Cooperative Pooling

Another disadvantage is that socialistic systems totally rely on cooperative pooling to get things done right. People who are competitive are viewed in a negative light in the community. The society expects support and cooperation, not competition. Socialism states that competitive people tend to find ways to create social unrest for their personal gain.

Abusive Use of Power

Corruption, favouritism, and red-tapism may be present in sicialism. The Central Power Authority and the state hold too much power, which they often abuse for their personal gains and interests.

Restricted Freedom

Socialism restricts the individual freedom of its citizens. They do not have the freedom to choose what they want to buy or the jobs they want to do. Their freedom is also restricted by the inability to have their own private property.

Administered Prices

In a socialistic economy, authority imposes administered prices that are not based on efficiency or market forces. That is why the economic and scientific allocation of resources is impossible in this system.

Differences between Socialism and Capitalism

The following table contains the main points of difference between socialism and capitalism. 

Conclusion

In conclusion, socialism is an economic system in which economic equality is provided. The members of a community join together and create a pool to allocate factors of production, and the profits are equally shared between all members. A main advantage of socialism is that it allows no single worker to work more than others, and those individuals who do not participate are also provided equally. Therefore, since governments control everything in a country, it is possible for them to abuse their authority.