Socialism and Its Characteristics, Pros, Cons, Examples and Types

What It Is, How It Works, Comparison to Capitalism, Communism, Fascism

socialism
••• In socialism, the workers are the owners of the factors of production and make decisions about its allocation. Photo: Gabriela Medina PREM/Getty Images

Socialism is an economic system where everyone in the society equally owns the factors of production. The ownership is acquired through a democratically elected government. It could also be a cooperative or a public corporation where everyone owns shares. The four factors of production are laborentrepreneurshipcapital goods, and natural resources

Socialism's mantra is, "From each according to his ability, to each according to his contribution." Everyone in society receives a share of the production based on how much each has contributed.

That motivates them to work long hours if they want to receive more.

Workers receive their share after a percentage has been deducted for the common good. Examples are transportation, defense, and education. Some also define the common good as caring for those who can't directly contribute to production. Examples include the elderly, children, and their caretakers.

Socialism assumes that the basic nature of people is cooperative. That nature hasn't yet emerged in full because capitalism or feudalism has forced people to be competitive. Therefore, a basic tenet of socialism is that the economic system must support this basic human nature for these qualities to emerge.

These factors are valued for their usefulness to people. This includes individual needs and greater social needs. That might include preservation of natural resources, education, or health care. That requires most economic decisions to be made by central planning, as in a command economy.

 

Advantages

Workers are no longer exploited, since they own the means of production. All profits are spread equitably among all workers, according to his or her contribution. The cooperative system realizes that even those who can't work must have their basic needs met, for the good of the whole.

The system eliminates poverty.

Everyone has equal access to health care and education. No one is discriminated against. 

Everyone works at what one is best at and what one enjoys. If society needs jobs to be done that no one wants, it offers higher compensation to make it worthwhile.

Natural resources are preserved for the good of the whole.

Disadvantages

The biggest disadvantage of socialism is that it relies on the cooperative nature of humans to work. It negates those within society who are competitive, not cooperative. Competitive people tend to seek ways to overthrow and disrupt society for their own gain. 

A second related criticism is that it doesn't reward people for being entrepreneurial and competitive. As such, it won't be as innovative as a capitalistic society.

A third possibility is that the government set up to represent the masses may abuse its position and claim power for itself. 

Difference Between Socialism, Capitalism, Communism, and Fascism

AttributeSocialismCapitalismCommunismFascism
Factors of production are owned byEveryoneIndividualsEveryoneIndividuals
Factors of production are valued forUsefulness to peopleProfitUsefulness to peopleNation building
Allocation decided byCentral planLaw of demand and supplyCentral planCentral plan
From each according to hisAbilityMarket decidesAbilityValue to the nation
To each according to hisContributionWealthNeed

Examples of Socialist Countries

There are no countries that are 100 percent socialist, according to the Socialist Party of the United Kingdom.

.   Most have mixed economies that incorporate socialism with capitalism, communism, or both. Here's a list of countries that are considered to have a strong socialist system:

Norway, Sweden, and Denmark: The state provides health care, education, and pensions. But these countries also have successful capitalists. The top 10 percent of each nation's people hold more than 65 percent of the wealth. That's because most people don't feel the need to accumulate wealth since the government provides a great quality of life. 

Cuba, China, Vietnam, Russia, and North Korea: These countries incorporate characteristics of both socialism and communism.

Algeria, Angola, Bangladesh, Guyana, India, Mozambique, Portugal, Sri Lanka, and Tanzania: These countries all expressly state they are socialist in their constitutions.

Their governments run their economies. All have democratically elected governments.

Belarus, Laos, Syria, Turkmenistan, Venezuela, and Zambia: These countries all have very strong aspects of governance, ranging from healthcare, the media, or social programs run by the government.

Many other countries, such as Ireland, France, Great Britain, Netherlands, New Zealand, and Belgium, have strong socialist parties and a high level of social support provided by the government. But, most businesses are privately owned. This makes them essentially capitalist. 

Many traditional economies use socialism, although many still use private ownership. 

Eight Types of Socialism

There are eight types of socialism. They differ on how capitalism can best be turned into socialism. They also emphasize different aspects of socialism. Here are a few of the major branches, according to "Socialism by Branch," in The Basics of Philosophy.

Democratic Socialism: The factors of production are managed by a democratically elected government. Central planning distributes common goods, such as mass transit, housing, and energy, while the free market is allowed to distribute consumer goods.  

Revolutionary Socialism: Socialism will emerge only after capitalism has been destroyed. "There is no peaceful road to socialism." The factors of production are owned by the workers and managed by them through central planning.  

Libertarian Socialism: Libertarianism assumes that the basic nature of people is rational, autonomous, and self-determining. Once the strictures of capitalism have been removed, people will naturally seek a socialist society that takes care of all. That's because they see it is the best for their own self-interest. 

Market Socialism: Production is owned by the workers. They decide how to distribute among themselves. They would sell excess production on the free market. Alternatively, it could be turned over to society, which would distribute it according to the free market. 

Green Socialism: This type of socialistic economy highly values the maintenance of natural resources. Public ownership of large corporations achieves this. It also emphasizes public transit and locally sourced food. Production focuses on making sure everyone has enough of the basics instead of consumer products one doesn't really need. This kind of economy guarantees a livable wage for everyone. 

Christian Socialism: Christian teachings of brotherhood are the same values expressed by socialism. 

Utopian Socialism: This was more a vision of equality than a concrete plan. It arose in the early 19th century, before industrialization. It would be achieved peacefully through a series of experimental societies. 

Fabian Socialism: This type of socialism was extolled by a British organization in the late 1900s. It advocated a gradual change to socialism through laws, elections, and other peaceful means.