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Socialism is an economic system where the means of production are either owned and managed by the state maximum social benefits is the central idea of socialism.
Socialism is an economic organization of society in which the material, means of production are owned by the whole community according to a general economic plan, all members being entitled to benefits from the results of such socialism planned production on the basis of equal rights.
The main features or characteristics of socialism economy system are as under:
1. Proper Utilisation of Factors of Production
In the socialism economy, the best possible utilization of physical and human resources is done keeping in mind the benefits to the public.
They help in increasing production, consumption and income pattern whereas in capitalism importance is given to luxurious.
Rapid economic development takes place in socialism where economic stability and best utilization of resources as possible.
Related: 21 Pros and Cons of Capitalism Economy (With Examples).
In the socialism economy means of production are owned by the government which is used to derive maximum benefits to the society.
The main feature of socialism economy system is government ownership. Here the factor of production and personal where is taken up for Nationalisation.
It becomes easy for achieving the desired goal where resources are used in the planned manner for the social benefit.
In socialist economy, the state owns almost all of the means of production compelling the common man to act as Government employees.
5. Facilitate Central Economic Planning
In the socialist economy, central planning is given due importance.
The central planning commission is formed so that all activities are carried out in the planned manner for attending the specific objectives.
Related: 15 Pros and Cons of Socialism Economy (With Examples).
6. Government Control on Production and Distribution
The government acts as a central figure for deciding what is to be produced, when it is produced, how it is going to be produced, who is producing it and on the other hand, decide how the distribution will be done and what quantity.
features of socialist economy
Private ownership of an important role in the capitalism economy whereas govt.
Ownership is carried out in a socialism economy.
7. Maximization of social benefits
In the capitalism economy, the maximization of private profit is there whereas in the socialist economy social benefit is given due importance.
Here the main factors of production are owned by the government and are used for the maximization of the benefit of the public at large.
Related: 19 Features and Importance of Mixed Economy (With Examples).
8. Absence of Exploitation
In the socialism economy, there is government ownership of the factors of production leading to the Welfare of the public.
The exploitation of labors and Consumers is completely abolished in the social system.
Private ownership, private profit, and exploitation also give rise to economic inequality in capitalism economy.
Whereas the presence of government ownership of property, the absence of exploitation and avoidance of private profits give rise to economic equality in socialism economy.
10. Absence of Unearned Income
In the socialism economy, private ownership of the wealth is absent thus passing the wealth on hereditary is stopped and so if the person will works then only income will rise.
The chief principle of the socialism economy can be “No work, No bread”.
Related: 17 Scope and Importance of Macroeconomics (With Examples).
11. Absent of freedom of pricing the product
In the socialist economy, freedom of pricing the product is absent since the price of the product is decided not according to the force of demand and supply but are given by the Board of Central planning.
Only the government decides the prices because the ownership of means of production lies in their hand.
12. No Consumer Sovereignty
Wants of the consumer are generally not taken into consideration for the production of various goods.
The demand and the consumption pattern of a product are also decided by the government.
Desires of the consumer are overlooked and so they are completed to use the good of the government.
Heavy and huge businesses are established by the government.
Personal freedom is lost.
Thus, now you know the characteristics of socialism economy.
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Alexander Mongu kamin says
February 23, 2022 at 4:58 AM
Am student of MBA Finance in South Sudan, I would like to to be having more about the type of economic system.