Socialist economy is a planned economy. Instead of permitting the free play of profit motives in a laissez-faire market economy, co-ordinate planning is introduced.
Sometimes the programme of “production for use rather than profit” is advocated, advertising expenditure on gadgets is reduced, workers and professional people are to develop instincts of craftsmanship and social service so that they will be guided by other motives than those of “acquisitive society”.
3. Redistribution of income:
Inherited wealth and swollen incomes are to be reduced by militant use of government taxing powers. Social security benefits, free medical care, and cradle to the grave welfare services provided by the collective purse are to increase the well-being of the less privileged classes and guarantee minimum standards of living. Equitable distribution of incomes is central to socialism.
4. Social welfare rather than private profit characterises a socialist society’s goals.
5. Peaceful and democratic revolution:
Socialism, as distinct from Communism, often advocates the peaceful and gradual extension of government ownership— revolution by ballot rather than by bullet. This aim is often more than a technical move, rather a deep philosophical tenet of faith.
Democratic socialism, which is a milder form of socialism, shares with capitalism existence of private sector, inequality of incomes, freedom of consumers and producers (subject to demands of central planning) and existence of price mechanism.
Socialism ensures full employment, a high rate of growth, dignity of labour and absence of exploitation of labour, relatively equitable distribution of income and wealth and absence of wastages associated with capitalistic system of production.
As against these merits, the system leads to loss of efficiency and enterprise and incentives for hard work and initiative are missing.
Since consumers have no means at their disposal for indicating their preferences for different types of goods and have to consume what has been produced as a result of central decision, the first casualty of the socialist system is the consumer’s sovereignty.
If some freedom of choice is allowed, there may be some goods which nobody will care to buy and other goods for which the demand may be in excess of the supply. Adjusting supply to demand may, in the absence of a free market mechanism, pose a rather intractable problem to the socialist planners.
Another defect of socialism is that it suffers from too much bureaucratic control. Power is concentrated in the hands of the State which takes all decisions regarding investment, production, distribution and consumption.
This leads to bureaucratization, red tape and a very cumbersome and expensive system of administration which cannot deliver the goods.
Resource allocation is arbitrary as there is no rational price system which generally guides allocation decisions. In the absence of competition, production is inefficient and costly and quite often there are shortages particularly of consumer goods.
Soviet experiments with socialism over a period of 70 years have miserably failed. But it was hailed by Sydney Leboa as new civilization. These points to the fact that Marxism has practically no future.