Socialism has a number of theoretical benefits, based on the idea of social equality and justice.
KEY points
- Advantages of socialism relating to social equality include a focus on reducing wealth disparities, unemployment and inflation (through price controls).
- Advantages of socialism related to economic planning include an ability to makegood use of land, labor and resources, as well as avoiding excess or insufficient production.
- Additional benefits of Socialism: Nationalization of key industries, redistribution of wealth, social security schemes, minimum wages, employmentprotection and trade union recognition rights.
Terms
- Public Benefit: A payment made in accordance with an insurance policy or a public assistance scheme.
- Redistribution: The act of changing the distribution of resources
Examples
- Socialist systems have a number of policy tools to help them achieve these goals. Nationalization of key industries such as mining, oil, and energy allows the state to invest directly, set prices and production levels, publicly fund research, and avoid exploitation. Wealth redistribution can occur through targeted, progressive taxation and welfare policies such as free/subsidized education and access to housing. Social security schemes also provide security in old age, while minimum wages, employment protection, and other labor rights ensure a fair wage and safety at work.
How Economies Can Benefit From Socialism
Socialist economics entails the following:
- Nationalization of key industries, such as mining, oil, steel, energy and transportation. A common model includes a sector being taken over by the state, followed by one or more publicly owned corporations arranging its day-to-day running. Advantages of nationalization include: the ability of the state to direct investment in key industries, distribute state profits from nationalized industries for the overall national good, direct producers to social rather than market goals, and better control the industries both by and for the workers. Additionally, nationalization enables the benefits and burdens of publicly funded research and development to be extended to the wider populace.
- Redistribution of wealth, through tax and spending policies that aim to reduce economic inequalities. Social democracies typically employ various forms of progressive taxation regarding wage and business income, wealth, inheritance, capital gains and property. On the spending side, a set of social policies typically provides free access to public services such as education, health care and child care. Additionally, subsidized access to housing, food, pharmaceutical goods, water supply, waste management and electricity is common.
- Social security schemes in which workers contribute to a mandatory public insurance program. The insurance typically includes monetary provisions for retirement pensions and survivor benefits, permanent and temporarydisabilities, unemployment and parental leave. Unlike private insurance, governmental schemes are based on public statutes rather than contracts; therefore, contributions and benefits may change in time, and are based on solidarity among participants. Its funding is done on an ongoing basis, without direct relationship to future liabilities.
- Minimum wages, employment protection and trade union recognition rights for the benefit of workers. These policies aim to guarantee living wages and help produce full employment. While a number of different models of trade union protection have evolved throughout the world over time, they all guarantee the right of workers to form unions, negotiate benefits and participate in strikes. Germany, for instance, appointed union representatives at high levels in all corporations, and as a result, endured much less industrial strife than the UK, whose laws encouraged strikes rather than negotiation.
The benefits of socialism also include the following:
- In theory, based on public benefits, socialism has the greatest goal of common wealth;
- Since the government controls almost all of society’s functions, it can make better use of resources, labors and lands;
- Socialism reduces disparity in wealth, not only in different areas, but also in all societal ranks and classes. Those who suffer from illnesses or are too old to work are still provided for and valued in by the government, assuming that the government is more compassionate that the individual’s family;
- Excess or insufficient production can be avoided;
- Prices can be controlled in a proper extent;
- Socialism can tackle unemployment to a great extent.
GLOSSARY
Benefit
An advantage, help or aid from something. Employee benefits and (especially in British English) benefits in kind (also called fringe benefits, perquisites, perqs or perks) are various non-wage compensations provided to employees in addition to their normal wages or salaries.
Capital
Money and wealth. The means to acquire goods and services, especially in a non-barter system. Already-produced durable goods available for use as a factor of production, such as steam shovels (equipment) and office buildings (structures).
Corporation
A group of individuals, created by law or under authority of law, having a continuous existence independent of the existences of its members, and powers and liabilities distinct from those of its members.
Disability
State of being disabled; deprivation or want of ability; absence of competent physical, intellectual, or moral power, means, fitness, and the like.
Economy
Collective focus of the study of money, currency and trade, and the efficient use of resources. The system of production and distribution and consumption. The overall measure of a currency system; as the national economy.
Employment
The work or occupation for which one is used, and often paid.
Goal
A desired result that one works to achieve.
Good
An object produced for market.
Industry
The sector of the economy consisting of large-scale enterprises.
Inflation
A rise in the general level of prices of goods and services in an economy over a period of time. An increase in the general level of prices or in the cost of living. An increase in the quantity of money, leading to a devaluation of existing money.
Insurance
A means of indemnity against a future occurrence of an uncertain event.
Justice
The ideal of fairness, impartiality, etc., especially with regard to the punishment of wrongdoing.
Liabilities
Probable future sacrifices of economic benefits arising from present obligations to transfer assets or providing services as a result of past transactions or events. An amount of money in a company that is owed to someone and has to be paid in the future, such as tax, debt, interest, and mortgage payments. An obligation of an entity arising from past transactions or events, including any type of borrowing.
Management
The act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively. Administration; the process or practice of managing.
Market
A group of potential customers for one’s product. One of the many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange.
Minimum Wage
The lowest rate at which an employer can legally pay an employee; usually expressed as pay per hour.
Pension
A gratuity paid regularly as a benefit due to a person in consideration of past services; notably to one retired from service, on account of retirement age, disability or similar cause; especially a regular stipend paid by a government to retired public officers, disabled soldiers; sometimes passed on to the heirs, or even specifically for them, as to the families of soldiers killed in service.
Planning
The act of formulating a course of action, or of drawing up plans.
Price
The price is the amount a customer pays for the product. The quantity of payment or compensation given by one party to another in return for goods or services. The cost required to gain possession of something.
Profits
Collective form of profit.
Resource
Something that one uses to achieve an objective, e.g. raw materials or personnel.
Retirement
Retirement is the point where a person stops employment completely. A person may also semi-retire by reducing work hours.
Right
A legal or moral entitlement.
Security
The condition of not being threatened, especially physically, psychologically, emotionally, or financially. proof of ownership of stocks, bonds, or other investment instruments.
Services
That which is produced, then traded, bought or sold, then finally consumed and consists of an action or work.
Social Democracy
A moderate political philosophy or ideology that aims to achieve socialistic goals within capitalist society such as by means of a strong welfare state and regulation of private industry.
Social Security
A system whereby the state either through general or specific taxation provides various benefits to help ensure the well-being of its citizens.
Socialism
A political philosophy based on principles of community decision making, social equality, and the avoidance of economic and social exclusion, with preference to community goals over individual ones. Any of various economic and political philosophies that support social equality, collective decision-making, distribution of income based on contribution and public ownership of productive capital and natural resources, as advocated by socialists. The intermediate phase of social development between capitalism and full communism. This is a strategy whereby the state has control of all key resource-producing industries and manages most aspects of the economy, in contrast to laissez-faire capitalism.
Solidarity
A bond of unity between individuals, united around a common goal or against a common enemy, such as the unifying principle that defines the labor movement. It is the integration—and degree and type of integration—shown by a society or group with people and their neighbors.
Supply Provisions
The amount of some product that producers are willing and able to sell at a given price, all other factors being held constant.
System
A whole composed of relationships among the members. The part of the universe being studied, arbitrarily defined to any size desired.