- characteristics
- Collective property
- Economic, social and political equality
- Planned economy
- There is no competition
- Work and wages according to abilities and needs
- Absolute economic control
- Price fixing
- Advantage
- social justice
- Rapid economic development
- Production based on needs
- Balanced economic development
- Economic stability
- Increased flexibility
- Equitable distribution of wealth
- There is no class struggle
- Disadvantages
- There is no appropriate basis for calculating the cost
- Inadequate resource allocation
- Lack of work incentives
- Loss of economic freedom
- State-centered power
- Complexity in administration
- Loss of freedom
- Articles of interest
- References
The socialist mode of production is one that is based on social ownership of the means of production, in order to satisfy the needs of the collective. This theory was created by Karl Marx, for which it was based on the deep social inequalities and injustices that existed on the means of production.
For socialism these means belong to everyone and for everyone, there being no individual owners. In practice, the State is the one who decides and acts as the plenipotentiary owner thereof. Work has no value, it must be voluntary and without having to establish any conditions on remuneration, because it is done for the good of society.
In the socialist mode of production, progress is associated with the degree of productivity of social work. In addition to individual material or cultural needs, individuals have social needs. In order to satisfy the latter, a production effort is necessary.
This surplus of work must be distributed among all in an equitable way, representing a relationship of collaboration and mutual help among workers.
characteristics
Collective property
All the means of production are owned by the community (that is, the government) and no individual can maintain private property beyond a certain limit. Therefore, it is the government that uses these resources in the interests of social welfare.
Economic, social and political equality
Theoretically, under socialism there is almost total equality between rich and poor. There is no problem of class struggle.
The State is responsible for the basic necessities of life: food, housing, health, education, clothing and employment. These will be provided without any discrimination.
Planned economy
The government clearly and quantitatively defines certain objectives. In order to achieve them, the government is directly responsible for formulating plans for economic activities such as production, exchange, distribution and consumption.
In economic plans, all types of decisions are made concerning the main problems of the economy.
There is no competition
The state has full control over the production of goods and services, so there is no competition in the market.
In this mode of production there is no private production. The government is the sole employer.
Work and wages according to abilities and needs
The work is assigned according to the ability and salary according to the need of the people. It is said that under socialism "from each according to their abilities, to each according to their needs."
Absolute economic control
The government has dominion over all economic activity. It owns and exercises controls over production through licenses, over consumption through production, and over distribution through direct sales of basic products in its stores.
Price fixing
There are two types of prices: the market price, applied to consumer goods; and the accountants, which assist management in making decisions about production and investments. Both operate under the strict regulation of the central planning authority.
Advantage
social justice
The main merit of socialism is that it ensures social justice, income inequalities are minimized, and national income is distributed more equitably and evenly.
Rapid economic development
The main factors that contribute to a rapid growth rate of the economy are the use of resources, planning and quick decisions.
Production based on needs
In this economy, production is directed to first satisfy the basic needs of the people.
Balanced economic development
Economic planning is aimed at equitable care of all production areas and all regions of the country. In this process, evaluations are carried out; those that are considered to be at a disadvantage with the rest receive priority attention.
Economic stability
Economic stability is in check, thanks to the planned nature of the economy. Because private investment is very low, economic fluctuations are minimal.
Increased flexibility
As there is market control, the state can quickly make the necessary changes to meet its objectives.
Planning flexibility is intended to provide immediate changes to the plan, as conditions vary.
Equitable distribution of wealth
All citizens have the same opportunity to earn income. As property and private enterprise are restricted, wealth is distributed.
There is no class struggle
As there are no distinctions between individuals, there is no discrimination between them or towards them. Therefore, there is no field for class struggle.
Disadvantages
There is no appropriate basis for calculating the cost
Because the government manages all the means of production, there is no market price for the factors of production.
This implies that there is no standard way of calculating the cost of production of goods and services.
Inadequate resource allocation
In the field of production arbitrariness occurs, since it is not based on the real needs of consumers. Consequently, there will be a misallocation of resources, making socialist production inefficient.
Lack of work incentives
In this system there is no incentive through profit for those outstanding workers, being occasionally awarded with some national honor.
This causes people to lose interest in giving the best of themselves, which results in inefficient processes.
Loss of economic freedom
Consumers lack options when it comes to purchasing a product, they can only buy what public companies produce.
In addition to this, the State controls which companies will exist and what positions an employee may hold.
State-centered power
In socialism, the State is not only a political authority, but has unlimited dominance in all areas of the nation.
Complexity in administration
The administrative burden is very heavy, due to government interference in all activities. The freedom to decide is extremely limited, which makes the processes slow and bureaucratic.
Loss of freedom
Freedom is so restricted that it doesn't seem to exist. In socialism the exploitation of the individual by another is forbidden, but since the State is the strongest, it can exploit the individual.
Articles of interest
What are the modes of production?
Asian production mode.
Slave production mode.
Feudal mode of production.
Capitalist mode of production.
References
- Umar Farooq (2012). Features and Characteristics of Socialism. Study Lecture Notes. Taken from: studylecturenotes.com.
- Wikipedia (2018). Socialist mode of production. Taken from: en.wikipedia.org.
- Money Matters (2018). Advantages and Disadvantages of Socialistic Economy. Taken from: accountlearning.com.
- Crossman Ashley (2017). The Mode of Production in Marxism. Taken from: thoughtco.com.
- Tushar Seth (2018). Socialist Economy: Meaning and Features of Socialist Economy. Economics Discussion. Taken from: economicsdiscussion.net.