Economic theories explained: what is socialism?

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Chinese tourists in front of a Lenin statueSocialism is an economic theory that, in various forms, is followed in several parts of the world.

Countries with socialist government systems in place include India, Portugal and, of course, China. But what is socialism and does it really work?

The definition of socialism
According to Oxford Dictionaries, socialism is a political and economic theory of social organisation that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.

In Marxist theory, however, socialism is a transitional social state between the overthrow of capitalism and the rise of a Communist society, in which classes and the state are no longer present.

The history of socialism
The word socialism, which comes from the French word socialisme, started being used in the 18th century, when an intellectual and working class political movement began criticising the effects of industrialisation and private property on society.

In the early 19th century, the word socialism referred to any concern for the social problems of capitalism irrespective of the solutions to those problems.

However, by the late 19th-century, socialism had come to signify opposition to capitalism and advocacy for an alternative system based on some form of social ownership.

The different kinds of socialism
There are many varieties of socialism that differ in the type of social ownership they advocate, the degree to which they rely on markets or planning, how they believe management should be organised within productive institutions, and what the role of the state should be.

Proponents of state socialism, for example, advocate the nationalisation of the means of production, distribution and exchange, while democratic socialism seeks to establish socialism within the context of a democratic political system.

The arguments for and against socialism
Socialists claim that the system of production and distribution should be organised to directly satisfy economic demands and human needs, rather than for private profit driven by the accumulation of capital.

Critics of socialism, on the other hand, believe that many forms of the economic theory are unfeasible in practice and that public ownership of the means of production, for example, is an infringement on liberty.

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