Meaning of Socialism:

Socialism is also called as planned economic system. It is an economic organization of society in which the material means of production or own by the whole community and operated by organs representative of and responsible to the community. According to a general economic plan all member of the community being entitle to benefits, from the result of such socialized planned production on the basis of equal rights. The merits and demerits of socialism explains the nature of socialism promptly.

Features of socialism:

•  Socialism is an alternative system of capitalism in socialism, there is social ownership of means of production and no private enterprise.
•  There is central authority with adequate powers to determine the objectives and co-ordinate societies efforts to attain those objectives.
• Social is economist necessarily a centrally planned economy.
• Equitable distribution of income is an essential feature of socialism
• Socialism is distinguished by social welfare and social security
• Equal opportunities are provided to all.
• The socialism aims to establish classless society where the distinction between the rich and the poor has completely disappeared.
• The other features are.
• Public Ownership: Socialism emphasizes the ownership of key industries, resources, and means of production by the state or the community.
• Central Planning: Economic planning by the state is a characteristic feature. Central authorities may determine production targets, resource allocation, and distribution of goods and services.
• Social Welfare: Socialism often seeks to ensure a more equitable distribution of wealth and resources, with a focus on providing essential services like healthcare, education, and social security.
• Reduced Economic Inequality: The goal is to reduce economic inequality by minimizing the disparities in income and wealth between different segments of society.
• Collective Decision-Making: Socialism often promotes collective decision-making processes, involving workers, communities, or the state in major economic and social decisions.
• Equal distribution of income: in a socialist type of economic system there will be equal distribution of national income.

Merits of socialism:

•  Social Justice: The goal of socialism is social justice under socialism the inequalities of income are reducing to the minimum and the national income is equitably distributed.
• Economic use of resources: The production resources of the nation are more economically and optimally allocating among the various productive uses.
• Full employment: Under socialism social ownership of factors of production an adoption of central economic planning enables the main importance of full employment.
• Economics stability: Socialism ensures economic stability by eliminating trade cycles through the control of state on production.
• Stability of price: The prices are fixed by the authority but not by the demand and supply forces as per market mechanism and hence prices remains stable
• Production of goods according to social priorities: Goods are produced according to social priority and not on the basis of maximization of private personal profit.
• No exploitation: In socialism there is no class of employers exploiting workers. Under social ownership, workers are in a sense of co-owners of the factories and firms where they’re working.

Demerits of socialism:

• Concentration of power in the state: The greatest danger of socialism is that too much power is concentrated in the state.
• Loss of personal liberty: There is no scope to the individual to speak or to behave with Liberty or show his ability of entrepreneurship. The free choice of occupation will go with the assignment of jobs.
• Lack of incentives: Incentive to hand work and stimulates to self-improvement disappear altogether when personal gain or self-interest is eliminated.
• Actions of effective competition: Under socialism there is absence of effective competition both among persons and among enterprise.
• Loss of consumer sovereignty: Under socialism, consumers have to adjust to production. Quota and rations are common he will not be able to maximize is satisfaction.
• Red tapes: There will be Red tape and the bureaucrats cannot take quick decision in running of the economic machinery.
• In efficient running of business: The condition in government service or not congenial for the display of extraordinary ability and a government department cannot claim success in business.
• No economic equality: There is still difference in income of the person and there are poor and rich even under socialism.
• Insufficiency of resources: The resources often maybe allotted to industrial which are less profit-making units due to the social priorities. Government cannot raise the huge amount of capital which is the basis of economic development.
•  No rational in pricing system: Under socialism prices do not reflect factor cost.

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