Socialism - Part 6
From Wikipedia, the free encyclopedia
Socialism as an economic system
See also: Socialist economics
Economically, socialism denotes an economic system of state ownership and/or worker ownership of the means of production and distribution. In the U.S.S.R., state ownership of the means of production was combined with central planning – what goods and services to make and provide, how they were to be produced, the quantities, and the sale prices (cf. Economy of the Soviet Union). Soviet economic planning was an alternative to allowing the market (supply and demand) to determine prices and production. During the Great Depression, socialists considered Soviet-style planned economies the remedy to Capitalism's inherent flaws – monopoly, business cycles, unemployment, unequally distributed wealth, and the economic exploitation of workers.
In the West, neoclassical liberal economists, e.g. Friedrich Hayek and Milton Friedman, said that socialist planned economies would fail, because planners could not have the business information inherent to a market economy (cf. economic calculation problem), nor would managers in Soviet-style socialist economies match the motivation of profit.
Consequent to Soviet economic stagnation in the 1970s and 1980s, socialists began to accept parts of their critique. Polish economist Oskar Lange, an early proponent of "market socialism", proposed a Central Planning Board establishing prices and controls of investment. The prices of producer goods would be determined through trial and error. The prices of consumer goods would be determined by supply and demand, with the supply coming from state-owned firms that would set their prices equal to the marginal cost, as in perfectly competitive markets. The Central Planning Board would distribute a "social dividend" to ensure reasonable income equality.
In Western Europe, particularly in the period after World War II, many socialist parties in government implemented what became known as mixed economies. These governments nationalised major and economically vital industries while permitting a free market to continue in the rest. These were most often monopolistic or infrastructural industries like mail, railways, power and other utilities. In some instances a number of small, competing and often relatively poorly financed companies in the same sector were nationalised to form one government monopoly for the purpose of competent management, of economic rescue (in the UK, British Leyland, Rolls Royce), or of competing on the world market. Typically, this was achieved through compulsory purchase of the industry (i.e. with compensation). For example in the UK the nationalization of the coal mines in 1947 created a coal board charged with running the coal industry commercially so as to be able to meet the interest payable on the bonds which the former mine owners' shares had been converted into.
Some socialists propose various decentralized, worker-managed economic systems. One such system is the "cooperative economy," a largely free market economy in which workers manage the firms and democratically determine remuneration levels and labor divisions. Productive resources would be legally owned by the cooperative and rented to the workers, who would enjoy usufruct rights. Another, more recent, variant is "participatory economics," wherein the economy is planned by decentralized councils of workers and consumers. Workers would be remunerated solely according to effort and sacrifice, so that those engaged in dangerous, uncomfortable, and strenuous work would receive the highest incomes and could thereby work less. Some Marxists and Anarcho-communists also propose a worker managed economy based on workers councils, however unlike participatory economics in Anarcho communism workers are remunerated according to their needs (which are largely self determined in an anarcho communist system). Recently socialists have also been working with the Technocracy movement to promote such concepts as Energy Accounting.
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I thought a few lessons on Socialism would be a good thing. The above is copied directly from the Wikipedia page on Socialism. I did remove the footnote indicators. The links provided on Wikipedia did not translate (of course), and there are a lot of them! So I elected to not spend an hour or more adding all the links. I suggest you go to Wikipedia (link provided) and read it yourself.