Introduction to Sociology

FURTHER RESEARCH

One alternative to traditional capitalism is to have the workers own the company for which they work. To learn more about company-owned businesses check out The National Center for Employee Ownership.

Socialism

Figure 4. The economies of China and Russia after World War II were both based on a communist system. (Photo courtesy of Wikimedia Commons)


Socialism is an economic system in which there is government ownership (often referred to as “state run”) of goods and their production, with an impetus to share work and wealth equally among the members of a society. Under socialism, everything that people produce, including services, is considered a social product. Everyone who contributes to the production of a good or to providing a service is entitled to a share in any benefits that come from its sale or use. To make sure all members of society get their fair share, governments must be able to control property, production, and distribution.

The focus in socialism is on benefitting society, whereas capitalism seeks to benefit the individual. Socialists claim that a capitalistic economy leads to inequality, with unfair distribution of wealth and individuals who use their power at the expense of society. Socialism strives, ideally, to control the economy to avoid the problems inherent in capitalism.

Within socialism, there are diverging views on the extent to which the economy should be controlled. One extreme believes all but the most personal items are public property. Other socialists believe only essential services such as healthcare, education, and utilities (electrical power, telecommunications, and sewage) need direct control. Under this form of socialism, farms, small shops, and businesses can be privately owned but are subject to government regulation.

The other area on which socialists disagree is on what level society should exert its control. In communist countries like the former Soviet Union, or modern-day China, Vietnam, and North Korea, the national government controls both politics and the economy, and many goods are owned in common. Ideally, these goods would be available to all as needed, although this often plays out differently in theory than in practice. Communist governments generally have the power to tell businesses what to produce, how much to produce, and what to charge for it. There are varying practices within and between communist nations; for example, while China is still considered to be a communist nation, it has adopted many aspects of a market economy. Other socialists believe control should be decentralized so it can be exerted by those most affected by the industries being controlled. An example of this would be a town collectively owning and managing the businesses on which its residents depend.

Because of challenges in their economies, several of these communist countries have moved from central planning to letting market forces help determine many production and pricing decisions. Market socialism describes a subtype of socialism that adopts certain traits of capitalism, like allowing limited private ownership or consulting market demands. This could involve situations like profits generated by a company going directly to the employees of the company or being used as public funds (Gregory and Stuart 2003). Many Eastern European and some South American countries have mixed economies. Key industries are nationalized and directly controlled by the government; however, most businesses are privately owned but regulated by the government.