Socialism is an economic Economics is the social science that studies the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek οἰκονομία from οἶκος (oikos, "house") + νόμος (nomos, "custom" or "law"), hence "rules of the house(hold)". Current economic and political theory Political philosophy is the study of such as liberty, justice, property, rights, law, and the enforcement of a legal code by authority: what they are, why they are needed, what makes a government legitimate, what rights and freedoms it should protect and why, what form it should take and why, what the law is, and what duties citizens owe to a advocating public State ownership, also called public ownership, government ownership or state property, are property interests that are vested in the state, rather than an individual or communities or common ownership Common ownership is a principle according to which the assets of an enterprise or other organization are held indivisibly rather than in the names of the individual members or by the government. Thus, rather than being “owners” of the enterprise, its members are held to be trustees of it and its assets for future generations. Common ownership and cooperative management of the means of production Means of production refers to physical, non-human, inputs used in production including factories, machines, and tools; along with both infrastructural capital and natural capital. This includes the classical factors of production minus financial capital and minus human capital. They include two broad categories of objects: instruments of labour ( and allocation of resources A resource is any physical or virtual entity of limited availability that needs to be consumed to obtain a benefit from it. Anything that can be used to satisfy a human need is a resource. Utility or usability is what makes a object a resource. In most cases, commercial or even non-commerial factors require resource allocation through resource.^[1][2][3]

In a socialist economic system, production is carried out by a free association of workers to directly maximize use-values Use value or value in use is the utility of consuming a good; the want-satisfying power of a good or service in classical political economy. In Marx's critique of political economy, any labor-product has a value and a use-value, and if it is traded as a commodity in markets, it additionally has an exchange value, most often expressed as a money- (instead of indirectly producing use-value through maximizing exchange-values In political economy and especially Marxian economics, exchange value refers to one of four major attributes of a commodity, i.e., an item or service produced for, and sold on the market. The other three aspects are use value, value and price), through coordinated planning Economic planning refers to any directing or planning of economic activity by an economic actor, usually the state, in an attempt to achieve specific economic or social outcomes. Planning is an economic mechanism for resource allocation and decision-making in contrast with the market mechanism; however most economies incorporate elements of both of investment decisions, distribution of surplus Surplus value is a concept used famously by Karl Marx in his critique of political economy, although he did not himself invent the concept. It refers roughly to that part of the new value created by production which is claimed by enterprises as "generic gross profit". Marx argues its ultimate source is unpaid surplus labour performed by, and the means of production. Socialism is a set of social and economic arrangements based on a post-monetary system of calculation, such as labour time In economics, a time-based currency is an alternative currency where the unit of exchange is the man-hour, energy units Energy accounting is a system used within industry, where measuring and analyzing the energy consumption of different activities is done to improve energy efficiency or calculation-in-kind; at least for the factors of production In economics, factors of production are the resources employed to produce goods and services. They facilitate production but do not become part of the product (as with raw materials) or become significantly transformed by the production process (as with fuel used to power machinery). To 19th century economists, the factors of production were land (.^[4]

Socialists advocate a method of compensation based on individual merit Meritocracy is a system of government or other organization wherein appointments are made and responsibilities assigned to individuals based upon demonstrated intelligence and ability (merit) or the amount of labour one contributes to society.^[5] They generally share the view that capitalism Capitalism is an economic system in which the means of production and distribution are privately owned and operated for a private profit; decisions regarding supply, demand, price, distribution, and investments are made by private actors in the market rather than by central planning; profit is distributed to owners who invest in businesses, and unfairly concentrates power Power is a measure of an entity's ability to control the environment around itself, including the behavior of other entities. The term authority is often used for power, perceived as legitimate by the social structure. Power can be seen as evil or unjust, but the exercise of power is accepted as endemic to humans as social beings. Often, the study and wealth Wealth is the abundance of valuable resources or material possessions or the control of such assets. The word wealth is derived from the old English wela, which is from an Indo-European word stem. An individual, community, region or country that possesses an abundance of such possessions or resources is known as wealthy within a small segment of society that controls capital In economics, capital, capital goods, or real capital are factors of production used to create goods or services that are not themselves significantly consumed in the production process. Capital goods may be acquired with money or financial capital and derives its wealth through a system of exploitation In political economy, economics, and sociology, exploitation involves a persistent social relationship in which certain persons are being mistreated or unfairly used for the benefit of others. This corresponds to one ethical conception of exploitation, that is, the treatment of human beings as mere means to an end—or as mere "objects". They argue that this creates an unequal Social equality is a social state of affairs in which all people within a specific society or isolated group have the same status in a certain respect. At the very least, social equality includes equal rights under the law, such as security, voting rights, freedom of speech and assembly, and the extent of property rights. However, it also includes society that fails to provide equal opportunities for everyone to maximise their potential,^[6] and does not utilise technology Technology is the usage and knowledge of tools, techniques, crafts, systems or methods of organization. The word technology comes from the Greek technología — téchnē (τέχνη), an 'art', 'skill' or 'craft' and -logía (-λογία), the study of something, or the branch of knowledge of a discipline. The term can either be applied generally and resources to their maximum potential in the interests of the public.^[7] Socialists characterise full socialism as a society no longer based on coercive wage-labour Wage labour is the socioeconomic relationship between a worker and an employer in which the worker sells their labour under a contract , and the employer buys it, often in a labour market.[Need quotation on talk to verify] In exchange for the wages paid, the products of the labour become the property of the employer. A wage labourer is a person, organized on the basis of relatively equal power-relations and adhocracy Adhocracy is a type of organization being antonymous to bureaucracy. The term was first popularized in 1970 by Alvin Toffler, and has since become often used in the theory of management of organizations , further developed by academics such as Henry Mintzberg rather than hierarchical, bureaucratic forms of organization in the productive sphere. Reformists Reformism is the belief that gradual democratic changes in a society can ultimately change a society's fundamental economic relations and political structures. This belief grew out of opposition to revolutionary socialism, which contends that revolutions are necessary to fundamentally change a society and revolutionary socialists The term revolutionary socialism refers to Socialist tendencies that advocate the need for fundamental social change through revolution by mass movements of the vast majority, as a strategy to achieve a socialist society. The term is used by socialist and communist tendencies in contrast to reformism, the advocacy of the possibility of gradual disagree on how a socialist economy should be established.

Modern socialism originated in the late 18th-century intellectual and working class Working class is a term used in the social sciences and in ordinary conversation to describe those employed in lower tier jobs (as measured by skill, education and lower incomes), often extending to those in unemployment or otherwise possessing below-average incomes. Working classes are mainly found in industrialized economies and in urban areas political movement A political movement is a social movement in the area of politics. A political movement may be organized around a single issue or set of issues, or around a set of shared concerns of a social group. In contrast with a political party, a political movement is not organized to elect members of the movement to government office; instead, a political that criticised the effects of industrialisation and private property Private property is the right of persons and firms to obtain, own, control, employ, dispose of, and bequeath land, capital, and other property. Private property can take the form of real estate, homes, factories, automobiles, capital, patents and copyrights. It is distinguished from public property, which refers to assets owned by a state, on society. Utopian socialists Utopian socialism is a term used to define the first currents of modern socialist thought. Although it is technically possible for any set of ideas or any person living at any time in history to be a Utopian socialist, the term is most often applied to those socialists who lived in the first quarter of the 19th century who were ascribed the label & such as Robert Owen Robert Owen , (born in Newtown, Montgomeryshire, Wales), was a social reformer and one of the founders of socialism and the cooperative movement (1771–1858), tried to found self-sustaining communes by secession from a capitalist society. Henri de Saint Simon Claude Henri de Rouvroy, comte de Saint-Simon, often referred to as Henri de Saint-Simon was a French early socialist theorist. He was born an aristocrat; the political ideologies he adopted in later life do not fall into the aristocratic category. Saint-Simon defied the formalities and conventions of his social class and fled to America to fight (1760–1825), who coined the term socialisme, advocated technocracy Technocracy is a hypothetical form of government in which engineers, scientists, and other technical experts are in control of decision making in their respective fields. The term technocracy derives from the Greek words tekhne meaning skill and kratos meaning power, as in government, or rule. Thus the term technocracy denotes a system of and industrial planning.^[8] Saint-Simon, Friedrich Engels Friedrich Engels was a German social scientist, author, political theorist, philosopher, and father of communist theory, alongside Karl Marx. Together they produced The Communist Manifesto in 1848. Engels also edited the second and third volumes of Das Kapital after Marx's death and Karl Marx Karl Heinrich Marx was a German philosopher, political economist, historian, political theorist, sociologist, communist, and revolutionary, whose ideas played a significant role in the development of modern communism and socialism. Marx summarized his approach in the first line of chapter one of The Communist Manifesto, published in 1848: " advocated the creation of a society that allows for the widespread application of modern technology to rationalise economic activity by eliminating the anarchy The tumult of the English Civil War led to the term to be taken up in political philosophy.[citation needed] Anarchy was one of the issues at the Putney Debates of 1647: of capitalist production.^[9][10] They argued that this would allow for economic output (or surplus value Surplus value is a concept used famously by Karl Marx in his critique of political economy, although he did not himself invent the concept. It refers roughly to that part of the new value created by production which is claimed by enterprises as "generic gross profit". Marx argues its ultimate source is unpaid surplus labour performed by) and power to be distributed based on the amount of work expended in production To each according to his contribution is considered by some Marxists and other socialists as a characteristic of society directly following the transition to socialism, but preceding the final step to communism. This essentially means that people are rewarded based on the amount they contribute to the social product.

Some socialists advocate complete nationalisation Nationalization, also spelled nationalisation, is the act of taking an industry or assets into the public ownership of a national government or state. Nationalization usually refers to private assets, but may also mean assets owned by lower levels of government, such as municipalities, being transferred to the public sector to be operated by or of the means of production, distribution, and exchange, while others advocate state control State ownership, also called public ownership, government ownership or state property, are property interests that are vested in the state, rather than an individual or communities of capital within the framework of a market economy A market economy is economy based on the power of division of labor in which the prices of goods and services are determined in a free price system set by supply and demand. Socialists inspired by the Soviet model of economic development The economy of the Soviet Union was based on a system of state ownership, collective farming, industrial manufacturing and administrative planning. The Soviet Union created the modern world's first centrally planned economy. The first major project of economic planning was the GOELRO plan, which was introduced in 1920 and basically fulfilled by 193 have advocated the creation of centrally planned economies Planned economy is an economic system in which the state or workers' councils manage the economy. It is an economic system in which the central government makes all decisions on the production and consumption of goods and services. Its most extensive form is referred to as a command economy, centrally planned economy, or command and control directed by a state that owns all the means of production. Others, including Yugoslavian The Socialist Federal Republic of Yugoslavia was the Yugoslav state that existed from the second half of World War II (1943) until it was formally dissolved in 1992 amid the Yugoslav Wars. It was a socialist state and a federation made up of six republics: Bosnia and Herzegovina, Croatia, Macedonia, Montenegro, Serbia, and Slovenia. Serbia, in, Hungarian The People's Republic of Hungary or Hungarian People's Republic was the official state name of Hungary from 1949 to 1989 during its Communist period under the guidance of the Soviet Union. The state remained in existence until 1989 when opposition forces consolidated in forcing the regime to abandon Marxism-Leninism. The state considered itself, East German The German Democratic Republic , informally called East Germany by the West, was the socialist state established in 1949 in the Soviet zone of occupied Germany and in the East Berlin portion of the Allied-occupied capital city. The German Democratic Republic, which consisted geographically of northeast Germany rather than all of eastern Germany, and Chinese b. ^ Simple characterizations of the political structure since the 1980s are no longer possible communist governments A communist state is a sovereign state with a form of government characterized by single-party rule or dominant-party rule of a communist party and a professed allegiance to a communist ideology as the guiding principle of the state in the 1970s and 1980s, instituted various forms of market socialism, combining co-operative and state ownership models with the free market exchange Trade is the voluntary, often asymmetric, exchange of goods, services, or money. Trade is also called commerce or transaction. A mechanism that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and services. Later one side of the barter were the metals, precious metals , bill, paper money. Modern and free price system A free price system or free price mechanism is an economic system where prices are set by the interchange of supply and demand, with the resulting prices being understood as signals that are communicated between producers and consumers which serve to guide the production and distribution of resources. Through the free price system, supplies are (but not free prices for the means of production).^[11]

Libertarian socialists Libertarian socialism is a group of political philosophies that aspire to create a society without political, economic, or social hierarchies (including social anarchists and libertarian Marxists) reject state control and ownership of the economy altogether, and advocate direct collective ownership of the means of production via co-operative workers' councils and workplace democracy.

Contemporary social democrats propose selective nationalisation of key national industries in mixed economies, while maintaining private ownership of capital and private business enterprise.

Economics

Economically, socialism denotes an economic system of either state ownership and/or worker ownership and administration of the means of production, and management over the allocation of producer goods and the means of production. Public or worker ownership can refer to nationalisation, municipalisation, the establishment of cooperative enterprises or in some cases direct-worker ownership. The fundamental feature of a socialist economy is that publicly owned, state or worker-run institutions produce goods and services in at least the commanding heights of the economy^[12][13].

An economic goal of socialism is to more effectively satisfy demand by producing utility directly without being burdened by private property relations in the means of production and the need to generate profit, which socialists generally view as being remnants of a defunct mode of production and an impediment to contemporary productive capabilities.

Various differing definitions of what constitutes a socialist economy exist, from those that define it as an entirely post-market and moneyless economy, to those that simply define it as publicly-owned and cooperative enterprises in a mixed-market or free-market economy. The economist Janos Kornai identifies five distinct definitions of socialism:

• The classical and Marxist conception, where socialism is a stage of economic development in which wage labour, private property in the means of production and monetary relations have been made redundant through the development of the productive forces, so that capital accumulation has been superseded by economic planning. Economic planning in this definition means conscious allocation of economic inputs and the means of production by the associated producers to directly maximise use-values as opposed to exchange-values, in contrast to the "anarchy of production" of capitalism.
• The Walrasian, or Market Socialist concept, which defines socialism as public-ownership or cooperative-enterprises in a market economy, with prices for producer goods set through a trial-and-error method by a central planning board. In this view, socialism is defined in terms of de jure public property rights over major enterprises.
• The Leninist conception, which includes a form of political organisation based on control of the means of production and government by a single political party apparatus that claims to act in the interest of the working class, and an ideology hostile toward markets and political dissent, with coordination of economic activity through centralised economic planning (a "command economy").
• The Social Democratic concept, which defines socialism as a set of values rather than a specific type of social and economic organisation. It includes unconditional support for parliamentary democracy, gradual and reformist attempts to establish socialism, and support for socially progressive causes. Social democrats are not opposed to the market or private property; instead they try to ameliorate the effects of capitalism through a welfare state, which relies on the market as the fundamental coordinating entity in the economy and a degree of public ownership/public provision of public goods in an economy otherwise dominated by private enterprise.
• The East Asian model, or socialist market economy, based on a largely free-market, capital accumulation for profit and substantial private ownership along with state-ownership of strategic industries monopolised by a single political party. Janos Kornai ultimately leaves the classification of this model (as either socialist or capitalist) to the reader.^[14]

"I am convinced there is only one way to eliminate (the) grave evils (of capitalism), namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals. In such an economy, the means of production are owned by society itself and are utilized in a planned fashion. A planned economy, which adjusts production to the needs of the community, would distribute the work to be done among all those able to work and would guarantee a livelihood to every man, woman, and child. The education of the individual, in addition to promoting his own innate abilities, would attempt to develop in him a sense of responsibility for his fellow-men in place of the glorification of power and success in our present society."

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