A Definition of Socialism

Two men dressed in suits shaking hands in front of flags
Former New Zealand Prime Minister John Key visiting Beijing, China.

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"Socialism" is a political term applied to an economic system in which property is held in common and not individually, and relationships are governed by a political hierarchy. Common ownership doesn't mean decisions are made collectively, however. Instead, individuals in positions of authority make decisions in the name of the collective group. Regardless of the picture painted of socialism by its proponents, it ultimately removes group decision making in favor of the choices of one all-important individual.

Socialism originally involved the replacement of private property with a market exchange, but history has proven this ineffective. Socialism cannot prevent people from competing for what is scarce. Socialism, as we know it today, most commonly refers to "market socialism," which involves individual market exchanges organized by collective planning.

People often confuse "socialism" with the concept of "communism." While the two ideologies share much in common (in fact, communism encompasses socialism), the primary difference between the two is that "socialism" applies to economic systems, whereas "communism" applies to both economic and political systems.

Another difference between socialism and communism is that communists directly oppose the concept of capitalism, an economic system in which production is controlled by private interests. Socialists, on the other hand, believe socialism can exist within a capitalist society.

Alternative Economic Thoughts

  • Capitalism "Capitalism is an economic system involving the private ownership over the means of production, distribution of goods, and the overall structure of businesses. Profit motive, via success, is a key driver in a capitalist society where millions of businesses must compete against one another to survive."
  • Does Socialist High Taxation on the Rich Hurt the Poor? "Do the rich actually pay for the higher taxes when they become law? Technically, the answer is yes. But the reality is that those costs are usually just passed on to other people or spending is restricted. Either way, the net effect is often a huge hit on the economy. Millions of small and medium-sized businesses fall into the target zone for higher taxation. If a small business is hit with higher costs due to an increase in fuel prices or raw goods, those increases are usually just passed on to the consumers, and those with less disposable income see their costs rise to sometimes devastating levels."
  • Should Conservatives Oppose a Higher Minimum Wage? "Not only would raising the minimum wage reduce the number of available jobs, but it probably would fail to make life “cheaper” for these workers in the long run anyway. Imagine that every retailer, small business, gas station, fast food, and pizza joint was forced to increase the pay of their heavily teen, college-aged, part-time, and second-job workforce by 25%. Do they just go “oh okay” and do nothing to make up for that? Of course not. They either reduce employee headcount (likely not making their situations “better”) or increase the cost of their product or service. So while you boost the minimum wage of these workers (even assuming they are the working poor) it doesn’t matter much because the price of every product they plan to purchase from other retailers, fast food joints, and small business just skyrocketed to pay for the pay increases. At the end of the day, the value of the dollar is merely weakened, and the ability to purchase goods becomes more expensive anyway."



Also Known As

Bolshevism, Fabianism, Leninism, Maoism, Marxism, collective ownership, collectivism, state ownership


“Democracy and socialism have nothing in common but one word, equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude.”
French historian and political theorist, Alexis de Tocqueville

“As with the Christian religion, the worst advertisement for Socialism is its adherents.”
Author, George Orwell

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Your Citation
Hawkins, Marcus. "A Definition of Socialism." ThoughtCo, Feb. 16, 2021, thoughtco.com/a-definition-of-socialism-3303637. Hawkins, Marcus. (2021, February 16). A Definition of Socialism. Retrieved from https://www.thoughtco.com/a-definition-of-socialism-3303637 Hawkins, Marcus. "A Definition of Socialism." ThoughtCo. https://www.thoughtco.com/a-definition-of-socialism-3303637 (accessed April 17, 2021).