Socialism and its Types, History, Characteristics, Advantages and Disadvantages

Posted on: 17th April 2020

What is Socialism?

The term “socialism” has been used in various political and economic systems throughout history. The systems vary in structure, although they share the idea of an unrestricted market economy as well as public ownership of means of production. Sharing of means of production leads to an equal society as well as better distribution of wealth. In history, some of these economic and political systems included utopianism, soviet communism, social democracy, and anarchism.

First Definition:

Socialism refers to the economic system, movement, or theory where the production and distribution of resources are owned, shared, and done by citizens of a society. The idea of socialism is that citizens should have equal access to resources. However, socialism makes citizens lack the motivation to work hard. They are never hungry for more since there are no individual benefits.

Second Definition:

It’s a political system where society as a whole is considered more valuable. It involves people sharing means of production and property ownership as opposed to allowing private individuals to own them. In this form of political system, the government is fully involved in the production and distribution of resources. A good example is the provision of medical care and other necessities to citizens.

Third definition:

It’s any of the various systems or theories of operation and ownership of means of production and distribution by the community or society instead of private individuals. All members of the community share products and resources. It’s a society where people are concerned about the well-being of others.

History of Socialism

The history of socialism traces back to ancient Greek times. During that time, Philosopher Plato talked about a type of collective society. In the 16thcentury, Thomas More of England also came up with the idea of a collective society in his Utopia. During the industrial revolution in the 18th century, socialism became a necessity because factory owners became increasingly wealthy while most workers lived in poverty. These workers provided cheap labor while laboring for long hours and under very harsh conditions.

In short, socialism emerged as a response to increasing capitalism.  It came as a result of extreme social and political changes. People wanted to create an egalitarian society by offering an alternative to capitalism and improving the living standards of the working class.

According to Karl Marx, whose socialism theory has been the most influential, societies are made up of social classes. If a given class has total or near-total control of means of production, it uses these powers to exploit another class of people. Marx argued that there was always a struggle of class throughout history. The proletariats (working class) and the bourgeoisie (capital class) were always in a class struggle. He believed that the working class would eventually triumph over the capital class and get to control the means of production, which will get rid of classes.

Although Karm Marx died in 1883, his influence and ideas on socialism became more pronounced. Leaders such as Mao Zedong, Vladimir Lenin, and political parties such as the German Social Democratic Party took up Marx’s thoughts and expanded on them.

Common Types of Socialism


Utopian socialism encourages people of all social classes to come together and promote the socialist idea of working for a common goal and shared ownership. It downplays class warfare and assumes that people can put an end to their selfishness and consider the common good. This means that under Utopian, the state does not own means of production, and there is decentralization in decision-making. It promotes some form of ethics, such as those of people living in a community.


Democratic socialism is a system where the working class manages the means of production, although there is a government that is elected by these people. In general, it’s a mixed economy where the state owns critical industries such as water, gas, and electricity but allows private firms to operate freely in the rest of the economic sectors. The government collects the tax, which it uses to distribute wealth. This means that poor citizens get to access resources such as good roads, better social amenities, and much more.


Revolutionary socialism emerges when people believe that it’s only through a social revolution that socialism can be established. It comes up due to continued oppression by the capitalist class. Because of the revolution, the factors of production are usually owned by the working class. However, the factors of production are managed centrally.


Christian socialism suggests an ethical background of socialism. Christianity teaches about living as a family and in brotherhood, thus sharing the values expressed by socialism. With this mindset, people can avoid excessive communism and ensure there is redistribution of resources such as education and health.


Libertarianism exists where there is no capitalism or state. It assumes that people are self-determining and rational in their decisions. Without capitalism and the state, people naturally embrace a society that is free of political, social, and economic hierarchies. Society cares for everyone. Therefore, people will come together to promote social values.


This is where the working class entirely owns production. Workers are the ones to decide how resources are supposed to be shared among themselves. Any excess production can also be sold in a free market.

What Is The Difference Between Socialism And Capitalism?

The major difference between socialism and capitalism is the extent to which the state gets involved in the economy. While privately owned businesses and assets characterize a capitalist economy, a socialist society relies on government intervention in the distribution of resources.  A capitalist society depends on the free market to determine income, prices, and wealth of individuals.

Here are a few differences between the two:


Socialism mainly advocates for the distribution of resources from wealthy citizens to poor citizens. It ensures that people have equal opportunities. Capitalism is not concerned about equality; rather, it suggests that inequality is important in promoting innovation and economic development.


In a socialist society, the state directly employs its people. Therefore, even if people aren’t doing anything important at work, the state can provide full employment. However, in a capitalist society, the state doesn’t provide jobs directly.


Most people believe that socialism brings about inefficiency due to state ownership. Workers tend to be less concerned about reducing costs while maximizing profit.  In a capitalist economy, people tend to be more efficient and innovative. This helps them reduce costs and maximize profit in order to help their firm stay in business.

Advantages and Disadvantages of Socialism 

Advantages of Socialism

1. Elimination of unemployment

Socialism is an economic system that is planned by those in authority. It aims to reduce unemployment and weaken any forces that bring about instability in the employment sector. Usually, this system helps eliminate cyclical unemployment. This creates a welfare state in which most people can afford basic needs due to increased employment.

Since it’s a welfare state, those who are employed get to take care of the basic needs of the sick, unemployed, and those who are unable to meet their basic needs.

2. Economic equality

Socialism tries to bring about economic equality among different communities. It’s important to note that inequality cannot be justified under any circumstances, whether politically, morally, economically, or politically. This is because economic inequality leads to the degradation and suffering of poor people. In most cases, these poor people are willing to improve their living standards–just that the society is not really concerned about them.

3. Best utilization of resources

Since socialism involves the absence of private property, centrally directed planning, well-defined objectives, and lack of profit motives, there is efficiency in the utilization of available resources. The government takes time to compressively study and analyze people's basic needs and the resources available to meet these needs. Research ensures there is no misuse of funds, such as the production of unwanted commodities.

4. Maximum Social Welfare

Socialism tries to ensure that there is a maximum number of individuals who have maximum economic and social satisfaction. This means that even people who want to consume but don’t have money are also put into account.

This is contrary to a capitalist economy where commodities are produced based on people’s willingness and ability to buy them. This means that only people with money, power, or influence can get the specific commodities they want.

5. Improves labor productivity

Socialism also improves people’s rate of productivity. It leads to the production of different kinds of goods and services because people are concerned about the welfare of others. For instance, social welfare reduces the fear of getting to deal with problems, such as health care costs, alone. This helps people stay healthy and productive.

6. Economic development

There is a central authority in a socialist society that controls and plans on how resources are to be used. This ensures there is a fast decision-making process, and resources are used fully without any wastage. This leads to economic growth and development. This kind of development will also be balanced within the entire country.

7. Minimal exploitation

Since class struggles are the main source of exploitation, socialism aims at creating a classless society where everyone is equal. There is no poor or rich class of people, and there are no cases of favor or discrimination. When all members of society are equal, they are guaranteed to benefit even if they did not contribute.

Disadvantages of Socialism

1. High tax burned for people

This kind of economy usually has a high rate of taxation. This taxation is implemented on every citizen, and thus it negatively affects the poor. Wealthy individuals are more likely to pay their taxes without any problems. However, if they feel it’s too high, they can decide to migrate to another country where the rates of taxation are relatively low. The poor citizen will have to struggle to pay tax regardless of how high it’s getting every day.

2. Governments fail in the process of promoting socialism

As seen in most countries today, governments are prone to failure due to inefficiency by those in power. The allocation of resources is also a significant problem among most governments today. If the government tries to promote socialism, it’s likely to fail because of lack of flexibility in the demand and supply of goods and services.

3. Leads to problems in Structural unemployment

Problems with employment structures occur when there is a mismatch of skills. Structural unemployment usually occurs due to changes in technology and bring about unemployment for people who have repetitive skills. Under socialism, the government is the major employer of its citizens. Therefore, if those in power decide that some industries should not exist, many people lose their jobs. Moreover, the local education system faces many challenges when it comes to teaching necessary employment skills.

4. Lack of economic freedom

Social ownership does not support independent thinking and people’s freedom to start their own businesses. Social ownership assigns workers jobs based on planning, which limits their ability to choose their occupation freely. Moreover, there is no freedom of choice in a socialist economy. Those in power determine the products to be sold as well as product prices. There is nothing you can do if you don’t like a product or its price.


Socialism depends on the efforts and contributions of every member of the society. Members of the society come together to manipulate factors of production. They also ensure their produce is shared equally among its members. No single member of the community works less than the rest. People who don’t have jobs are also provided for by the society.

Therefore, socialism takes into account not only social needs but also individual needs since they allocate resources through central planning. This system motivates citizens to work in order to achieve a common goal. However, since the government or those in authority control everything, they can abuse their powers.

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