Socialism Case

Published: 2021-06-29 07:00:04
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Category: Business

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Socialism has been used differently by various individuals and groups of people. According to Britannica Academic Edition, 2012 'Socialism' is defined as "an economic system characterized by social ownership of the means of production and co-operative management of the economy, and a political philosophy advocating such a system." Bradly- Thompson defines socialism as 'legal-theft' and 'self- sacrifice'. Whereas, according to Karl Marx, socialism is defined as lower form of communism.
Socialism started to gain popularity in Eastern Europe during the period of 1930s but this theory gave rise to many issues related to the incentives, profits and losses, private property rights and prices, politics and culture. The decline of socialism in Eastern Europe was a result of not only economic factors, but politics and culture also played a vital role. One of the criticisms of socialism was that incentives were either ignored or they played a minimal role. Further, socialism demonstrates an economic system in which decision making is done by the government rather than by the interaction between consumers and businesses. It also points out incentive mechanism to direct economic activity. Since, socialism fails to underline the importance of incentives, it is therefore considered to be a theory which is inconsistent with human nature. If a country has an abundance of natural resources, it does not mean that it can compensate for its lack of an efficient system of incentives. This can be explained by the following example. "Russia is a country which has an abundance of natural resources, be it minerals, oil reserves, natural gas, or precious stones like diamonds and gold. It has rivers, streams and farms which encompasses 11 time zones. In spite of all this, Russia still remains poor".(Mark J. Perry, 1995) Just having large reserves of natural resources does not make any country rich, for a country to develop it requires unlimited resources of its people i.e. the human resource.

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