Sample Essay on Definition and Advantages of Socialist Economy

Definition and Advantages of Socialist Economy

What is a socialist economy?

A socialist economy is an economy in which all factors of production are owned and controlled by the government. The government is also responsible for catering to the needs of all its citizenry and ensuring equitable distribution of resources.

In as socialist economy, individual citizens are not allowed to own factors of production. Instead, the government forms an authoritative body or committee which is in charge of planning and utilizing all the resources of the country. The authority chosen also determines the individual needs of the citizens and allocates the basic needs to all citizens.

Ideally, the socialist economy shares out jobs and tasks for every citizen. This is done without any discrimination. The state also provides for all the needs of the citizens including food, shelter, education, health care and social amenities. In this type of economy, equality is regarded highly and the state is thus in charge of ensuring that all resources are used effectively and distributed equally.  The opposite of a socialist economy is a capitalist economy.

What are the benefits of a socialist economy?

A socialist economy like any other economy has both advantages and disadvantages. The ideals of this type of economy have worked in some countries but others prefer capitalistic economies. Amongst the key benefits of a socialist economy include:

  • Enhances stability in the economy. The socialist economy tends to be more stable than other types of economies. This is because the authorities that manage the resources and factors of production tend to be more organized and averse to risks. Such authorities are more likely to carry out research and work within given schedules and mandates unlike where an individualistic approach is taken. This cushions the country from fluctuating market prices and unstable global economic environment.
  • Creates a fairer system. In a socialist economy, there is fairness in division and distribution of resources. Everybody is given an opportunity to grow and contribute to the society regardless of their background, caste, gender, race or religion. This creates a system that is fair and also encourages everybody in society to participate in building the nation.
  • Enhances unity. Since socialist economies bring a sense of equality in the society, the citizens of socialist nations tend to be more united and loving towards one another. This is because they work towards the same goal and also equitable distribution of wealth and resources curbs any ill feelings towards each other based on competition and inequality.
  • Greater welfare. When socialist economies are well managed, the citizens are more likely to benefit from better welfare and living standards. This is because the government is in charge of providing all the needs of the citizens and also ensuring they are well. This creates a sense of security and citizens do not have to worry about meeting their needs.
  • Creates a more efficient workforce and human resources. In socialist economies, everybody works for the state and the government therefore goes to great heights to ensure that people are well trained and equipped. This ultimately creates a formidable workforce which is even driven further by the sense of unity and loyalty to the government and country at large.

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