Socialism

AAA

DEFINITION of 'Socialism'

An economic and political system based on public or collective ownership of the means of production. Socialism emphasizes equality rather than achievement, and values workers by the amount of time they put in rather than by the amount of value they produce. It also makes individuals dependent on the state for everything from food to health care. China, Vietnam and Cuba are examples of modern-day socialist societies. Twentieth-century socialist governments were overthrown in Czechoslovakia, East Germany and the U.S.S.R.

INVESTOPEDIA EXPLAINS 'Socialism'

While capitalism is based on a price system, profit and loss and private property rights, socialism is based on bureaucratic central planning and collective ownership. Proponents of socialism believe that it creates equality and provides economic security and that capitalism is an inferior system that exploits workers for the benefit of a small, wealthy class. Critics of socialism believe that it is based on faulty principles and ignores human nature and the role of incentives in economic transactions.



RELATED TERMS
  1. Capitalism

    A system of economics based on the private ownership of capital ...
  2. Great Leap Forward

    An economic and social campaign that intended to change China ...
  3. Egalitarianism

    A philosophical thought system that emphasizes equality and equal ...
  4. Marxism

    A social, political and economic philosophy that examines the ...
  5. Karl Marx

    A philosopher and economist famous for his ideas about capitalism ...
  6. Disequilibrium

    A situation where internal and/or external forces prevent market ...
Related Articles
  1. Economics

    What is the difference between communism and socialism?

    Learn how some countries are incorporating socialist methods into capitalism.
  2. Economics

    The History Of Economic Thought

    Economics is a vital part of every day life. Discover the major players who shaped its development.
  3. Personal Finance

    The History Of Capitalism: From Feudalism To Wall Street

    Find out how the economic system we now use was created.
  4. Economics

    Why Can't Economists Agree?

    There are many reasons why economists can be given the same data and come up with entirely different conclusions.
  5. Investing Basics

    Why Country Funds Are So Risky

    High returns come at a price, but country funds may still be a good bet.
  6. Mutual Funds & ETFs

    Understanding BRIC Investments

    Brazil, Russia, India and China are becoming more popular for investing, but there is still plenty of risk among BRIC countries.
  7. Personal Finance

    State-Run Economies: From Public To Private

    Find out how former Iron Curtain countries used private enterprise to join the world financial markets.
  8. Options & Futures

    Financial Capitalism Opens Doors To Personal Fortune

    The Industrial Revolution introduced a new age of investing and financial self sufficiency.
  9. There are many ways to rank the word's most powerful companies. Looking at market value, brand value or sales revenue are all methods used to rank the biggest companies in the world.
    Economics

    Most Powerful And Influential Public Companies In 3 Metrics

    There are many ways to rank the word's most powerful companies. Looking at market value, brand value or sales revenue are all methods used to rank the biggest companies in the world.
  10. A look at China's plan to control population growth and how it could change going forward.
    Economics

    China's One-Child Policy Explained

    A look at China's plan to control population growth and how it could change going forward.

You May Also Like

Hot Definitions
  1. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  2. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  3. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  4. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  5. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  6. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
Trading Center