Routledge Dictionary of Economics, Second Edition
A way of organizing an economy so that the society owns productive capital and distributes the NATIONAL INCOME for the benefit of all. It is the alternative to uncontrolled CAPITALISM and to some extent a rejection of market mechanisms. Early idealistic forms of socialism, often based on the idea of producers’ CO-OPERATIVES, were suggested by OWEN, FOURIER and ST SIMON and were soon analysed in John Stuart MILL’S Principles of Political Economy (1848). Later socialist writings departed from the co-operative principle and based their theories on wider premises.
MARX, ENGELS and their followers were more ambitious in their theorizing, and provided a long-term analysis of the emergence of capitalism (mythically described by TURGOT and SMITH) and late classical theories of value and distribution.
Today, socialism for a whole economy is often associated with PLANNING (as in SOVIET-TYPE ECONOMIES). Some economies modified central planning by combining planning with market mechanisms, e.g. Hungary and Yugoslavia, to create MARKET SOCIALISM. As socialism coincided with the rise of TRADE UNIONS in the countries first to industrialize, it is not surprising that there has often been an intimate association between labour and socialist parties. The remaining idealists who desire to live in societies following strict EGALITARIAN principles would be best to choose sub-economies such as the Israeli KIBBUTZIM or the US Hutterite communities.
See also: egalitarianism; guild socialism; industrial democracy
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