What is socialism or command economy? And enumerate the merits and demerits of
socialism
Socialism is an economic system which is contrary to capitalism.
Some definition is as definition of socialism.
1.
It
is a system in which resources are owned by the state rather than by the people.
2.
Socialist
economy is one whose all means of production are state controlled (prof.web).
3.
“Economic
system which is based on cooperation rather than competition and which utilizes
centralized planning and distribution”.
We have two main kinds of socialism
I.
Authoritarian socialism or communism (Marxian socialism)
This idea presented by Carl Marx (1818----1883) who is a German
philosopher and economist. According to Marx and his friend Fredrich Engles,
the capitalism is furnished with class conflict (rich is richer and poor is
poorer) and resultantly an unrest is emerged. Hence capitalism is replaced by
the Marxian socialism or communism.
Definition
Communism means an ideal system in which all the resources are
owned by the community.
Since the period of stalin from 1924 to gorbachev 1985, the Marxian
socialism or communism remained in operation in USSR. In favored of this system
Churchill says, the soviet economy is a riddle wrapped up in a mystery inside
an enigma.
II.
Liberal socialism or market socialism (Marshall Titto)
Marshal titto was the leader of Yugoslavia. After coming into power
he introduced his own kind of communism which is described as “MERKET
SOCIALISM”.
Definition
The market socialism is an economic system which is based on the
socialist ideas but at the same time most of the decisions are made by the
market mechanism.
Note------after the political disintegration of Soviet Union and
Yugoslavia the Marxian socialism lost its dignity. Now in china Marxian
socialism is still persues. After the death of Mao this philosophy is also
losing its attraction. The Chinese people demand for liberalism.
Merits of socialism
1.
Social ownership of means o production
Under socialism farms and factories,
railways and banks are owned by the society rather than by private persons or
companies.
2.
Economic planning
In socialism allocation of resources is done by a central authority
with a view to maximizing social welfare. Thus, economic planning is an
important feature of socialism.
3.
Social welfare the main aim
The means of production are operated with the object of promoting
and servimg the whole community rather than for the benefit of a few
individuals. Social welfare object is preferred on earning profit. Under
socialism special attention is paid to basic necessities of life.
4.
Equality of income
Under socialism all the means of production are under the social
ownership and there is no system of private property’s the inequalities of
wealth cannot take place.
5.
Equality of opportunity
Under socialism all the people have equal chances of promotion and
getting free education up to the high level.
6.
Classless society
There is no class distribution in this system like capitalism. All
the means of production are owned by the community and operated by it for
social welfare.
7.
Economic stability
Under capitalism sometimes aggregate supply increase than the
aggregate demand and cyclical fluctuations occur while in a planned economy
crises cannot occur.
8.
Economic development
Planning authority can utilize the means of production in better
way. In this way the rate of economic development increases.
9.
Social justice
Under socialism, social justice is provided to the public. There is
no unequal distribution of wealth.
10.
Social security
Under socialism, social security is provided to the public in case
of accident or unemployment full protection is provided by the state.
Demerits of socialism
1.
No economic freedom
Under socialism, there is o right of private property. Even one
person can not do the business independently.
2.
Case of corrupt government
If the government is corrupt and inefficient than it create many
problems for the nation.
3.
Centralization of power
All the powers are in the hands of the government and there is no
balance of powers between the public and the government. It is not a good sign for the democracy.
4.
Absence of entrepreneurial ability
The managerial skill which is found in private sector, we cannot
find in government officials.
5.
Producer is king
Under capitalism consumer is compared as a king but in socialism
producer is considered a king and consumer is a slave. Consumer uses only those
commodities which are produced by the government.
6.
No incentive for individuals
Socialism curbs the individual incentive to work. It is argued that
when every individual is assured by the state that he will get the basic
necessities of life, the incentive for hard work curbs.
Islamic
economic system and main features of this system
In Islamic economic system all the economic activities like
production of wealth, consumption of wealth and distribution of wealth are
according the law of SHARIAH.
Islam is a complete code of life and it provides guidance to man in
every field of life. Following are the main features of Islamic economic
system.
1.
Zakat
Zakat is the back bone of Islamic economic system. According to the
holy prophet (peace be upon him) zakat is the treasury of Islam. Islam provides
security to every human being living in Islamic society. Zakat is the insurance
company of Muslims. Zakat is received from those Muslims who are “SAHIB-E-NASIB”.
It is distributed among the poor’s, zakat plays very important role in removing
inequality of wealth and poverty.
2.
Wider circulation of wealth
In Islamic economic system, circulation of wealth increases because
due to zakat system wealth goes from rich to poors and their rate of
consumption increases effective demand never decreases and it is a healthy sign
for the economy.
3.
Interest-less system
Interest is prohibited in Islamic economic system. Profit and loss
sharing system has been introduced in Islam.
4.
Principle of wealth consumption
In the case of consumption, Islam allows to spend but it does not
allow anyone to be spend thrift. Neither has it allowed “BUKHLE nor “ASRAF”. It
shows the way of moderation.
5.
Order of social welfare
It is a completely a social welfare system. Islam encourages to
spend money and discourages the collection of wealth. According to “SHAIRAH” is
not better for one person that neither he uses the money nor he gives it
others. In Islamic socity excess money is given to poors and needy people in
the shape of “SADQA” and “KHAIRAT” in this way Islamic economic system very
useful in removing the poverty.
6.
Right of private property
Under Islamic economic system every one can purchase consume and
exchange the private property within the law of “SHARIAH”.
7.
Freedom of contract
Every one allowed to enter into any contract with other person for
his profit. But every contract should be according to Islamic principle.
8.
Economic freedom
Every one free to do any business he likes every person can adopt
any profession but it should be according to “SHARIAH”
9.
Concept of hall and haram
Any thing which is permissible according to the Islamic shariah is
called “hallal” any thing which is prohibited to Islamic shariah is called “haram”.
In Islamic economic system some limitations are imposed on the earning of
wealth. Islam does not issue the licence to earn wealth by any method. Islam
imposed some limits so the other people of
the society may not suffer a loss, theft, gambling, hoarding, and
interest type of business are prohibited.
10.
Role of the state
In Islamic state, it is the duty of the government that it provides
social justice to people. It pays proper attention to the public welfare.
11.
Consumer is a king
In Islamic economic system, producer produces the commodities
according the demand of the consumer. So we can say that consumer is compared
as a king.