What is Socialism?

It is important to understand what socialism is. There are a lot of people who proudly call themselves socialists. Social democracy is very popular today especially with the younger generation. On the other side there are those who accuse people with whom they disagree with as socialists. Both of these sides are usually wrong in understanding what socialism is.

I will first begin with the standard description of what socialism is. Socialism is a structure to society where the people's need are provided by the government, the government collects this money from everyone and then gives out the necessities to the people to those who need it. But this description is wrong. What this is, is not socialism, but a welfare state. The welfare state is part of socialism, but it is not the defining characteristic of socialism. This is where much of the confusion to what socialism is comes from.

There are others who describe socialism as the system of redistribution of wealth. The rich lose a lot of their money and that money is handed over to the poor. This is done to promote equality. But this other common description of socialism is also wrong. The redistribution of wealth, just like the welfare state, is a component of socialism, but not the defining characteristic of socialism.

In fact, it is possible to have a socialistic society without a welfare state and without the redistribution of wealth, I do not think such societies have actually existed but it is possible. Socialism is, to put it very simply, central economic planning. The central planner is the state. When Karl Marx was objecting to capitalism his primary objection was the private means of capital, the capitalists, he said, would exploit the workers because they want more wealth. The problem is, according to Marx, the private means of capital. What we need is a system where capital is owned by the public (of course the "public" here is really the state). The defining characheristic of socialism is the public-owned means of production. The state is the main feature of the economy. The state decides, not the market, what needs to be produced, how much will be produced, what the prices need to be, to whom it will go. The private businesses do not have that kind of freedom to make those kinds of choices. Only the state can decide these things. That is central economic planning. The economy is not structured by the bottom-up, by individuals struggling for profit, but from the top-down, by a group of planners who make economic desicisons for the people.

The welfare state is a component of socialism. Since the government controls the economy it therefore is the one who provides for the citizens. And so there is a welfare state. Where the money of the people come together and are spend on those people who need it rather than businesses providing to the people for profits. The redistribution of wealth is also a component of socialism, but for the above reasons it does not have to be. If there is a welfare system, and most likely there is under a socialistic government, then the rich will most likely be taxed more than the poor. The really poor will receive more from the welfare system then they paid in while the rich will receive less. In a way this can be seen as a form of redistribution of wealth. But again, this is important, socialism is not about having a welfare system and not about having redistribution of wealth, what it is, very simple, is central economic planning.

Communism and socialism really are the same, just varying degrees of central planning. Under communism the central planning is most severe. Sometimes the government even replaces businesses and acts itself as a monopoly that can serve the needs of the people. This difference can be seen in Nazi Germany and Soviet Russia. Soviet Russia had a lot more central planning than did Nazi Germany. But Nazi Germany also had strong central planning, the Nazis were not right-wingers as a lot of people wrongly believe. The Soviets are better described as communists because they had very severe economic control. The Nazis had a bit more economic freedom but they still favored heavy control of the economy, and so they are better described as socialists. But both communism and socialism stems from the same idea - a central planner over the economy.

The president is not a socialist as a lot of people accuse him of being. Because he is not for central planning of the economy. He happens to be an interventionist, but Republicans are interventionists also, just not as much as Democrats. Interventionism is not socialism. Interventionism is imposing certain restrictions and controls over the markets but the markets function by themselves. Socialism is when instead of interventionism there is planning taking place in the economy. Since there is no central planning taking place in the United States and since the president does not support central planning the United States and the president are not socialist.

However, calling a universal healthcare system as socialized medicine may sometimes be accurate. The nation might not be socialist, but a part of the nation might be. It all depends on how the universal healthcare system functions. If the government alone provides for the citizens their healthcare, or tells private entities how they can operate then such a system would be a socialized system. If instead of insurance companies the government has control over insurance, or tells insurance companies how they can operate, and it decides by planners who gets what, then such a system is a socialized system of healthcare or health insurance. But the country itself is not necessarily a socialistic country because everything else might be uncontrolled by planners. In general though I do not think that there are so many genuine socialized systems of healthcare. Instead there is a welfare system of healthcare by the government, but the economy of healthcare is left alone by planners. Thus, I am not a big fan of calling universal healthcare, "socialized medicine", because it is not central economic planning, just welfarism and interventionism.

People who call Sweden a socialistic country are wrong. Sweden is a welfare system, which is a component of socialism, but that alone does not make Sweden a socialistic country. Nor is that a true social democracy because the economy is not in the hands of planners. The economic index of freedom puts Sweden rather high on the list. It does have high taxes and welfare programs which lowers its economic freedom index but it nonetheless has the economy decided upon by the markets not by planners. Sweden is not an example of how socialism can work because their economy is not socialistic. If you want to make the case that Sweden is socialistic then you need accept that their economy is controlled by central planners, which it is not. In fact, the history of Sweden only points to the failure of socialism. In their earlier history they imposed heavier economic controls. Their standard of living declined. Sweden had to deregulate their markets. This does not point to the success of socialism, on the contrary it points to the failure of socialism.

I hope this clears up some confusion of what socialism means.