Lec 07 Socialism | Mixed Economy

Socialism:
Collective ownership and democratic control of the material means of production by the workers and the people
Socialism is a term applied to an economic system in which property is held in common and not individually, and relationships are governed by a political hierarchy. Common ownership doesn't mean decisions are made collectively, however. Instead, individuals in positions of authority make decisions in the name of the collective group.
Socialists argue that socialism would allow for wealth to be distributed based on how much one contributes to society, as opposed to how much capital one holds.


Mixed Economy
Any economy in which private corporate enterprises and public sector enterprises exist side-by-side, and decisions taken through market mechanism are supplemented by some form of partial planning, is to be described as a mixed economy.
This system overcomes the disadvantages of both the market and planned economic systems.
Provides a clear demarcation of the boundaries of the public sector and private sector so that the core sector and strategic sectors are invariably in the public sector.
The government intervenes to prevent undue concentration of economic power and monopolistic and restrictive trade practices
The rights of the individual are respected and protected subject only to the requirements of public law and order and morality

1. Socialism Mixed Economy Unit 7 Instructor: Atta Hussain Syed

2. SOCIALISM Collective ownership and democratic control of the material means of production by the workers and the people Socialism is a term applied to an economic system in which property is held in common and not individually, and relationships are governed by a political hierarchy. Common ownership doesn't mean decisions are made collectively, however. Instead, individuals in positions of authority make decisions in the name of the collective group. Socialists argue that socialism would allow for wealth to be distributed based on how much one contributes to society, as opposed to how much capital one holds.

3. Cont. A primary goal of socialism is social equality and a distribution of Wealth based on one’s contribution to society and an economic arrangement that would serve the interests of society as a whole. Socialism as we know it today, most commonly refers to "market socialism," which involves individual market exchanges organized by collective planning. Difference between socialism and communism is that communists directly oppose the concept of capitalism, an economic system in which production is controlled by private interests. Socialists, on the other hand, believe socialism can exist within a capitalist society.

4. Socialist countries (Current) Examples Laos People's Democratic Republic  People's Republic of China Republic of Cuba Socialist Republic of Vietnam

5. China In China the government manages and controls the economy. Many of the domestic companies are owned and run by the government. Recently, the Chinese economy has become more geared towards capitalism, but is still officially socialist. Life in China remains relatively less stressful and more relaxed than life in capitalist countries like America.

6. The Cuban Economy Cuba is one of the most prominent socialist nations, having a mostly state-run economy, a national health-care program, government-paid (i.e. free) education at all levels, subsidized housing, utilities, entertainment and even subsidized food programs. These subsidies compensate for the low salaries of Cuban workers, making them better off than their international counterparts in many other countries. Cuba does not have a stock exchange – a crucial indicator of a capital-free economy. Around 80% of Cuba's workforce is in state-owned facilities.

7. Features of Socialism Social Ownership of means of production Existence of public sector Decisive role of Economic Planning Production guided by Social Benefits Abolition of exploitation of labor

8. Benefits of Socialism Better salaries Stable Environment Eliminates poverty Better Products Fulfills survival need Opportunity for citizens to explore non-economically-productive pursuits

9. Limits of Socialism Distorted (one sided) price signals Suppression of economic democracy Slow Technological advancements Minimize self management Reduced incentives

10. MIXED ECONOMY Any economy in which private corporate enterprises and public sector enterprises exist side-by-side, and decisions taken through market mechanism are supplemented by some form of partial planning, is to be described as a mixed economy. This system overcomes the disadvantages of both the market and planned economic systems. Provides a clear demarcation of the boundaries of public sector and private sector so that the core sector and strategic sectors are invariably in the public sector. The government intervenes to prevent undue concentration of economic power, and monopolistic and restrictive trade practices The rights of the individual are respected and protected subject only to the requirements of public law and order and morality

11. Examples Pakistan India United States of America Russia France Sweden UK Hong Kong Canada

12. Pakistan In a mixed economy, private and public sectors go side by side. The government directs economic activity in some socially important areas of the economy, the rest being left to the price mechanism to operate. Before Independence, Pakistani economy was a ‘laissez faire’/ free market economy. But post-independence, she adopted the mixed economy system. Thus, it is clear from the following arguments that our economy is a mixed economy.

13. Features Resources are owned both by the government as well as private individuals. i.e. co-existence of both public sector and private sector. Market forces prevail but are closely monitored by the government. Monopolies may be existing but under close supervision of the government.

14. Advantages Producers and consumer have sovereignty to choose what to produce and what to consume but production and consumption of harmful goods and services may be stopped by the government. As compared to Market economy, a mixed economy may have less income inequality due to the role played by the government. A mixed economy represents an achievable balance between individual initiative and social goals.

15. Limitations One disadvantage of mixed economies is that they tend to lean more toward government control and less toward individual freedoms. While most modern forms of government are consistent with some form of mixed economy, the mixed economy is most commonly associated with social democratic parties or nations run by social democratic governments. Some critics of contemporary social democracy argue that when social democracy abandoned Marxism it also abandoned socialism and has become, in effect, a liberal capitalist movement. Marxian socialists argue that because social democratic programs retain the capitalist mode of production they also retain the fundamental issues of capitalism, including cyclical fluctuations, exploitation and alienation.