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Socialist System

The collectivist system is characterized by the conscious setting of goals for the economy as a whole and an authority to administer it. The socialist system can be defined as a system of economic organization in which there is public ownership and management of the basic industries and public control of the distribution of income. By public ownership is meant that the large and basic industries are owned and controlled by the government. Under communism (authoritarian socialism), the consumption pattern may be regulated by the government.

The features of the socialist system are as under:

(i)    Public Ownership. All the factors of production are owned by the government. It is the government which determines the utilization of factors of production for the production of goods and services. The private entrepreneurs have no role to play.

(ii)    Central Planning. Socialism stipulates the central authority which can set and accomplish socio-economic goals. Such an authority may be the planning Commission or some other organ of the Government. Such authority fixes the priorities for the nation and it has the power to direct the use of economic resources to achieve socio-economic objectives. Allocation of resources to various productive activates is also the responsibility of this authority.

(iii)    Social Welfare. The main goal of socialistic system is social welfare. Every person in the country is ensured a decent standard of living. The disparities in income are reduced to a considerable extent. The determinants of social welfare are quality diet, health, education, old age security, etc.

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