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Acknowledgement.1 Introduction2 Types of Socialism5 -Leninism..5 -Democratic Socialism..6 -Market Socialism.7 -Utopian Socialism....9 Socialism in Contemporary Society.11 -Socialist Market Economy in China.11 -Rise and Fall of Socialism in India12 Is Socialism Good or Bad?....15 -A Dirty Word.15 -Going the Other Way.16 Conclusion & Suggestions....18 Bibliography..18


[Brief History, Various Types & Its Relevance in Present Society] INTRODUCTION Socialism broadly includes many variations, but in all its forms it means: Basic economic decisions, as well as political decisions, must reflect the common good. The entire economy should operate for the good of the entire society, with no one left behind. No private concentrations of capital or other wealth, and no other types of private concentrations of power. The end of money's domination over society. The end of the priority of property and private greed. Socialism will complete what democracy began-- the transfer of sovereignty in all spheres from elites to the people. "Communal ownership of land and capital."

STATEMENT OF PROBLEM The basic thrust area of this project is the study of Socialism and its various major branches. Also the past and present scenario of socialism has been discussed in this project. OBJECTIVES 1. To study the different forms of Socialism. 2. To study the relevance of Socialism in the contemporary society. 3. To critically analyze the theory of Socialism. HYPOTHESIS Socialism means a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and the distribution of capital, land etc., in the community as a whole. METHOD OF STUDY The method adopted for the collection of data of this project is Doctrinal Method.


What is Socialism? What are the different types of Socialist concepts? Whether Socialism is good or bad? What were the approaches of different countries for applying a Socialist means of production? CONCLUSION AND SUGGESTIONS In the project. BIBLIOGRAPHY In the project.

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Socialism refers to a broad array of ideologies and political movements with the goal of a socioeconomic system in which property and the distribution of wealth are subject to control by the community for the purposes of increasing social and economic freedom, equality and cooperation. Socialism is a type of Collectivism. The key assumption made is that the individual belongs to the community, and therefore his/her labor belongs to the collective. There are various offshoots of the core ideal.

Properties of Socialism All members of the economy share benefits, regardless of their economic value to the system. A healthy socialistic system results in non-economic productivity. In environments with plentiful resources, socialism provides all members with their survival needs, through the redistribution of wealth from those who produce. Members that cannot participate economically - due to disabilities, age, or periods of poor health - can still impart wisdom, support and continuity of experience to the system. Leaders, who are not producing, have domain over those who are producing.

There are different varieties of socialism. They share a desire for egalitarianism, by which they mean some real equality, not just equality before the law and equal opportunities. In a socialist society one would expect income tax to be sharply progressive. Who Owns What Socialism is the collective ownership by all the people of the factories, mills, mines, railroads, land and all other instruments of production. Who Benefits Socialism means production to satisfy human needs, not as under capitalism, for sale and profit.

Who Runs Things Socialism means direct control and management of the industries and social services by the workers through a democratic government based on their nationwide economic organization. Under socialism, all authority will originate from the workers, integrally united in Socialist Industrial Unions. In each workplace, the rank and file will elect whatever committees or representatives are needed to facilitate production. Within each shop or office division of a plant, the rank and file will participate directly in formulating and implementing all plans necessary for efficient operations. Local & National Government Besides electing all necessary shop officers, the workers will also elect representatives to a local and national council of their industry or serviceand to a central congress representing all the industries and services. Democratic Control All persons elected to any post in the socialist government, from the lowest to the highest level, will be directly accountable to the rank and file. They will be subject to removal at any time that a majority of those who elected them decide it is necessary. Such a system would make possible the fullest democracy and freedom. It would be a society based on the most primary freedom economic freedom. Individual Rights For individuals, socialism means an end to economic insecurity and exploitation. It means workers cease to be commodities bought and sold on the labor market, and forced to work as appendages to tools owned by someone else. It means a chance to develop all individual capacities and potentials within a free community of free individuals. It means a classless society that guarantees full democratic rights for all workers. What Socialism Isand Is Not Socialism does not mean government or state ownership. It does not mean a closed party-run system without democratic rights. Those things are the very opposite of socialism. Socialism, as the American Socialist Daniel De Leon defined it, is that social system under which the necessaries of production are owned, controlled and administered by the people, for the people, and under which, accordingly, the cause of political and economic despotism having been abolished, class rule is at end. That is socialism, nothing short of that. And, we might add, nothing more than that! Remember: If it does not fit this description, it is not socialismno matter who says different. Those who claim that socialism existed and failed in places like Russia and China simply do not know the facts. Socialism will be a society in which the things we need to live, work and control our own livesthe industries, services and natural resources

are collectively owned by all the people, and in which the democratic organization of the people within the industries and services is the government. Socialism means that government of the people, for the people and by the people will become a reality for the first time.


Leninism promotes the creation of a vanguard party, led by professional revolutionaries (practice of the dictatorship of the proletariat), to lead the working class in the conquest of the state. They believe that socialism will not arise spontaneously through the natural decay of capitalism, and that workers by themselves are unable to organize and develop socialist consciousness, therefore requiring the leadership of a revolutionary vanguard. After taking power, Leninists seek to create a socialist state in which the working class would be in power, which they see as being essential for laying the foundations for a transitional withering of the state towards communism (Stateless society). The mode of industrial organization championed by Leninists and Marxism-Leninism is the capitalist model of scientific management inspired by Fredrick Taylor. Leninism branched into Marxism-Leninism, Trotskyism, Stalinism and Maoism. Developed by and named after Russian revolutionary and politician Vladimir Lenin, Leninism comprises political and socialist economic theories, developed from Marxism, and Lenin's interpretations of Marxist theory within the agrarian Russian Empire of the early 20th century. Leninism reversed Marxs order of economics over politics, allowing for a political revolution led by a vanguard party of professional revolutionaries rather than a spontaneous uprising of the working class as predicted by Karl Marx. After the October Revolution of 1917, Leninism was the ideological basis of Soviet socialism, specifically its Russian realization in the Soviet Union. As a political-science term Leninism entered common usage in 1922, only after infirmity ended Lenins participation in governing the USSR. Two years later, in July 1924, at the fifth congress of the Communist International (Comintern), Grigory Zinoviev popularized Leninism as a Marxist ideological term denoting revolutionary. After the Union of Soviet Socialist Republics was established in 1922, its governing philosophy, Leninism, became the predominant branch of Marxism. In Russia, the theoretical descendants of Leninism are Stalinism and Trotskyism; at his death in 1924, Lenins revolutionary comrades, Joseph Stalin and Leon Trotsky, were the leaders of the strongest ideological factions that emerged to assume command of the Communist Party in the USSR. Ideologically, the Stalinists and the Trotskyists (like their namesakes), deny the philosophic and political legitimacy of the other, because each claims to be the true Leninist theory.

-Democratic socialism
Modern democratic socialism is a broad political movement that seeks to propagate the ideals of socialism within the context of a democratic system. Many democratic socialists support social democracy as a road to reform of the current system, but others support more revolutionary tactics to establish socialist goals. Conversely, modern social democracy emphasises a program of gradual legislative reform of capitalism in order to make it more equitable and humane, while the theoretical end goal of building a socialist society is either completely forgotten or redefined in a pro-capitalist way. The two movements are widely similar both in terminology and in ideology, although there are a few key differences. Democratic socialism generally refers to any political movement that seeks to establish an economy based on economic democracy by and for the working class. Democratic socialists oppose democratic centralism and the revolutionary vanguard party of Leninism. Democratic socialism is difficult to define, and groups of scholars have radically different definitions for the term. Some definitions simply refer to all forms of socialism that follow an electoral, reformist or evolutionary path to socialism, rather than a revolutionary one. Democratic socialists believe that both the economy and society should be run democratically to meet public needs, not to make profits for a few. To achieve a more just society, many structures of our government and economy must be radically transformed through greater economic and social democracy so that ordinary people can participate in the many decisions that affect their lives. Democratic socialism is a description used by various socialist movements and organizations to emphasize the democratic character of their political orientation. Democratic socialism is contrasted with political movements that resort to authoritarian means to achieve a transition to socialism, instead advocating for the immediate creation of decentralized economic democracy from the grassroots level, undertaken by and for the working class itself. Specifically, it is a term used to distinguish between socialists who favor a grassroots-level, spontaneous revolution or gradualism over Leninism - organized revolution instigated and directed by an overarching Vanguard party that operates on the basis of democratic centralism. The term is sometimes used synonymously with "social democracy", but social democrats need not accept this label, and many self-identified democratic socialists oppose contemporary social democracy because social democracy retains the capitalist mode of production.


Democratic socialism is often used in contrast to movements, who supported the Soviet Union, the People's Republic of China and other socialist states during the Cold War. Some Social

democratic parties label themselves "democratic socialist", however, their policies and goals have moved toward social liberalism and neoliberalism since the dissolution of the Soviet Union. During India's freedom movement, many figures on the Left of the Indian National Congress organized themselves as the Congress Socialist Party. Their politics, and those of the early and intermediate periods of JP Narayan's career, combined a commitment to the socialist transformation of society with a principled opposition to the one-party authoritarianism they perceived in the Stalinist revolutionary model. The folkesocialisme or people's socialism that emerged as a vital current of the Left in Scandinavia beginning in the 1950s could also be characterized as a democratic socialism in the same vein. In much of Europe and North America during the 1960s, there was a strong current of democratic socialism in the politics of the New Left. For example, the classic Port Huron Statement of the SDS combines a stringent critique of the Communist model with calls for a democratic socialist reconstruction of society. In western Europe, Daniel Cohn-Bendit, the situationists, and various groups taking to the streets in May 1968 articulated similar positions. The New Left legacy of democratic socialism may be clearly seen in the post-Marxist positions of a wide range of intellectuals (sometimes identified with post-modernism or poststructuralism), from Chantal Mouffe in Europe to Cornel West in the United States. Simultaneously in Eastern Europe (particularly Czechoslovakia), there was a tendency towards socialism with a human face meant to endow a Marxist-Leninist political establishment with more authentically democratic credentials. Since the end of the Cold War, many traditionally Marxist-Leninist groups and parties have evolved positions more closely resembling democratic socialism. The parties of the European United Left today often include both a "conservative" Marxist-Leninist wing and a "liberal" democratic socialist tendency. The boundaries of what might be categorized as "democratic socialism" are thus necessarily fluid. On the right, democratic socialism shades seamlessly into social democracy; on the left, it passes into various hybrids and permutations of Leninism. Furthermore, it also shades off into a variety of radical progressive groups not specifically identifying with the history or symbolism of "socialism" as such. Since the 1990s much of the political activity of the democratic Left has fed into the international movement against capitalist globalization. Many anti-globalist groups describe themselves as anti-capitalist without selfidentifying as socialist, despite sharing a great many positions and analyses with democratic socialism.

Market socialism refers to various economic systems where the means of production are publicly owned, managed and operated for a profit in a market economy. The profit generated in a market socialist system would be used to directly remunerate employees or go toward public

finance. Theoretically, the fundamental difference between a traditional socialist economy and a market socialist economy is the existence of a market for the means of production and capital goods under market socialism. Market socialism generally refers to three related but distinct economic systems. Early forms of market socialism consisted of proposals for cooperative enterprises operating in a free-market economy, so that exploitation would be eliminated and individuals would receive the full product of their labor. Early market socialism was expressed by Ricardian socialists, mutualists, individualist anarchists and syndicalist. The maturing of neoclassical economic theory led to various new proposals of market socialism in the early twentieth century. The traditional neoclassical market socialist proposals consisted of state-owned industries and a central planning board (CPB) that sets prices to equal marginal cost, thereby achieving pareto efficiency. Market socialism has also been used to refer to an economic system that utilizes a free price system for the allocation and distribution of all resources, with public ownership being reserved to "strategic" sectors of the economy. Within this model, the state would utilize market mechanisms to direct economic activity in the same manner governments affect economic decisions in capitalist economies, including the use of (external) regulation over the otherwise autonomously-operating enterprises. This allows for the public enterprises to function in a decentralized fashion.


The earliest models of this form of market socialism were developed by Enrico Barone (1908) and Oskar R. Lange (c. 1936). Lange and Fred M. Taylor proposed that central planning boards set prices through "trial and error," making adjustments as shortages and surpluses occurred rather than relying on a free price mechanism. If there were shortages, prices would be raised; if there were surpluses, prices would be lowered. Raising the prices would encourage businesses to increase production, driven by their desire to increase their profits, and in doing so eliminate the shortage. Lowering the prices would encourage businesses to curtail production to prevent losses, which would eliminate the surplus. Therefore, it would be a simulation of the market mechanism, which Lange thought would be capable of effectively managing supply and demand but could not work as efficiently or as effectively as the true thing. Time delays due to bureaucracy, distortions due to politics, and the lack of an entrepreneurial process that would come up with newer, better and cheaper products would seriously hamper the results of this approach vis-a-vis the real thing, which would also avoid the financial cost of paying for inessential government administrative staff.

A second form of market socialism has been termed "free market socialism" because it does not involve planners. Pierre-Joseph Proudhon developed a theoretical system called mutualism, which attacks the legitimacy of existing property rights, subsidies, corporations, banking, and rent. Proudhon envisioned a decentralized market where people would enter the market with equal power, negating wage slavery. Proponents believe that cooperatives, credit unions, and other forms of worker ownership would become viable without being subject to the state. Market socialism has also been used to describe some individualist anarchist works which argue that free markets help workers and weaken capitalists.

Utopian socialism is a term used to define the first currents of modern socialist thought. It is distinguished from later socialist thought by being based on idealism instead of materialism. Although it is technically possible for any set of ideas or any person living at any time in history to be a utopian socialist, the term is most often applied to those socialists who lived in the first quarter of the 19th century who were ascribed the label "utopian" by later socialists to convey negative attitudes and naivet to dismiss their ideas as fanciful or unrealistic. The utopian socialist thinkers did not use the term utopian to refer to their ideas. Karl Marx and Friedrich Engels referred to all socialist ideas that were simply a vision and distant goal for society as utopian. Utopian socialists were likened to scientists who drew up elaborate designs and concepts for creating what socialists considered a more equal society. They were contrasted by scientific socialists, likened to engineers, who were defined as an integrated conception of the goal, the means to producing it, and the way that those means will inevitably be produced through examining social and economic phenomena. This distinction was made clear in Engels' work Socialism: Utopian and Scientific (1892, part of an earlier publication, the Anti-Dhring from 1878). Utopian socialists were seen as wanting to expand the principles of the French revolution in order to create a more "rational" society and economic system, and despite being labeled as utopian by later socialists, their aims were not always utopian with their values often included rigid support for the scientific method and creating a society based upon such. - cite_note-1 One key difference between "utopian socialists" and other socialists (including most anarchists) is that utopian socialists generally don't feel class struggle or political revolutions are necessary

to implement their ideas. They feel their form of cooperative socialism can be established among like-minded people within the existing society.


Utopian socialists never actually used this name to describe themselves; the term "Utopian socialism" was introduced by Karl Marx and Friedrich Engels in The Communist Manifesto in 1848, although Marx shortly before the publication of this pamphlet already attacked the ideas of Pierre-Joseph Proudhon in Das Elend der Philosophie (originally written in French, 1847) and used by later socialist thinkers to describe early socialist or quasi-socialist intellectuals who created hypothetical visions of egalitarian, communalist, meritocratic or other notions of "perfect" societies without actually concerning themselves with the manner in which these societies could be created or sustained. In Das Elend der Philosophie, English title The Poverty of Philosophy, Marx criticized the economic and philosophical arguments of Proudhon set forth in The System of Economic Contradictions, or The Philosophy of Poverty. Marx accused Proudhon of wanting to rise above the bourgeoisie. In the history of Marx' thought and Marxism, this work is pivotal in the distinction between the concepts of utopian socialism and what Marx and the Marxists claimed as scientific socialism. Although the utopian socialists did not share many common political, social, or economic perspectives, Marx and Engels argued that certain intellectual characteristics of the Utopian socialists unified the disparate thinkers. In The Communist Manifesto, Marx and Engels wrote, "The undeveloped state of the class struggle, as well as their own surroundings, causes Socialists of this kind to consider themselves far superior to all class antagonisms. They want to improve the condition of every member of society even that of the most favored. Hence, they habitually appeal to society at large, without distinction of class; nay, by preference, to the ruling class. For how can people, when once they understand their system, fail to see it in the best possible plan of the best possible state of society? Hence, they reject all political, and especially all revolutionary, action; they wish to attain their ends by peaceful means, and endeavor, by small experiments, necessarily doomed to failure, and by the force of example, to pave the way for the new social Gospel."



China is a large nation with a population of 1.3 billion. Its in the middle of a period of rapid economic growth that is drawing attention from various parts of the world. Sekai Shuho (World Affairs Weekly) magazine article written by a researcher of the China Center for Economy of a probusiness think-tank has made the following forecast : "It is more than possible for China to maintain an annual growth rate at 6-7 percent on average over the next 20 years. Generally speaking, it is highly likely that China will overtake Japan in terms of the economy at some point between 2020 and 2025, and become the second largest economy." During the Mao Zedong era from the 1950s through the 1970s, there was a tendency to, so to speak, run too fast on the way of social development, as was shown by the "Great Leap" and the "Peoples Commune" movement. At the time, China's objective was to reach the stage of communism, a higher stage of future society. That is not the case with China today. According to Chinas strategy, the task now is for China to reach an "elementary stage" of socialism. This is the strategy established in the 1978 Congress of the Communist Party of China. They explained to us that it would take 100 years for China to complete this "elementary course." How long-sighted their plan is! China sets an interim goal of becoming a middle-income (medium-developed) country in 50 years. What path do they intend to take to achieve their economic development? This question was dealt with 10 years ago. The CPC Congress in 1992 adopted a strategy to achieve "socialism through a market economy. Also Vietnam, Chinas neighbor, adopted a policy called Doi Moi (innovation) at the Communist Party of Vietnam Congress in 1986. Doi Moi can be taken as the Vietnamese version of the course toward "socialism through a market economy." On China and Vietnam adopting a market economy for their economic development, many commentators in Japan and abroad argued that both countries were replacing socialism with capitalism. I think that they were jumping to a wrong conclusion. They had a firm misconception that the market economy is only pertinent to capitalism. Chinas and Vietnams efforts present us with a research subject that needs careful study to find out what significance their projects have as a quest for socialism, free from such fixed misconceptions.

Some of China's efforts overlap what the Soviet Union experienced during Lenin's era
In comparing the history of Lenins challenge with the market economy and the course which China has followed since the 1949 revolution, I find them overlapping in some interesting points. It would be safe to say that China, after experiencing many zigzags during the 40-odd years after the victorious revolution is entering a phase similar to the time when Lenin proposed the NEP. The Mao Zedong era, in particular before and after the outbreak of the "Great Cultural Revolution" in the 1960s, in a sense had a tint of "war communism. Under war communism" Lenin insistently argued that small producers were the hotbed of capitalism; the introduction of the market economy would mean allowing capitalism to thrive again. In order to shift to the NEP, he had to break with these arguments. In China, Mao Zedong led similar arguments in the 1960s, warning that small producers, with their natural procapitalist inclinations, are trying to seize every opportunity to embark on the road of capitalism and that this will give birth to "capitalist roaders in power." This argument led him to adopt a policy that the main task of the revolution was a class struggle against the "capitalist roaders." He first believed that the class enemy, vis. "capitalist roaders," existed in rural districts. Later, he began to warn that they existed within the Communist Party of China. This argument was translated into a struggle to overthrow the party's leading members. The "Red Guards" were mobilized in the struggle known as the "Great Cultural Revolution." The present Chinese concept that includes the "elementary stage of socialism" or the "socialist market economy" was worked out as the new direction of nation building efforts by burying the historical mistakes. In this respect, the Chinese course of development is based on the awareness similar to one Lenin maintained when he decided to shift from "war communism" to the NEP.


India became the poster child for postWorld War II socialism in the Third World. Steel, mining, machine tools, water, telecommunications, insurance, and electrical plants, among other industries, were effectively nationalized in the mid-1950s as the Indian government seized the commanding heights of the economy. Other industries were subjected to such onerous regulation that innovation came to a near standstill. The Industries Act of 1951 required all businesses to get a license from the government before they could launch, expand, or change their products. One of Indias leading indigenous firms made 119 proposals to the government to start new businesses or expand existing ones, only to find them rejected by the bureaucracy.

The government imposed import tariffs to discourage international trade, and domestic businesses were prevented from opening foreign offices in a doomed attempt to build up domestic industries. Foreign investment was subject to stifling restrictions. But the planners failed. Manufacturing never took off, and the economy meandered; India lagged behind all its trade-embracing contemporaries. Between 1950 and 1973, Japans economy grew 10 times faster than Indias. South Koreas economy grew five times faster. Indias economy crawled along at 2 percent per year between 1973 and 1987, while Chinas growth lept to 8 percent and began matching rates for Hong Kong, Taiwan, and other Asian tigers. Even as that reality became clear as early as the late 1960s and early 1970s, Indias policy makers refused to give up on economic planning. Experts and elected officials settled for what they called the Hindu Rate of Growth, which, according to official figures, was sluggish at about 3 to 4 percent per year. That would be respectable for a developed country like the United States or Germany, since they start from a higher economic base. But for a country like India, its abysmal. Attitudes finally began to change in the 1980s, as Indias persistent budget deficits forced austerity measures in the middle of the decade. A foreign exchange crisis in 1991 precipitated major shifts in public policy thinking. The government brought spending in line with revenues and moved away from fixed exchange rates, allowing the Indian currency to reflect world prices. (Fixing exchange rates at a government-determined price tended to overvalue the rupee on world markets, discouraging foreign investment.) The government began to open the door to foreign investment while Indian companies were allowed to borrow in foreign capital markets and invest abroad. Inflation was brought under control. The new policies fostered a booming information technology industry, which grew to billiondollar status in the mid-1990s and exceeded $6 billion in revenues by 2001. The technology sector didnt suffer from as many burdensome regulations as, say, steel and airlines. Nor did its success hinge on traditional utilities and basic infrastructure, depending more on new technology such as satellites. A 2004 World Bank report notes that Services, the least regulated sector in the economy continue to be the strongest performer, while manufacturing, the most regulated sector, is the weakest. At first, Indians were simply subcontractors to more sophisticated multinational companies. Then Indian companies began to generate new technologies on their own as they tapped into the global marketplace. The software used to power Palm Pilots, for example, was developed by an Indian firm, not outsourced to technicians or programmers. Today 1,600 tech companies, including the billion-dollar multinationals Infosys and Wipro, export products and services from Indias high-tech capital, Bangalore. U.S. companies with major Indian investments include Google, Yahoo, Microsoft, and Oracle. While I.T. exports led the industrys early growth, future growth is expected to be based on the expansion of the domestic economy.

With a billion people, India is bound to become a major consumer powerhouse. It may even outcompete China. Culturally, India is much more attuned to free market ideas, says Barun Mitra, managing trustee of the New Delhibased Liberty Institute. Indias social and institutional fabric is much more resilient than Chinas. The nationalized component of the Indian economy is relatively small. Indias share of the workforce in any kind of public sector is barely 6 percent of the total workforce of 420 million. Furthermore, Indias regulatory apparatus was crafted from a kinder, gentler form of socialism. For one thing, more than 90 percent of its workforce is in the informal sector, largely untouched by the regulations perpetuated by the federal government in Delhi and the state and regional governments. Furthermore, India is a liberal democracy, bounded by a constitution and a broadbased cultural tolerance for different lifestyles and points of view. Those same factors grassroots respect for trade, constitutional governance, and cultural tolerance of diversityhave contributed to the rise of another industry symbolic of a progressive, dynamic economy: film and entertainment. Bollywoods movie output rivals that of Hollywood and Hong Kong. Thats not to say theres no intolerance: A bloody war followed Indias independence and partition in 1947, and serious tensions have persisted along religious, ethnic, class, and caste lines. But despite a population that is overwhelmingly Hindu, Indias current president is a Muslim, and its current prime minister is a Sikh. Thirty thousand people died in the state of Punjab between 1980 and 1995 primarily because of conflict between Hindus and Sikhs. Yet Punjab is now peaceful, and is one of Indias richest states. It is worth pointing out that there are 150 million Indians who profess the Muslim faith, Mitra observes. Yet there is not one Indian Muslim who has been found to be involved with any of the international jihadi or terrorist groups. And I believe this is because of the sense of political participation that the Indian democratic process allows. The key to further progress will be leveraging the countrys comparative economic advantage in information technology and services. India has many of the key ingredients for making this transition, notes a 2005 report from the World Bank Finance and Private Sector Development Unit. It has a critical mass of skilled, English-speaking knowledge workers, especially in the sciences. It has a well-functioning democracy. Its domestic market is one of the worlds largest. It has a large and impressive Diaspora, creating valuable knowledge linkages and networks. As robust as Indias growth is, it probably could do much better. It will take a continued commitment to open trade to achieve higher growth rates, and its still unknown whether India has the political commitment to stay the course.


In its classic form, Socialism is bad because it concentrates total power in the hands of a particular political regime. Most remember what Stalin did with that power. Who would want to bring back the brutality and enslavement associated with that regime that is combined with inefficiencies related to central control of the economy? Its important to keep the two power centers separate, business and government, to prevent such abuse. Socialism is a dirty word in America. My conservatives suspect a socialist plot whenever politicians propose new restrictions on business enterprise, favor the non-profits, impose onerous taxes, or otherwise use government to take property away from someone without paying full compensation. They want to use their government positions to enrich themselves and friends, not change the social order. We must now try to look at this question in a disinterested way. What is the best type of society? What relationship ought to exist between business and government, assuming that each has its sphere of influence? The best way to approach this question is to identify functions in society that properly belong to government and those that properly belong to private businesses Consider, then, whether it is desirable to put governments tax-collecting function in private hands? I would say not. The free-enterprise system gives a financial reward for finding creative new ways to expand the business. If a business finds new ways to make people happy or more comfortable, thats OK. However, the collection of taxes is supposed to follow a set of rules. As bad as enforcement by Revenue collecting agents can be, it would be worse to have private bill collectors go after the taxes you owe to the government because those people would have a direct financial incentive to pore through your financial records and find every last dollar allegedly owed in taxes. Some functions are best left to a relatively disinterested bureaucracy. Let us make, then, that distinction. The business sector ought to comprise functions that require personal initiative, reward hard work and skilled enterprise, and depend on the free market to decide whether an enterprise succeeds or fails. The successful risk-taker, rewarded by market success, deserves the resulting wealth. The government sector, on the other hand, ought to comprise functions that require fairness of administration or the knowledgeable execution of predetermined routines. Its more important to follow the law conscientiously and impartially than carry out brilliant initiatives.

Some of governments traditional functions are: to wage war and provide for national defense, to police the community, to maintain fire departments, to build and maintain roads, to operate post

offices, to coin money, to adjudicate legal disputes, to educate children, to provide water and sanitation, etc. The private sector handles most other functions. These are related to furnishing commercial products, including food, that people want or need in their lives. Conservatives have favored privatizing some government functions. For instance, private contractors handled some of the military and military support functions in Iraq. Private companies have built and maintained toll roads. Charter schools have taken over a portion of public education. Private security firms do policing. UPS and Fed-Ex handle some of the services that the post office has performed. When government functions are privatized, it is usually explained that the private sector can do the work more efficiently. Privately owned businesses are highly motivated and lean whereas government bureaucracies are bloated and lethargic. In fact, a frequent reason to privatize government operations is to find a way around the relatively generous union contracts that public employees often have. The private contractor lays off high-paid employees and replaces them with less highly paid non-union employees. Also, the government manager can switch to another contractor if problems arise.

Going the other way

Since the Reagan years, the emphasis has been on reevaluating government services and transferring some to private ownership. Less attention has been paid to the possibility of converting some functions that are currently handled by private firms to ones handled by government. Consider a recent example: the bailout of Wall Street banks and investment firms. The U.S. Treasury Department believed that the huge losses incurred by Wall Street had caused banks to stop lending to customers and to each other. Secretary Paulson first proposed to buy toxic mortgage investments from the banks to provide cash for other lending. The banks still refused to lend, preferring instead to buy other banks and pay bonuses to their executives. Then Henry Paulson proposed making direct investments in the banks. He proposed giving them cash. Nothing seemed to work. Privately owned banks cannot be forced to lend to their customers. If the failure to lend has created a national financial emergency, an obvious solution would be to nationalize the banks. If government owned the banks, its officials could direct the loan officers to make more loans to customers. It could direct them to adjust the terms of mortgages to avoid foreclosures. The credit squeeze could easily be solved. In fact, many have questioned the wisdom of a central banking system which, privately owned, charges interest to the government for money that it borrows. The power to coin money should remain a government prerogative.

Another questionable enterprise is the private practice of law. A communitys body of law is the product of government consisting of rules and regulations to guide various kinds of activities in society. Ideally, those rules should apply equally to all citizens. When disputes are taken to court, none should have a procedural advantage but be treated equally under the law. On the other hand, private law firms are engaged for the purpose of buying representation to win the case. Their expertise consists of manipulating court procedures and case law, using their oratorical skills to advantage, and exploiting the appeals process to achieve the best possible outcome given existing law and the facts of the case. The better lawyers are paid more money to gain better-than-average justice for their clients. That means that the rich generally do better in court than persons of average means. The administration of law should be impartial and dull. We do not want brilliant lawyers who devise clever new strategies and legal interpretations to bend the law in favor of their clients; instead we want technicians who operate methodically to carry out the laws purpose. Therefore, the advantages of private enterprise do not apply to this field. Justice would be better served by having government lawyers assist people who want to file cases in court to put their complaint in a proper legal form and perhaps mediate disputes on the front end. In my scheme of a better society, there would be such an occupation in government to cut costs and improve the quality of justice, all done at a reasonable and transparent rate of compensation. Also, the medical field lends itself to inclusion in the public sector. While it is true that medical practice and technology benefits from human ingenuity and motivation of the kind inspired by private enterprise, medical practitioners are basically applying an existing body of knowledge to patients to restore their health. We would want them giving undivided attention to that end and not be distracted by financial considerations. This is the problem with medicine today. It is too expensive and too money-driven. The relationship between doctors and pharmaceutical companies may not foster the best treatment but, instead, is all about marketing products. A patient is actually receiving substandard care when a doctor prescribes unnecessary surgery or pills. And insurance pays for much of this. Finally, government should consider getting into the insurance field in a more substantial way. Originally, insurance was considered a way to spread the risk of uncertain ventures so that individuals would not be financially ruined if the venture failed. Now it has become a wealth redistribution scheme. When persons with preexisting health conditions are included in healthinsurance pools, this is not a risk but a known future claim. Government should be honest about this and set up a program either to pay or deny these high-priced claims resulting from particular health conditions instead of forcing the public to participate in the payment through insurance. Additionally, private insurance companies boost profits by collecting premiums and then denying claims when payment is due. Government would be a more honest broker in that respect.

This is not to deny that free enterprise is better suited than government for most kinds of industries and occupations. We do want entrepreneurs and inventors pioneering new types of products. We do want these products to stand or fall by decisions of the free market. Privately owned businesses must withstand the discipline of consumer judgment whereas government bureaucracies continue so long as funding is available. Therefore, undisciplined bureaucracies tend to grow stale. They come to serve themselves rather than public needs. That is why socialistic economies have often failed.


In this project I have referred to the various branches of Socialism, simultaneously giving a brief explanation about their history and origin. The latter section of this project deals with the relevance of Socialism in present society and ends with a brief analysis of the question whether Socialism is good or bad. Change in productive relationships will bring social production into accord with social ownership and therefore into accord with social needs. The necessary means of achieving socialism are determined by the nature of socialism itself. A society organized as a result of conscious democratic control can only be established by conscious democratic means. The ends and means are inseparable. The work of establishing socialism is already being carried on by the movement for world socialism, but it is vital that its rapid growth be ensured by all who identify with its aims.