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New Harmony, Indiana, por F. Bates
New Harmony, a model community presented by Robert Owen, 1838

Socialism is an economic and political system. It is an economic theory of social organization. It believes that the means of making, moving, and trading wealth should be owned or controlled by the workers. This means the money made belongs to the people who make the things, instead of a group of private owners. People who agree with this type of system are called socialists.

How can a society own the means of making wealth? There are two main ways socialists answer this question: by the state on behalf of the workers, or by worker-owned cooperatives. Socialists believe that everything in society is made by the cooperative efforts of the people and citizens.

Forms of socialism

There are many kinds of socialism. In all types, at least in principle, the workers own the means of production. The major differences between the different varieties are the role of the free market (market planning), how the means of production are controlled, the role of management of workers, and the government's role in the economy.


Another kind of socialism is "collectivization." In this system, money and goods are shared more equally among the people, with the government in control. In theory, this system results in the gap between classes getting smaller, with the state helping the nation's poorest people, while the richest agree to higher taxes and economic restrictions.

Communism as a goal

Some socialists believe that socialism will evolve into what they see as a more advanced system: communism, with no state, money, or social classes. In Marxist theory, socialism is a temporary social state between capitalism and communism, although some socialists have no intention of transitioning to communism.

Most non-communist people say "communism" when they mean the Marxist and Leninist ideas of Russia's Bolshevik party. Marx believed that capitalism followed the economic and political system of feudalism. He also believed that capitalism would treat unfairly many people and that those people would eventually revolt and change to socialism. Then he thought that socialism can be another bridge, but to communism. However, many people incorrectly use the term "Communist" to refer to a socialist state. Others call this 'State Socialism,' to distinguish it from the communist goal that does not need a state or any form of government. To non-communists, the word 'socialism' is now used mostly for attempts to come close to this goal in a democratic state.

Democratic socialism

Democratic socialism is a type of socialism achieved through democracy. The main method of democratic socialism is changing society through slow reform rather than a quick revolution. Democratic socialism usually wants to gradually reform capitalism, similarly to social democracy, but these reforms won't stop until there is no more capitalism. Democratic socialism also usually entails all businesses being operated as worker-owned cooperatives.

Social democracy

Social democracy is a kind of capitalism that tries to mix parts of socialism with capitalism. It is not a form of socialism, but shares some ideas with it. In this system, despite there still being private property, the government takes money from the rich and gives it to the poor to reduce inequality, usually in the form of social programs. While the intentions of social democracy and socialism can be similar or shared, social democracy keeps the capitalist system intact, and slightly reforms it. Socialism would mean completely getting rid of the capitalist system. Social democracy is often confused with democratic socialism due to the similar names and having the same short term goals. The biggest difference is social democrats want to stop reforming capitalism when they think their reforms are good enough, but democratic socialists will not stop until capitalism is gone. Some examples of social democracies are the Scandinavian countries.

In social democracies, some services and industries are subsidized (given money to help them run), or partly controlled by the government, or both. For example, education, health care, housing, utility companies and public transportation are some industries that might be owned/supported by the government in a social democracy. For the most part, people working in these industries are paid by the government, with money paid by the people as taxes. A strong Welfare system is key to social democracy.


Many countries see socialism differently. Socialist International is an organization dedicated to the cause of promoting socialist ideals, and has ties with many socialist parties, especially Social Democratic parties.


A Welshman, Robert Owen, was the first socialist. His followers began calling themselves socialists in 1841. He is still regarded as a pioneer of the Co-operative Movement in Britain. He said that workers should own the companies they worked for. The workers would then share the profits among themselves. He set up a new model factory in New Lanark, Scotland.

Karl Marx is the most well-known creator of the theory of socialism, and of communism. He wrote a book about capitalism, socialism, and communism, called "The Communist Manifesto". Friedrich Engels co-wrote the book, and paid for much of Marx's work and research.

Many socialist political parties were formed during the 19th century and early part of the 20th century. Left-wing political parties are mostly newer than right-wing ones.

Socialism with "Chinese characteristics"

Socialism with Chinese characteristics applies socialism and Marxism to the actual conditions of China. One example is Deng Xiaoping's Chinese economic reform. The ideology consists of:

  1. Economically, China has different types of ownership but in accordance with socialism, public ownership takes the leading role.
  2. Politically, China sticks to one party rule (the People's Congress). Some authors claim it is "a system of multiparty cooperation". Regardless, it seeks political consultation and regional ethnic autonomy.
  3. Culturally, China uses socialism as the base for social trends, but also respects differences in local culture, while finding what is common.

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