N5 – Module 1 Socialism (or Communism)
“Socialism is accepted as a system of statism (the act of strengthening the economic and political power of the State) with centrally concentrated and comprehensive economic/social/physical control of the activities of the individual to the detriment of individual liberty, where the ownership of all the factors of production – land, raw material, labour and capital, are vested in the government, and where production, distribution and trade belong to the community and are administered by the government on behalf of the community” (Gildenhuys, 1993:7).
Note You should be able to see how this is opposed to the laissez-faire approach – it is exactly the opposite.
The Ideology of Socialism This is what the believers in this system generally claim or believe in: The principal form of evil in the world is the institution of private property – the very pillar of the laissez-faire approach.
Case Study: Communism in Russia and China Russia and China were the two main countries who adopted this ideology. Later on in this chapter you will see why the social welfare state arose – this was really a reaction to the totalitarian approach of the communist – this meant that all power was invested in the state – it was centralised. Soon, although the state had the intention of looking after the poor and underprivileged, it became all powerful and forgot the everyday needs of the individual. People wanted some power in their lives – they were tired of obeying strict laws and working for the state only. You can imagine that without incentives such as bonuses and extra pay, people did little work. They were also not allowed to own private property and to better their individual lives financially by earning more. Many countries in Europe, like Germany and Holland, never adopted pure socialism or communism, but instead gave birth to the social welfare state in which people were protected but also had more power to become prosperous. There are very few communist countries left, most notably: China, Cuba and North Korea. Ironically, while China still calls itself communist, it has massively embraced capitalism, leading to it having huge economic growth. The USSR abandoned communism in 1991, leading to the end of the cold war and the establishment of 14 new states.
Socialism advocates the transformation of private property into public property and income provided from such property to be divided in accordance with individual needs. This amounts to the common ownership of all the means of production. You should now be able to say what the “means of production” are – can you remember?
The 10 Commandments of Socialism [The following ten principles are, according to Gildenhuys (1993:7)]: 1. The abolition of property rights for land and utilisation of all income from rents for public purposes;
2. Abolition of all inheritance rights; 3. Confiscation of all property of immigrants and rebels; 4. Centralisation of credit in the hands of the state; 5. A heavy progressive or graduated income tax; 6. Centralisation of the means of communication and transport to the state;
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