Fundamental Principles of Public Finance
7. Extension of factories and instruments of production owned by the state; 8. Equal obligation on all to work; 9. Integration of agriculture with manufacturing industries; 10. Free education for all children in public schools.
Characteristics of Socialism Gildenhuys (1993:8) summarises these as follows: • It does not acknowledge particular and private ownership of production factors – all power over land, capital, labour is vested in and owned by the state;
• Government decides on how and for what purpose the production factors shall be employed, e.g. what shall be produced; what quality; what price; and also the salaries for workers (in capitalism the market decides this);
• There is a ban on all capitalist or free market systems – no hawkers, free markets – no entrepreneurship;
• Redistribution of income takes place through severe use of taxation; • Social security benefits such as pensions, unemployment benefits, free health service and education are collectively provided for out of progressive tax sources – to uplift less privileged classes;
• Government guarantees a minimum standard of living.
Social Welfare State The period between the publication of the Communist Manifesto (1848) and 1945 was characterised by a growth in socialism.But as mentioned previously, people soon became tired of a totalitarian government which took all the power away from the people.
There are five main reasons for a new approach, which resulted in the modern welfare state: 1. There was much disillusionment with draconian (very strict) methods applied by some countries (USSR, China) which were characterised by oppression and the loss of lives (some 20 million people were killed under the rule of Stalin in the USSR) and which created great opposition and concern in the West.
2. There was a realisation that political evolution is better than political revolution – economic growth is better than disruption of community/stability and the natural spirit of entrepreneurship.
3. There was also much improvement in the living and working conditions of workers and the less privileged, which created a situation where reform through revolution became unnecessary.
4. The absence of individual freedom and the centralisation of power to the state created a fear of this type of government.
5. The fanatical rejection of any political ideology from the West resulted in a Cold War during which nuclear arms were produced at an alarming rate – this resulted in a global threat not only to the West, but also to any country that practised capitalism.
Case Study: The Great Purge Between 1936 and 1938 Josef Stalin, the head of Russia embarked on a series of campaigns of political repression and persecution, in which he ruthlessly destroyed all his opposition, both real and perceived. According to declassified Soviet archives, close to 700 000 people were shot at an average of 1 000 executions per day. However, other estimations put the casualty figure much higher in the range of 950 000 to 1.2 million (as a comparison, imagine that one out of every fifty people in South Africa were executed).
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