Socialism: Collective ownership and democratic control of the material means of production by the workers and the people Socialism is a term applied to an economic system in which property is held in common and not individually, and relationships are governed by a political hierarchy. Common ownership doesn't mean decisions are made collectively, however. Instead, individuals in positions of authority make decisions in the name of the collective group. Socialists argue that socialism would allow for wealth to be distributed based on how much one contributes to society, as opposed to how much capital one holds. Mixed Economy Any economy in which private corporate enterprises and public sector enterprises exist side-by-side, and decisions taken through market mechanism are supplemented by some form of partial planning, is to be described as a mixed economy. This system overcomes the disadvantages of both the market and planned economic systems. Provides a clear demarcation of the boundaries of the public sector and private sector so that the core sector and strategic sectors are invariably in the public sector. The government intervenes to prevent undue concentration of economic power and monopolistic and restrictive trade practices The rights of the individual are respected and protected subject only to the requirements of public law and order and morality

1. Socialism
Mixed Economy
Unit 7
Instructor:
Atta Hussain Syed

2. SOCIALISM
• Collective ownership and democratic control of the material means of
production by the workers and the people
• Socialism is a term applied to an economic system in which property is held in
common and not individually, and relationships are governed by a political
hierarchy. Common ownership doesn't mean decisions are made collectively,
however. Instead, individuals in positions of authority make decisions in the
name of the collective group.
• Socialists argue that socialism would allow for wealth to be distributed based on
how much one contributes to society, as opposed to how much capital one
holds.

3. Cont.
• A primary goal of socialism is social equality and a distribution of Wealth based on
one’s contribution to society and an economic arrangement that would serve the
interests of society as a whole.
• Socialism as we know it today, most commonly refers to "market socialism," which
involves individual market exchanges organized by collective planning.
• Difference between socialism and communism is that communists directly oppose
the concept of capitalism, an economic system in which production is controlled
by private interests. Socialists, on the other hand, believe socialism can exist
within a capitalist society.

4. Socialist countries (Current)
• Examples
• Laos People's Democratic Republic
• People's Republic of China
• Republic of Cuba
• Socialist Republic of Vietnam

5. China
• In China the government manages and controls the economy. Many
of the domestic companies are owned and run by the government.
• Recently, the Chinese economy has become more geared towards
capitalism, but is still officially socialist. Life in China remains
relatively less stressful and more relaxed than life in capitalist
countries like America.

6. The Cuban Economy
• Cuba is one of the most prominent
socialist nations, having a mostly state-
run economy, a national health-care
program, government-paid (i.e. free)
education at all levels, subsidized
housing, utilities, entertainment and
even subsidized food programs.
These subsidies compensate for the low
salaries of Cuban workers, making them
better off than their international
counterparts in many other countries.
Cuba does not have a stock exchange – a
crucial indicator of a capital-free
economy. Around 80% of Cuba's
workforce is in state-owned facilities.

7. Features of Socialism
• Social Ownership of means of production
• Existence of public sector
• Decisive role of Economic Planning
• Production guided by Social Benefits
• Abolition of exploitation of labor

8. Benefits of Socialism
• Better salaries
• Stable Environment
• Eliminates poverty
• Better Products
• Fulfills survival need
• Opportunity for citizens to explore non-
economically-productive pursuits

9. Limits of Socialism
• Distorted (one sided) price signals
• Suppression of economic democracy
• Slow Technological advancements
• Minimize self management
• Reduced incentives

10. MIXED ECONOMY
• Any economy in which private corporate enterprises and public sector
enterprises exist side-by-side, and decisions taken through market mechanism
are supplemented by some form of partial planning, is to be described as a
mixed economy.
• This system overcomes the disadvantages of both the market and planned
economic systems.
• Provides a clear demarcation of the boundaries of public sector and private
sector so that the core sector and strategic sectors are invariably in the public
sector.
• The government intervenes to prevent undue concentration of economic power,
and monopolistic and restrictive trade practices
• The rights of the individual are respected and protected subject only to the
requirements of public law and order and morality

11. Examples
• Pakistan
• India
• United States of America
• Russia
• France
• Sweden
• UK
• Hong Kong
• Canada

12. Pakistan
• In a mixed economy, private and public sectors go side by side. The government
directs economic activity in some socially important areas of the economy, the
rest being left to the price mechanism to operate.
• Before Independence, Pakistani economy was a ‘laissez faire’/ free market
economy. But post-independence, she adopted the mixed economy system.
• Thus, it is clear from the following arguments that our economy is a mixed
economy.

13. Features• Resources are owned both by the government as well as private
individuals. i.e. co-existence of both public sector and private sector.
• Market forces prevail but are closely monitored by the government.
• Monopolies may be existing but under close supervision of the
government.

14. Advantages
• Producers and consumer have sovereignty to choose what to
produce and what to consume but production and consumption of
harmful goods and services may be stopped by the government.
• As compared to Market economy, a mixed economy may have less
income inequality due to the role played by the government.
• A mixed economy represents an achievable balance between
individual initiative and social goals.

15. Limitations
• One disadvantage of mixed economies is that they tend to
lean more toward government control and less toward
individual freedoms.
• While most modern forms of government are consistent
with some form of mixed economy, the mixed economy is
most commonly associated with social democratic parties
or nations run by social democratic governments.
• Some critics of contemporary social democracy argue that
when social democracy abandoned Marxism it also
abandoned socialism and has become, in effect, a liberal
capitalist movement.
• Marxian socialists argue that because social democratic
programs retain the capitalist mode of production they also
retain the fundamental issues of capitalism, including
cyclical fluctuations, exploitation and alienation.