Undoubtedly the term was used by Owen in in the sense of an economic organisation constituted in the interest of workers.
Griffiths collects definitions of socialism supplied by British intellectuals, trade unionists and politicians of his time including Maurice Dobb, Bertrand Russell and Sidney Webb. The motion was rejected by votes to The Symposium also commemorated the formation in in the United Kingdom of the first Labour government. Many of these contributions offered sentiments rather than operational suggestions; some saw socialism as an expression of Christian teachings.
Great Britain in the s socialism, to the extent that it was defined at all, was largely interpreted as common ownership of the means of production, without any consideration of the possibility of a mixed economy or a role for markets.
The diversity of possible definitions reflects the multi-dimensional nature of the socialist project. For the purpose of simplification the essential components of socialism can be reduced to four:. If we assign a value 0 to the absence or strong attenuation of each of these four elements, and 1 to its significant presence, 16 alternative models can be generated: The simplification proposed here ignores nuances which are often important in the value to be assigned to the various constituent elements; the problem is that even the introduction of a single additional intermediate value of 0.
An excessive increase in the number of systems would follow also from the introduction of an additional constituent element with value 0 or 1, which would double the possible systems to We leave aside utopian systems that never existed: Ideal maximalist socialist system; in theory also the Chinese Cultural Non-liquidating distributions definition of socialism ; The Yugoslav model in theory, with social property, i.
Inequality among regions, sectors, enterprises. Macroeconomic control principally achieved through monetary policy including access to and cost of credit.
The Chinese Cultural Revolution in practice: Low commitment to equality: Such a system, successfully transplanted in Central Eastern Europe and other countries of the Non-liquidating distributions definition of socialism after the last War, included YugoslaviaChina and Albania apart from a filo-Chinese interlude in Today such a system survives only in Belarus, Uzbekistan, Turkmenistan and Cuba even in North Korea the greater part of the population is reported to be living on incomes produced in the private sector.
Public ownership is still substantial in spite of the disappearance of Town and Village Enterprises and the apparent dominance of the private sector, except for the dominant state ownership of the banking sector to the point that it is often classed as a form of state capitalism Coase and Wang; Naughton and Tsai There are no forms of participation and economic let alone political democracy.
The remaining eight economic systems generated by the proposed taxonomy are listed below for the sake of completeness:. Scandinavian type social democracy: A weaker form of social democracy in several European countries, with widespread de-regulation and blander forms of state intervention than those envisaged in the previous ideal The Nazi-Fascist model of the economy. Dominating private ownership and enterprise, populism understood as non-sustainable or outright impossible promisesauthoritarianism, widespread and deep state intervention in the economy both at the macroeconomic and the enterprise level.
The Scandinavian model of social democracy from the end of the s: Neo-corporatism of Austrian type Co-determination Mitbestimmung typical of post-War Germanywith a minority representation of employees in the Board of Directors of their enterprises, in special sectors; the social market economy understood as a guarantee of competition and social peace. Pay is linked to enterprise results also in Japanoften graded depending on seniority, with a flexibility in the course of the business cycle that is associated with greater employment stability.
The Non-liquidating distributions definition of socialism system pure and simple including many of its variants such as: In this essay I will deal in the first instance with the Soviet-type model, its rise, evolution and collapse, as well as the general problems of post-socialist transitions.
I will then consider the social democratic model of socialism, exemplified by the European Social Model and other capitalist countries pursuing socialist values in a market economy without dominant public ownership and enterprise. Towards the end of the s the social democratic model was perverted by leaders adopting hyperliberal, austerian and globalist capitalism, leading to crisis, unemployment and mounting inequality.
In the last few years this deformation of traditional social democracy has met with repeated, resounding electoral defeats, in favour of parties promptly accused of populism but actually expressing popular discontent. A planned sequel to this long essay, already under preparation, will deal with the future of socialism. The rise of socialism is rooted in the drawbacks of capitalism.
Therefore, the nature, advantages and drawbacks of capitalism must be considered in the next sections before investigating the rise and fall of socialism. Capitalism is one of the greatest social inventions of mankind. The combination of private property, free enterprise, market coordination of production and exchange, money, and wage labour was enhanced by the creation of joint-stock companies, fractional reserve banking, the state provision of law and order and public infrastructures, the opening of trade and investment relations between states and the development of financial markets.
The standard wage contract 1 can be terminated at short notice; 2 fixes a money wage per unit of time, with effort guaranteed by penalty of termination and of competition by a large labour reserve army, while capital takes all the residual surplus; 3 gives the capitalist complete discretion to organise production, deciding what and how to produce and sell.
The capitalist system promoted urbanisation, industrialisation, technical progress, economic growth and prosperity on an unprecedented scale: At the same time Marx viewed capitalism as a form of systematic labour exploitation. Primitive societies were not exploitative because they exchanged goods roughly embodying Non-liquidating distributions definition of socialism same amount of labour.
Feudalism was openly exploitative, for the amount of work performed by labourers for themselves and for their feudal masters was clearly stipulated and visible; whereas capitalism does not look exploitative at all, since all labour is paid for, but workers perform more work than is embodied in their Non-liquidating distributions definition of socialism of consumption and a surplus of unpaid labour is appropriated by capitalists.
Marx neglects altogether entrepreneurship, uncertainty and risk and their rewards: The replacement and growth of fixed capital would be necessary in any mode of production including socialism, Pareto Inequality of wealth and incomes was recognised as a defining feature of capitalism. Its redeeming feature was the financing of investment and growth: Non-liquidating distributions definition of socialism modelled intersectoral flows and equilibrium conditions for a stationary and a growing economy in his schemes of simple and enlarged reproduction with two vertically integrated sectors producing consumption and investment goods respectively.
However, he exaggerated the instability of a capitalist system by assuming that profits necessarily would have to be reinvested in the same sector in which they originated, while in any capitalist economy re-investment is never subject to such an arbitrary restriction Lange amplified unreasonably this presumed instability of the system maintaining this undue sectoral restriction in a multi-sector model.
Marx regarded capitalism as a totally chaotic and anarchic system, naturally generating unemployed labour and under-utilisation of other resources, as well as costly fluctuations and crises. However, he neglected automatic processes of economic adjustment, operating imperfectly, often either too fast or too slowly, but typical of the operation of markets in a capitalist system. These automatic processes are: In the longer term, when productive capacity can vary, there is a gradual adjustment of the actual capital stock to the level desired by enterprises in consideration of the demand level they experience — an upwards adjustment via investment in new capital or downwards through the non-replacement of excess capital.
These adjustment processes are rooted in the maximisation of profit on the part of enterprises operating in a system of markets, whose owners appropriate profit to their own advantage.
Goodwina and likens the adjustment mechanisms operated by markets to homeostatic mechanisms, such as for instance a thermostat, that records the actual temperature, compares it to a pre-fixed desired temperature and automatically activates heating or cooling systems in order to reduce the difference between actual and desired temperatures see also Leijonhuvfud This kind of logic is less cogent and much more controversial in the case of financial markets.
Financial intermediation creates value by modifying the size, time horizon and riskiness of assets demand and supply, but their continuous operation is associated to phenomena of Non-liquidating distributions definition of socialism euphoria and panic. Financial markets contribute to economic growth at the cost of a greater vulnerability and potential instability. Keynes believed that financial investment should be indissoluble like marriage or better, we should say that investment divorce should be equally costly and traumatic.
Derivative products, whose value depends "Non-liquidating distributions definition of socialism" the value of underlying assets, which they amplify and multiply, can contribute to the increase of total risk instead of its distribution among a large number of agents. This is why Buiter proposed to reserve derivatives transactions to agents who justify them on the basis of an underlying insurable interest.
The alternative to markets seen as automatic thermostats is the manual regulation of temperature or of equivalent processes; manual control — in economic terms — corresponds to central planning.
The desirability of self-regulating market mechanisms with respect to central planning depends on the speed of reaction of the system, on its tendency to reduce or to amplify the possible divergence between objectives and reality, from the stability or otherwise of such processes. There can be circumstances in which manual control planning is preferable to the automatic control markets.
My favourite example, which I used to inflict on my students, is taken from Star Wars: But he is justified by exceptional circumstances: The automatic adjustment processes discussed here, built into a market system, in spite of their imperfections have made the capitalist system more flexible, at the same time exposing it to the risk of possible episodes of much greater unemployment, Non-liquidating distributions definition of socialism and stagnation than would have been the case otherwise.
In the popular tradition as well as in lower grade theoretical writings we find a mythical vision of capitalism as a system of guaranteed efficiency.
In such an ideal world everybody maximises their own utility subject to budget constraints, equalising substitution rates in consumption goods to their relative prices; each enterprise maximises profits choosing the output level at which marginal cost equals price and equalising the substitution rates between different inputs to their relative prices.
If we rule out some additional difficulties to be discussed later in this section, there derives a general economic equilibrium which enjoys the properties of Paretian efficiency: Unfortunately this kind of economic system is a utopia, in the literal sense of a system that does not exist and could not possibly exist.
First of all markets as we know them are incomplete, with respect to those that would be necessary to validate this vision. Missing are intertemporal markets for future goods, except for a small number of homogeneous primary products and domestic and foreign currencies, and mostly for relatively short time horizons.
Third, in order to guarantee the expected efficiency properties, if all of these markets existed they should register transactions for all future periods from now to eternity and for all the possible states of the world, and then close without ever reopening again, leaving the contracted transactions to be implemented without fail from now to Kingdom come.
In the real world as we know it markets open, close and reopen continuously, indeed in the global economy they rarely close, except on the occasion of universal festivities. Expectations rule, not prices. Even if, absurdly, these markets existed and opened and closed once and for all as soon as transactions were completed, nobody could guarantee the execution of contracts, which would
Non-liquidating distributions definition of socialism drastically the volume of economic activity.
And in any case these markets could never involve labour services, without submitting labourers to slavery or to feudal conditions of irrevocable subjection to a master or an enterprise, which in turn would be compelled to employ them. In the Keynesian world in which we live savers do not necessarily need to convert their savings into current demand for future goods, and this is the reason why an excess of savings over investment cause unemployment rather than the desired accumulation of wealth.
Neoclassical economic theory has sought to overcome these difficulties primarily by introducing ad hoc hypotheses that substantially neglect their existence rather than resolving them:. These hypotheses were strongly criticised by Cambridge England economists in the controversy on Capital Theory of the s, see Cohen and Harcourt.
Although discredited for instance, disowned even by Muth who had introduced them rational expectations are instrumental to the thesis that government policy is always ineffective because it is correctly anticipated by the public.
Another by-product of this theory is the principle of Central Bank independence from the government: Soviet planners sometimes maintained that their central planning was always necessarily optimal, for if they had known how to do it better they would have done it.
Certainly it should be easier to recognise opportunities for a better allocation of resources on the part of multiple economic subjects engaged in repeated bilateral transactions in a market economy, thanks to the division of knowledge shared out by economic subjects Hayek than on the part of a single central planning agency. But plan construction could be decentralised, as envisaged by Lange andwhich is a rebuttal of Hayek on the alleged impossibility of economic calculus under socialism or by the planning procedures modelled by Ward With these decentralised procedures, mimicking markets by trial and error, both Efficient Markets and Optimal Planning would be equally plausible or rather equally implausible.
Still, from the viewpoint of general economic equilibrium, the efficiency of markets requires various additional strict conditions: We know with absolute certainty that none of these conditions is satisfied in any corner of the world in which we live. Even if all conditions for market efficiency were Non-liquidating distributions definition of socialism, there is no reason whatever to believe that markets are actually fair from the viewpoint of income distribution.
In fact such distribution depends from the initial distribution of productive factors i. Therefore there is no reason whatever why the resulting distribution, depending on cumulative random factors, should be regarded as fair, whether by the majority of economic subjects or by a democratically elected government through which a society expresses its collective values, or in the judgement of representative international organisations for instance from the viewpoint of the Sustainable Development Goals for poverty reduction and other distributive objectives adopted by United Nations for On the contrary, markets may be regarded as doubly unfair, because income distribution depends upon an unequal and arbitrary distribution of Non-liquidating distributions definition of socialism which is not democratic one dollar one vote, as it were, instead of one head one vote and because this unequal distribution of income is translated into further unequal increments of accumulated wealth.
Finally, precisely from "Non-liquidating distributions definition of socialism" viewpoint of general economic equilibrium, wages should be considered as equivalent to the value of time devoted to work instead of leisure, and therefore strictly speaking should be excluded altogether from national income accounting at least for the purpose of inequality measurement, instead of being treated like the revenue of those rentiers who enjoy as leisure the entire time at their disposal without being forced transform it into goods or salary for their subsistence.
The high and growing inequality of the capitalist system is well documented by Popov In the twentieth century the tendency towards increasing inequality in income and wealth distribution was temporarily interrupted in the period Definition of socialism Logo Fiedosiejev's table Szymanski's table Quotes education not supported by forcing people to acquire experiences in achieving goals and competing is not sufficient.
Liquidation of capitalists. The emergence of a minute positivity, merging programmes and changing distribution systems. Griffiths () collects definitions of socialism supplied by British . Therefore there is no reason whatever why the resulting distribution.