Socialism is an economic system in which all the means of production and distribution are wholly owned and controlled by the state. The government takes all the crucial decisions such as what goods and services are to be produced, how they are to be produced, in what quantities they are to be produced and at what prices they are to be sold. The government of the erstwhile Soviet Union (now Russia) is a shining example of a socialist economy, but the state ownership of property in the Soviet Union was combined with effective planning by the government.
Socialism was criticised sharply by several economists as they could not understand how the government could function in an efficient manner if they monopolised every service, including the basic services. The bureaucracy was not driven by profit maximisation, which was the goal of the private entrepreneurs in capitalist societies. Central planning failed as most of the objectives of these socialist governments could not be met, and this was the reason pure socialism also gradually began to fail and mixed economies became the order of the day.
Socialism was criticised sharply by several economists as they could not understand how the government could function in an efficient manner if they monopolised every service, including the basic services. The bureaucracy was not driven by profit maximisation, which was the goal of the private entrepreneurs in capitalist societies. Central planning failed as most of the objectives of these socialist governments could not be met, and this was the reason pure socialism also gradually began to fail and mixed economies became the order of the day.
