2008/9 Schools Wikipedia Selection. Related subjects: Systems of government


Socialism refers to a broad array of ideologies and political movements with the goal of a socio-economic system in which property and the distribution of wealth are subject to control by the community. This control may be either direct—exercised through popular collectives such as workers' councils—or indirect—exercised on behalf of the people by the state. As an economic system, socialism is often characterized by state, worker, or community ownership of the means of production, goals which have been attributed to, and claimed by, a number of political parties and governments throughout history.

The modern socialist movement largely originated in the late-19th century working class movement. In this period, the term socialism was first used in connection with European social critics who criticized capitalism and private property. For Karl Marx, who helped establish and define the modern socialist movement, socialism would be the socioeconomic system that arises after the proletarian revolution, in which the means of production are owned collectively. This society would then progress into communism.

Since the 19th century, socialists have not agreed on a common doctrine or program. Various adherents of socialist movements are split into differing and sometimes opposing branches, particularly between reformists and revolutionaries. Some socialists have championed the complete nationalization of the means of production, while social democrats have proposed selective nationalization of key industries within the framework of mixed economies. Some Marxists, including those inspired by the Soviet model of economic development, have advocated the creation of centrally planned economies directed by a state that owns all the means of production. Others, including Communists in Yugoslavia and Hungary in the 1970s and 1980s, Chinese Communists since the reform era, and some Western economists, have proposed various forms of market socialism, attempting to reconcile the presumed advantages of cooperative or state ownership of the means of production with letting market forces, rather than central planners, guide production and exchange. Anarcho-syndicalists, Luxemburgists (such as those in the Socialist Party USA) and some elements of the United States New Left favour decentralized collective ownership in the form of cooperatives or workers' councils.

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Certain elements of a socialist thought long predate the socialist ideology that emerged in the first half of the 19th century. Plato's Republic and Thomas More's Utopia have been cited as including socialist ideas. The fifth century Mazdak movement in what is now Iran has been described as "communistic" for challenging the enormous privileges of the noble classes and the clergy, criticizing the institution of private property and for striving for an egalitarian society. William Morris argued that John Ball, one of the leaders of the 1381 Peasants' Revolt in England, was the first socialist. John Ball is credited with saying: "When Adam delved and Eve span, Who was then the gentleman?" During the English Civil War in the mid 17th century, movements identified with the socialist tradition include the Levellers and the Diggers; the latter believing that land should be held in common.

During the 18th-century Enlightenment, criticism of inequality appeared in the work of political theorists such as Jean Jacques Rousseau in France, whose Social Contract began, "Man is born free, and he is everywhere in chains." Following the French Revolution of 1789, François Noël Babeuf espoused the goals of common ownership of land and total economic and political equality among citizens...

Origins of socialism

The appearance of the term "socialism" is variously attributed to Pierre Leroux in 1834, or to Marie Roch Louis Reybaud in France, or else in England to Robert Owen, who is considered the father of the cooperative movement.

The first modern socialists were early 19th century Western European social critics. In this period, socialism emerged from a diverse array of doctrines and social experiments associated primarily with British and French thinkers—especially Robert Owen, Charles Fourier, Pierre-Joseph Proudhon, Louis Blanc, and Saint-Simon. These social critics criticised the excesses of poverty and inequality of the Industrial Revolution, and advocated reforms such as the egalitarian distribution of wealth and the transformation of society into small communities in which private property was to be abolished. Outlining principles for the reorganization of society along collectivist lines, Saint-Simon and Owen sought to build socialism on the foundations of planned, utopian communities.

According to some accounts, the use of the words "socialism" or "communism" was related to the perceived attitude toward religion in a given culture. In Europe, "communism" was considered to be the more atheistic of the two. In England, however, that sounded too close to communion with Catholic overtones; hence atheists preferred to call themselves socialists.

Claude Henri de Rouvroy, Comte de Saint-Simon, founder of French Socialism
Claude Henri de Rouvroy, Comte de Saint-Simon, founder of French Socialism

By 1847, according to Frederick Engels, "Socialism" was "respectable" on the continent of Europe, while "Communism" was the opposite; the Owenites in England and the Fourierists in France were considered Socialists, while working class movements which "proclaimed the necessity of total social change" termed themselves "Communists". This latter was "powerful enough" to produce the communism of Étienne Cabet in France and Wilhelm Weitling in Germany.

The International Workingmen's Association - the First International

In 1864, the International Workingmen's Association (IWA) or First International, was founded in London. Victor Le Lubez, a French radical republican living in London, invited Marx to come, "as a representative of German workers", according to Saul Padover. The IWA held a preliminary conference in 1865 and its first congress at Geneva in 1866. Marx was appointed a member of the committee and, according to Padover, Marx and Johann Georg Eccarius, a tailor living in London, were to become, "the two mainstays of the International from its inception to its end". The First International became the first major international forum for the promulgation of socialist ideas.

The Social Democratic Workers' Party of Germany was founded in 1869 under the influence of Marx and Engels. In 1875, it merged with the General German Workers' Association of Ferdinand Lassalle to become what is known today as the German Social Democratic Party (SPD). Socialism became increasingly associated with newly formed trade unions. In Germany, the SPD built trade unions and in Austria, France and other European countries, socialist parties and anarchists played a prominent role in forming and building up trade unions, especially from the 1870s onwards. This stood in contrast to the British experience, where moderate New Model Unions dominated the union movement from the mid-nineteenth century and where trade unionism was stronger than the political labour movement until the formation and growth of the Labour Party in the early years of the twentieth century.

Socialist groups supported diverse views of socialism, from the gradualism of many trade unionists to the radical, revolutionary theory of Marx and Engels. Anarchists and proponents of other alternative visions of socialism, who emphasized the potential of small-scale communities and agrarianism, coexisted with the more influential currents of Marxism and social democracy. The anarchists, led by the Russian Mikhail Bakunin, believed that capitalism and the state were inseparable and that one could not be abolished without the other.

The Second International

As the ideas of Marx and Engels took on flesh, particularly in central Europe, socialists sought to unite in an international organisation. In 1889, on the centennial of the French Revolution of 1789, the Second International was founded, with 384 delegates from 20 countries representing about 300 labour and socialist organizations. It was termed the "Socialist International" and Engels was elected honorary president at the third congress in 1893.

Just before his death in 1895, Engels argued that there was now a "single generally recognised, crystal clear theory of Marx" and a "single great international army of socialists". Despite its illegality due to the Anti-Socialist Laws of 1878, the Social Democratic Party of Germany's use of the limited universal male suffrage were "potent" new methods of struggle which demonstrated their growing strength and forced the dropping of the Anti-Socialist legislation in 1890, Engels argued. In 1893, the German SPD obtained 1,787,000 votes, a quarter of votes cast. However before the leadership of the SPD published Engels' 1895 Introduction to Marx's Class Struggles in France 1848-1850, they removed certain phrases they felt were too revolutionary.

Marx believed that it was possible to have a peaceful socialist transformation in England, although the British ruling class would then revolt against such a victory. America and Holland might also have a peaceful transformation, but not in France, where Marx believed there had been "perfected... an enormous bureaucratic and military organisation, with its ingenious state machinery" which must be forcibly overthrown. However, eight years after Marx's death, Engels argued that it was possible to achieve a peaceful socialist revolution in France, too.

The First World War

When the First World War began in 1914, many European socialist leaders supported their respective governments' war aims. The social democratic parties in the UK, France, Belgium and Germany supported their respective state's wartime military and economic planning, discarding their commitment to internationalism and solidarity.

Lenin, however, denounced the war as an imperialist conflict, and urged workers worldwide to use it as an occasion for proletarian revolution. The Second International dissolved during the war, while Lenin, Trotsky, Karl Liebknecht and Rosa Luxemburg, together with a small number of other Marxists opposed to the war, came together in the Zimmerwald Conference in September 1915.

The Revolutions of 1917-23

By 1917, the atmosphere of enthusiastic patriotism which had greeted the start of the First World War had evaporated and was replaced by an upsurge of radicalism in most of Europe and as far afield as the United States (see Socialism in the United States) and Australia.

In February 1917, revolution broke out in Russia and the workers, soldiers and peasants set up workers', soldiers' and peasants' councils (in Russian, soviets), while power was placed into the hands of a Provisional government prior to the convocation of a Constituent Assembly. Lenin arrived in Russia in April 1917 and called for "All power to the Soviets". The Bolsheviks won a majority in the Soviets in October 1917 and at the same time the October Revolution was led by Lenin and Trotsky. At the Petrograd Soviet on the 25 October 1917, Lenin declared, "Long live the world socialist revolution!"

The elections to the Constituent Assembly were held in November 1917 and were won by the non-Marxist, peasant-based Socialist-Revolutionary (SR) party with almost twice as many votes as the Bolsheviks. The Constituent Assembly was convened for 13 hours between 4 p.m. and 4:40 a.m., January 5-6, 1918. The SR leader Victor Chernov was elected President of the fledgling republic. The following day the Bolsheviks dissolved the assembly.

In this period, few Communists — least of all Lenin and Trotsky — doubted that the success of socialism in Soviet Russia depended on successful socialist revolutions carried out by the working classes of the most developed capitalist countries. For this reason, in 1919, Lenin and Trotsky drew together the Communist Parties from around the world into a new 'International', the Communist International (also termed the Third International or Comintern).

The new Soviet government immediately nationalised the banks and major industry, and repudiated the former Romanov regime's national debts. It implemented a system of government through the elected workers' councils or soviets. It sued for peace and withdrew from the First World War.

Arguably for the first time, socialism was not just a vision of a future society, but a description of an existing one, at least in embryo. On 26 October 1917, the day after seizing power, Lenin drew up a Draft Regulations on Workers' Control, granting workers' control in enterprises with not less than five workers and office employees, who were to be granted access to all books, documents and stocks, and whose decisions were to be "binding upon the owners of the enterprises".

The Russian revolution of October 1917 gave rise to the formation of Communist Parties around the world, and the revolutions of 1917-23 which followed.

The German Revolution of 1918 overthrew the old absolutism and, as in Russia, Workers' and Soldiers' Councils almost entirely made up of SPD and Independent Social Democrats (USPD) members were set up. The Weimar republic was established and placed the SPD in power, under the leadership of Friedrich Ebert. The Workers' and Soldiers' Councils were put down by the army and the Freikorps. In 1919 the Spartacist uprising challenged the power of the SPD government, but it was put down in blood and the German Communist leaders Karl Liebknecht and Rosa Luxemburg were discovered and brutally murdered. A Communist regime under Kurt Eisner in Bavaria in 1919 was also put down in blood.

A Communist regime briefly held power under Béla Kun in Hungary. There were revolutionary movements in Vienna, the industrial centres of northern Italy, and revolutionary movements in the Ruhr area in Germany in 1920 and in Saxony in 1923.

However, these revolutionary movements failed to spread the socialist revolution into the advanced capitalist countries of Europe. In Soviet Russia things were desperate. In August 1918, Lenin was shot in the head and wounded by Fanya Kaplan. Under siege from a trade boycott and invasion by Germany, UK, USA, France and other forces, facing civil war and starvation, the Soviet regime implemented War Communism in June, 1918. All private enterprise was made illegal, strikers could be shot, "non-working classes" were forced to work and the Soviet regime could requisition grain from the peasants for the workers in the cities.

By 1920, the Red Army, led by Trotsky, had largely defeated the White Armies. In 1921, War Communism was ended, and under the New Economic Policy (NEP), private ownership was restored to small and medium enterprises, and especially to the peasants. The peasants had resented and hindered the requisitions of grain so that the situation in the cities remained desperate or was getting worse. Lenin declared that the "commanding heights" of industry would still be under state control, but that the NEP was a capitalist measure in a country that was still largely unripe for socialism. Businessmen and women, called 'NEPmen', began to flourish, and the rich peasant (or ' Kulak', meaning 'fist') gained more power.

Lenin, now half paralysed from several strokes, castigated the powers the state had assumed in the Soviet Union by 1923. It had reverted to "a bourgeois czarist machine... barely varnished with socialism". After Lenin's death in January 1924, the Communist Party of the Soviet Union, falling steadily under the control of Stalin, rejected the theory that socialism could not be built in the Soviet Union on its own. Stalin declared a policy of " socialism in one country", namely the Soviet Union. Despite demands by the increasingly marginalised Left Opposition for the restoration of soviet democracy, the Soviet Union continued to develop a bureaucratic and authoritarian model of social development, which was condemned by moderate socialists, Trotskyists and others for undermining the initial socialist ideals of the Russian Revolution.

The inter-war era and World War II

The Russian Revolution of October 1917 brought about the definitive ideological division between Communists as denoted with a capital "C" on the one hand and other communist and socialist trends such as anarcho-communists and social democrats, on the other. The Left Opposition in the Soviet Union gave rise to Trotskyism which was to remain isolated and insignificant for another fifty years, except in Sri Lanka where Trotskyism gained the majority and the pro-Moscow wing was expelled from the Communist Party.

In 1922, the fourth congress of the Communist International took up the policy of the United Front, urging Communists to work with rank and file Social Democrats while remaining critical of their leaders, who they criticised for "betraying" the working class by supporting the war efforts of their respective capitalist classes. For their part, the social democrats pointed to the dislocation caused by revolution, and later, the growing authoritarianism of the Communist Parties. When the Communist Party of Great Britain applied to affiliate to the Labour Party in 1920 it was turned down.

Socialism after World War II

In 1945, the world’s three great powers met at the Yalta Conference to divide the world between them. UK Prime Minister Winston Churchill joined USA President Franklin D. Roosevelt and Joseph Stalin, General Secretary of the Communist Party of the Soviet Union's Central Committee. With the relative decline of Britain compared to the two superpowers, the USA and the Soviet Union, however, many viewed the world as "bi-polar" — a world with two irreconcilable and antagonistic political and economic systems. Many termed the Soviet Union "socialist", not least the Soviet Union itself, but also commonly in the USA, China, Eastern Europe, and many parts of the world where Communist Parties had gained a mass base. In addition, scholarly critics of the Soviet Union, such as Friedrich Hayek, the Austrian-British economist and political philosopher, were commonly cited as critics of socialism.

This view was not universally shared, particularly in Europe, and especially in Britain, where the Communist Party was very weak. In 1951, British Health Minister Aneurin Bevan expressed the view that, "It is probably true that Western Europe would have gone socialist after the war if Soviet behaviour had not given it too grim a visage. Soviet Communism and Socialism are not yet sufficiently distinguished in many minds."

In 1949, the Chinese Revolution established a Communist state in China. Criticising the invasion and trade embargo of the young Soviet state, Bevan wrote "At the moment it looks as though the United States is going to repeat the same folly in China... You cannot starve a national revolution into submission. You can starve it into a repressive dictatorship; you can starve it to the point where the hellish logic of the police state takes charge."

In 1951, the Socialist International was refounded by the European social democratic parties. It declared: "Communism has split the International Labour Movement and has set back the realisation of Socialism in many countries for decades... Communism falsely claims a share in the Socialist tradition. In fact it has distorted that tradition beyond recognition. It has built up a rigid theology which is incompatible with the critical spirit of Marxism."

In the postwar years, socialism became increasingly influential throughout the so-called Third World. Countries in Africa, Asia, and Latin America frequently adopted socialist economic programs. In many instances, these nations nationalized industries held by foreign owners. The Soviet Union had become a superpower through its adoption of a planned economy, albeit at enormous human cost. This achievement seemed hugely impressive from the outside, and convinced many nationalists in the former colonies, not necessarily communists or even socialists, of the virtues of state planning and state-guided models of social development. This was later to have important consequences in countries like China, India and Egypt, which tried to import some aspects of the Soviet model.

The last quarter of the twentieth century marked a period of major crisis for Communists in the Soviet Union and the Eastern bloc, where the growing shortages of housing and consumer goods, combined with the lack of individual rights to assembly and speech, began to disillusion more and more Communist party members. With the rapid collapse of Communist party rule in the Soviet Union and Eastern Europe between 1989 and 1991, the Soviet version of socialism has effectively disappeared as a worldwide political force.

Social Democracy in power

Clement Attlee, UK Prime Minister in the Labour Party government of 1945
Clement Attlee, UK Prime Minister in the Labour Party government of 1945

In 1945, the British Labour Party led by Clement Attlee was swept to power on a radical programme. Socialist (and in some places Communist) parties also dominated postwar governments in France, Italy, Czechoslovakia, Belgium, Norway and other European countries. The Social Democratic Party had been in power in Sweden since 1932, and Labour parties also held power in Australia and New Zealand. In Germany, on the other hand, the Social Democrats were defeated in Germany's first democratic elections in 1949. The unity of the democrats and the Communist parties which had been established in the wartime resistance movements continued in the immediate postwar years. The democratic socialist parties of Eastern Europe, however, were destroyed when Stalin imposed "Communist" regimes in these countries.

Social democracy at first took the view that they had begun a "serious assault" on the five "Giant Evils" afflicting the working class, identified for instance by the British social reformer William Beveridge: "Want, Disease, Ignorance, Squalor, and Idleness". However on the left wing of the Labour Party, Aneurin Bevan, who had been responsible for introducing the Labour Party’s National Health Service in 1945, criticised the government for not going further. Bevan demanded that the "main streams of economic activity are brought under public direction" with economic planning, and criticised the Labour Party's implementation of nationalisation for not empowering the workers in the nationalised industries with democratic control over their operation. In his In Place of Fear, which Crosland called the "the most widely read socialist book" of the period, Bevan begins: “A young miner in a South Wales colliery, my concern was with one practical question: Where does the power lie in this particular state of Great Britain, and how can it be attained by the workers?”

The Frankfurt Declaration of the refounded Socialist International stated:

1. From the nineteenth century onwards, capitalism has developed immense productive forces. It has done so at the cost of excluding the great majority of citizens from influence over production. It put the rights of ownership before the rights of man. It created a new class of wage-earners without property or social rights. It sharpened the struggle between the classes.

Although the world contains resources which could be made to provide a decent life for everyone, capitalism has been incapable of satisfying the elementary needs of the world’s population. It proved unable to function without devastating crises and mass unemployment. It produced social insecurity and glaring contrasts between rich and poor. It resorted to imperialist expansion and colonial exploitation, thus making conflicts between nations and races more bitter. In some countries powerful capitalist groups helped the barbarism of the past to raise its head again in the form of Fascism and Nazism.

— The Frankfurt Declaration 1951

The social democratic governments in the post war period introduced measures of social reform and wealth redistribution through state welfare and taxation policy. For instance the newly elected UK Labour government carried out nationalisations of major utilities such as mines, gas, coal, electricity, rail, iron and steel, and the Bank of England . France claimed to be the most state controlled capitalist country in the world, carrying through many nationalisations .

In the UK the National Health Service was established bringing free health care to all for the first time. Social housing for working class families was provided in council housing estates and university education was made available for working class people through a grant system. Free school milk was introduced by Ellen Wilkinson, Minister for Education, who told the 1946 Labour Party conference: "Free milk will be provided in Hoxton and Shoreditch, in Eton and Harrow. What more social equality can you have than that?" Attlee's biographer argues that this "contributed enormously to the defeat of childhood illnesses resulting from bad diet. Generations of poor children grew up stronger and healthier because of this one small and inexpensive act of generosity by the Attlee government".

In 1956, Anthony Crosland estimated that 25% of industry was nationalised in the UK, and that public authorities accounted for a similar percentage of total employment, including the nationalised industries. However the parliamentary leadership of the social democracies in general had no intention of ending capitalism, and their national outlook and their dedication to the maintenance of the post-war 'order' prevented the social democracies from moving to nationalize the "commanding heights" of industry. They were termed 'socialist' by all in 1945, but in the UK, for instance, where Social Democracy had a large majority in Parliament, "The government had not the smallest intention of bringing in the 'common ownership of the means of production, distribution and exchange'" as written in Clause 4 of the Labour Party constitution. In Germany, the Social Democratic Party adopted the Godesberg Program in 1959, which rejected class struggle and Marxism.

In 1980, with the rise of Ronald Reagan in the U.S. and Margaret Thatcher in Britain, the Western welfare state found itself under increasing political pressure. Margaret Thatcher had abolished free school milk for children when Education Secretary in the 1970-74 Conservative government. Now monetarists and neoliberals attacked social welfare systems as an impediment to individual entrepreneurship. Western European socialists were under intense pressure to refashion their parties in the late 1980s and early 1990s and to reconcile their traditional economic programs with the integration of a European economic community based on liberalizing markets. The Labour Party in the United Kingdom went through a period of intense struggle, epitomised by Labour leader Neil Kinnock’s passionate and highly publicised 1985 Labour Party conference attack on the Militant Tendency and his repudiation of the demands of the miners who had been defeated after a year-long all-out strike against pit closures. By the 1990s, released from the pressure of the left, the Labour Party, especially under the premiership of Tony Blair, put together a set of policies based on encouraging the market economy while promoting the involvement of private industry in delivering public services.

In 1989, the 18th Congress of the Socialist International at Stockholm adopted a Declaration of Principles which declares that "Democratic socialism is an international movement for freedom, social justice and solidarity. Its goal is to achieve a peaceful world where these basic values can be enhanced and where each individual can live a meaningful life with the full development of his or her personality and talents and with the guarantee of human and civil rights in a democratic framework of society." The objectives of the Party of European Socialists, the socialist bloc in the European Parliament, are "to pursue international aims in respect of the principles on which the European Union is based, namely principles of freedom, equality, solidarity, democracy, respect of Human Rights and Fundamental Freedoms, and respect for the Rule of Law." The companion to contemporary political philosophy states: "The rallying cry of the French Revolution - equality, liberty and fraternity - now constitute essential socialist values."

In 1995, the UK Labour Party revised its aims: "The Labour Party is a democratic socialist party. It believes that by the strength of our common endeavour we achieve more than we achieve alone, so as to create for each of us the means to realise our true potential and for all of us a community in which power, wealth and opportunity are in the hands of the many, not the few." Cabinet minister Herbert Morrison famously argued that, "Socialism is what the Labour government does", and Anthony Crosland argued that capitalism had been ended, stating: "To the question 'Is this still capitalism?' I would answer 'No'."

Socialism in the 21st century

In some Latin American countries, socialism has re-emerged in recent years, with an anti-imperialist stance, the rejection of the policies of neo-liberalism and the nationalisation or part nationalisation of oil production, land and other assets. Venezuelan President Hugo Chávez and Bolivian President Evo Morales, for instance, refer to their political programs as socialist. Chávez has coined the term "21st century socialism" (sometimes translated more literally as " Socialism of the 21st century"). After winning re-election in December 2006, President Chávez said: "Now more than ever, I am obliged to move Venezuela's path towards socialism."

Socialists have been prominent in their opposition to war, and in organizing anti-war protests. Protests against the Iraq War have been unprecedented in their scale, often taking place simultaneously around the world. According to the French academic Dominique Reynié, between January 3 and April 12, 2003, 36 million people across the globe took part in almost 3,000 protests against the Iraq war. On February 15, 2003, millions of people protested in approximately 800 cities around the world. Listed by the 2004 Guinness Book of Records as the largest protest in human history, protests occurred among others in the United Kingdom, Italy, Spain, Germany, Switzerland, Ireland, the United States, Canada, Australia, South Africa, Syria, India, Russia, South Korea, Japan, and even McMurdo Station in Antarctica. The largest demonstration this day occurred in London, where 2,000,000 protesters gathered in Hyde Park.

In the developing world, some elected socialist parties and communist parties remain prominent, particularly in India. In China, the Chinese Communist Party has led a transition from the command economy of the Mao period to an economic program they term the socialist market economy or " socialism with Chinese characteristics". Under Deng Xiaoping, the leadership of China embarked upon a program of market-based reform that was more sweeping than had been Soviet leader Mikhail Gorbachev's perestroika program of the late 1980s. Deng's program, however, maintained state ownership rights over land, state or cooperative ownership of much of the heavy industrial and manufacturing sectors and state influence in the banking and financial sectors. In South Africa the ANC abandoned its partial socialist allegiances on taking power and followed a standard neo-liberal route. But from 2005 through to 2007 the country was wracked by many thousands of protests from poor communities. One of these gave rise to a mass movement of shack dwellers, Abahlali baseMjondolo that, despite major police suppression, continues to advocate for popular people's planning and against the marketization of land and housing.

Socialism as an economic system

The term socialism is used to refer to an economic system characterized by state ownership of the means of production and distribution. In the Soviet Union, state ownership of productive property was combined with central planning. Down to the workplace level, Soviet economic planners decided what goods and services were to be produced, how they were to be produced, in what quantities, and at what prices they were to be sold (see economy of the Soviet Union). Soviet economic planning was promoted as an alternative to allowing prices and production to be determined by the market through supply and demand. Especially during the Great Depression, many socialists considered Soviet-style planning a remedy to what they saw as the inherent flaws of capitalism, such as monopolies, business cycles, unemployment, vast inequalities in the distribution of wealth, and the exploitation of workers.

In the West, neoclassical liberal economists such as Friedrich Hayek and Milton Friedman argued that socialist planned economies were doomed to failure. They asserted that central planners could never match the overall information inherent in the decision-making throughout a market economy (see economic calculation problem). Nor could enterprise managers in Soviet-style socialist economies match the motivation of private profit-driven entrepreneurs in a market economy.

Following the stagnation of the Soviet economy in the 1970s and 1980s, many socialists have begun to accept some of this critique. Polish economist Oskar Lange, for example, was an early proponent of " market socialism." He proposed a Central Planning Board that sets the prices of producer goods and controls the overall level of investment in the economy. The prices of producer goods would be determined through trial and error. The prices of consumer goods would be determined by supply and demand, with the supply coming from state-owned firms that would set their prices equal to the marginal cost, as in perfectly competitive markets. The Central Planning Board would distribute a "social dividend" to ensure reasonable income equality.

In western Europe, particularly in the period after World War II, many socialist parties in government implemented what became known as mixed economies. These governments nationalised major and economically vital industries while permitting a free market to continue in the rest. These were most often monopolistic or infrastructural industries like mail, railways, power and other utilities. In some instances a number of small, competing and often relatively poorly financed companies in the same sector were nationalised to form one government monopoly for the purpose of competent management, of economic rescue (in the UK, British Leyland, Rolls Royce), or of competing on the world market. Typically, this was achieved through compulsory purchase of the industry (i.e. with compensation). For example in the UK the nationalization of the coal mines in 1947 created a coal board charged with running the coal industry commercially so as to be able to meet the interest payable on the bonds which the former mine owners' shares had been converted into.

These nationalised industries would frequently be combined with Keynesian economics and incomes policies to try and guide the whole economy. Nevertheless, most economists, and many socialists, consider that these economies were (or are) capitalist economies, and the aspirations of those who believed the mixed economy would abolish boom and slump, mass unemployment, and industrial unrest, were disappointed with the onset of the first world wide recession of 1973-4, the oil crisis of this period, and the monetary instability which followed. Some far left socialists, as well as some workers in the nationalised industries, also criticised the nationalisations for not establishing workers' control of the nationalised industries, through elected representatives, and the amount of compensation paid to the previous owners.

Some socialists propose various decentralized, worker-managed economic systems. One such system is the "cooperative economy," a largely free market economy in which workers manage the firms and democratically determine remuneration levels and labor divisions. Productive resources would be legally owned by the cooperative and rented to the workers, who would enjoy usufruct rights. Another, more recent, variant is " participatory economics," wherein the economy is planned by decentralized councils of workers and consumers. Workers would be remunerated solely according to effort and sacrifice, so that those engaged in dangerous, uncomfortable, and strenuous work would receive the highest incomes and could thereby work less.

Socialism and social and political theory

Marxist and non-Marxist social theorists have both generally agreed that socialism, as a doctrine, developed as a reaction to the rise of modern industrial capitalism, but differ sharply on the exact nature of the relationship. Émile Durkheim saw socialism as rooted in the desire simply to bring the state closer to the realm of individual activity as a response to the growing anomie of capitalist society. Max Weber saw in socialism an acceleration of the process of rationalization commenced under capitalism. Weber was a critic of socialism who warned that putting the economy under the total bureaucratic control of the state would not result in liberation but an ' iron cage of future bondage.'

Socialist intellectuals continued to retain considerable influence on European philosophy in the mid-20th century. Herbert Marcuse's 1955 Eros and Civilization was an explicit attempt to merge Marxism with Freudianism. Structuralism, widely influential in mid-20th century French academic circles, emerged as a model of the social sciences that influenced the 1960s and 1970s socialist New Left.

Criticisms of socialism

Criticisms of socialism range from disagreements over the efficiency of socialist economic and political models to condemnation of socialist states. There is much focus on the economic performance and human rights records of Communist states, although some proponents of socialism reject the categorization of such states as socialist. Economic liberal Friedrich Hayek argued that the social control over distribution of wealth and private property advocated by socialists cannot be achieved without reduced prosperity for the general populace, and a loss of political and economic freedoms. Socialism has been criticized for slowly evolving into a totalitarian regime when people begin to defect from supporting it. Winston Churchill, during his 1945 election campaign, claimed that:

a socialist policy is abhorrent to the British ideas of freedom. Socialism is inseparably interwoven with totalitarianism and the object worship of the state. It will prescribe for every one where they are to work, what they are to work at, where they may go and what they may say. Socialism is an attack on the right to breathe freely. No socialist system can be established without a political police. They would have to fall back on some form of Gestapo, no doubt very humanely directed in the first instance.

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