In a socialist economy, the means of manufacture are owned and functioned by the State. Each decision concerning production and distribution are taken by the central planning authority. Therefore the socialist economy is also termed as planned economy or command economy. The government plays a vigorous role. Social welfare is given significance; therefore equivalent opportunity is given to all. All such benefits have delivered high level of human development. A few of the most successful socialist economies are Cuba, China, Vietnam and North Korea. The following are the fundamental characteristic features of socialism.1. Social Welfare Motive:
In socialist economies, social or combined welfare will be the major motive. Unlike capitalism, profit will not be the goal of policy making. The decisions will be taken maintaining the maximum welfare of the people in mind. Therefore social well-being of people will be the reason of development.2. Limited Right to Private Property:
The right to private property is restricted. Every properties of the country will be owned by the State. That is, the ownership is communal in nature. Therefore no individual can accumulate too much property as in the situation of capitalism.3. Central Planning:
Most economic policy decisions will be acquired by a centralized planning authority. Each sector of the economy will be directed by fine designed planning. 4. No Market Forces:
In a centralized planned system of development, the market forces merely have a restricted role to play. Production, commodity & factor prices, consumption and distribution will be managed by development planning with well-being motive.
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