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Socialism refers to the various theories of economic organization which advocate either public or direct worker ownership and administration of the means of production and allocation of resources. A more comprehensive definition of socialism is an economic system that has transcended commodity production and wage labor, where economic activity is carried out to maximize use-value as opposed to exchange-value, including in its definition a corresponding change in social and economic relations; such as the organization of economic institutions and resource allocation; often implying advocacy for a method of compensation based on the amount of labor expended.
Socialists generally share the view that capitalism unfairly concentrates power and wealth among a small segment of society that controls capital and derives its wealth through a system of exploitation. This in turn creates an unequal society, that fails to provide equal opportunities for everyone to maximise their potential, and does not utilise technology and resources to their maximum potential nor in the interests of the public.
Many socialists, from Henri de Saint-Simon, one of the founders of early socialism (Utopian Socialism), to Friedrich Engels and Karl Marx, advocated for the creation of a society that allows for the widespread application of modern technology to rationalise economic activity by eliminating the anarchy of capitalist production. They reasoned that this would allow for economic output (or surplus value) and power to be distributed based on the amount of work expended in production, although there is disagreement among socialists over how and to what extent this can be achieved.
Socialism is not a concrete philosophy of fixed doctrine and programme; its branches advocate a degree of social interventionism and economic rationalisation (usually in the form of economic planning), but sometimes oppose each other. A dividing feature of the socialist movement is the split between reformists and revolutionaries on how a socialist economy should be established. Some socialists advocate complete nationalisation of the means of production, distribution, and exchange; others advocate state control of capital within the framework of a market economy.
Socialists 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 Yugoslavian, Hungarian, German and Chinese communist governments in the 1970s and 1980s, have instituted various forms of market socialism, combining co-operative and state ownership models with the free market exchange and free price system (but not free prices for the means of production). Modern social democrats propose selective nationalisation of key national industries in mixed economies, while maintaining private ownership of capital and private business enterprise. (In the 19th and early 20th century the term was used to refer to those who wanted to completely replace capitalism with socialism through reform.) Modern social democrats also promote tax-funded welfare programs and regulation of markets; many, particularly in European welfare states, refer to themselves as socialists, despite holding pro-capitalist viewpoints, thus adding ambiguity to the meaning of the term "socialist". Libertarian socialism (including social anarchism and libertarian Marxism) rejects state control and ownership of the economy altogether and advocates direct collective ownership of the means of production via co-operative workers' councils and workplace democracy.
Modern socialism originated in the late 18th-century intellectual and working class political movement that criticised the effects of industrialisation and private ownership on society. The utopian socialists, including Robert Owen (1771–1858), tried to found self-sustaining communes by secession from a capitalist society. Henri de Saint Simon (1760–1825), the first individual to coin the term socialisme, was the original thinker who advocated technocracy and industrial planning. The first socialists predicted a world improved by harnessing technology and combining it with better social organisation, and many contemporary socialists share this same belief. Early socialist thinkers tended to favour an authentic meritocracy combined with rational social planning, while many modern socialists have a more egalitarian approach.
Economically, socialism denotes an economic system of either state ownership and/or worker ownership and administration of the means of production, and to varying degrees depending on the specific model, management over the distribution of goods and services. Public or worker ownership can refer to nationalization, municipalization, the establishment of cooperative enterprises or in some cases direct worker ownership. The fundamental feature of a socialist economy is that publicly-owned, state or worker-run institutions produce and deliver goods and services, at least in the commanding heights of the economy. Various differing definitions of what constitutes a socialist economy exist, ranging from socialists who state a socialist economy is one in which wage labor, private property in the means of production and monetary relations have been made obsolete, or that the market economy and private ownership of the means of production have been superseded by economic planning to maximize use-values as opposed to exchange-values; to definitions that simply advocate state or cooperative enterprises in either free-market or mixed market economies.
This form of socialism combines public ownership and management of the means of production with centralized state planning, and can refer to a broad range of economic systems from the centralized Soviet-style command economy to participatory planning via workplace democracy.
In a centrally-planned economy, decisions regarding the quantity of goods and services to be produced as well as the allocation of output (distribution of goods and services) are planned in advanced by a planning agency. This type of economic system was often combined with a single-party political system, and is thus associated with the Communist states of the 20th century.
In the economy of the Soviet Union, state ownership of the means of production was combined with central planning, in relation to which goods and services to make and provide, how they were to be produced, the quantities, and the sale prices. Soviet economic planning was an alternative to allowing the market (supply and demand) to determine prices and production. During the Great Depression, many socialists considered Soviet-style planned economies the remedy to capitalism's inherent flaws – monopoly, business cycles, unemployment, unequally distributed wealth, and the economic exploitation of workers.
In the West, neoclassical liberal economists such as Friedrich Hayek and Milton Friedman said that socialist planned economies would fail, because planners could not have the business information inherent to a market economy (cf. economic calculation problem), nor would managers in Soviet-style socialist economies match the motivation of profit. Consequent to Soviet economic stagnation in the 1970s and 1980s, socialists began to accept parts of their critique. Polish economist Oskar Lange, an early proponent of market socialism, proposed a central planning board establishing prices and controls of investment. 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.
A state-directed economy is a system where either the state or worker cooperatives own the means of production, but economic activity is directed to some degree by a government agency or planning ministry through coordinating mechanisms such as Indicative planning and dirigisme. This differs from a centralized planned economy (or a command economy) in that micro-economic decision making, such as quantity to be produced and output requirements, is left to managers and workers in state enterprises or cooperative enterprises rather than being mandated by a comprehensive economic plan from a centralized planning board. However, the state will plan long-term strategic investment and some aspect of production. It is possible for a state-directed economy to have elements of both a market and planned economy. For example, production and investment decisions may be semi-planned by the state, but distribution of output may be determined by the market mechanism.
State-directed socialism can also refer to technocratic socialism; economic systems that rely on technocratic management mechanisms in addition to public ownership of the means of production. A forerunner of this concept was Henri de Saint-Simon, who understood the state would undergo a transformation in a socialist system and change its role from one of "political administration of men, to the administration of things".
In western Europe, particularly in the period after World War II, many socialist and social democratic parties in government implemented what became known as mixed economies, some of which included a degree of state-directed economic activity. In the biography of the 1945 UK Labour Party Prime Minister Clement Attlee, Francis Beckett states: "the government... wanted what would become known as a mixed economy". Beckett also states that "Everyone called the 1945 government 'socialist'." 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.
Also in the UK, British Aerospace was a combination of major aircraft companies British Aircraft Corporation, Hawker Siddeley and others. British Shipbuilders was a combination of the major shipbuilding companies including Cammell Laird, Govan Shipbuilders, Swan Hunter, and Yarrow Shipbuilders Typically, this was achieved through compulsory purchase of the industry (i.e. with compensation). In the UK, the nationalisation 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.
Market socialism refers to various economic systems that involve either public ownership and management or worker cooperative ownership over the means of production, or a combination of both, and the market mechanism for allocating economic output, deciding what to produce and in what quantity. In state-oriented forms of market socialism where state enterprises attempt to maximize profit, the profits can fund government programs and services eliminating or greatly diminishing the need for various forms of taxation that exist in capitalist systems.
Some forms of market socialism are based on neoclassical economic theory, with the aim of attaining pareto efficiency by setting price to equal marginal cost in public enterprises. This form of socialism was promoted by Oskar Lange, Abba Lerner and Fredrick Taylor. Other forms of market socialism are based on classical economics, such as those advocated by Thomas Hodgskin, who viewed interest accumulation, rent and profit as deductions from exchange-value, so that eliminating the capitalist element from the economy would lead to a free-market and socialism. The term market socialism has also been applied to Soviet-style planned systems that try to organize themselves partially along market-lines while retaining centralized state ownership of capital (New Economic Mechanism, Goulash Communism). Market socialism is also associated with forms of Individualist anarchism and the philosophy of Libertarian socialism, which argues that genuine free-markets weaken the capitalist class and empower the working class.
The current economic system in the People's Republic in China, formally titled the socialist market economy, combines a large state sector that comprises the 'commanding heights' of the economy with a growing private sector mainly engaged in commodity production and light industry, and is responsible from anywhere between 33% (People's Daily Online 2005) to over 50% of GDP generated in 2005. Directive centralized planning based on mandatory output requirements and production quotas have been displaced by the free-market mechanism for most of the economy and directive planning in some larger state industries. Many political scientists liken this to Russia's policy of perestroika. One of the major changes between the old planned economy and the socialist market model is the corporatization of state institutions, with 150 of them reporting directly to the central government. By 2008, these state-owned corporations have became increasingly dynamic and generated a large increase in revenue for the state, with the state-sector leading the recovery of economic growth in 2009 during the wake of the financial crises. The Socialist Republic of Vietnam has adopted a similar model after the Doi Moi economic renovation, officially called the socialist-oriented market economy. This differs from the Chinese model in that the Vietnamese government retains firm control over the state sector and strategic industries, but allows for a considerable increase in private-sector activity for firms engaged in commodity production.
Although there is dispute as to whether or not these models actually constitute state capitalism, the decisive means of production remain under state-ownership. Proponents of the socialist market economic system defend their it from a Marxist perspective, stating that a planned socialist economy can only become possible after first establishing the necessary comprehensive commodity market economy and letting it fully develop until it exhausts its historical stage and gradually transforms itself into a planned economy. They distinguish themselves from market socialists who believe that economic planning is unattainable, undesirable or ineffective at distributing goods, viewing the market as the solution rather than a temporary phase in development of a socialist planned economy.
Some socialists propose various decentralised, worker-managed economic systems. A de-centralized planned economy is one where ownership of enterprises is accomplished through various forms of worker cooperatives, autogestion and planning of production and distribution is done from the bottom-up by local worker councils in a democratic manner. One such system is the cooperative economy, a largely free market economy in which workers manage the firms and democratically determine remuneration levels and labour 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 decentralised 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.
Some Marxists and anarcho-communists also propose a worker-managed economy based on workers councils, however in anarcho-communism, workers are remunerated according to their needs (which are largely self-determined in an anarcho-communist system). Recently socialists have also been working with the technocracy movement to promote such concepts as energy accounting.
Marxist and non-Marxist social theorists agree that socialism developed in reaction to modern industrial capitalism, but disagree on the nature of their relationship.
In the most influential of all socialist theories, Karl Marx and Engels believed the consciousness of those who earn a wage or salary (the "working class" in the broadest Marxist sense) would be molded by their "conditions" of "wage-slavery", leading to a tendency to seek their freedom or "emancipation" by throwing off the capitalist ownership of society. For Marx and Engels, conditions determine consciousness and ending the role of the capitalist class leads eventually to a classless society in which the state would wither away. Marx wrote: "It is not the consciousness of [people] that determines their existence, but their social existence that determines their consciousness."
The Marxist conception of socialism is that of a specific historical phase that will displace capitalism and precede communism. The major characteristics of socialism (particularly as conceived by Marx and Engels after the Paris Commune of 1871), are that the proletariat will control the means of production through a workers' state erected by the workers in their interests. Economic activity is still organised through the use of incentive systems and social classes would still exist but to a lesser and diminishing extent than under capitalism.
For orthodox Marxists, socialism is the lower stage of communism based on the principle of "from each according to his ability, to each according to his contribution" while upper stage communism is based on the principle of "from each according to his ability, to each according to his need"; the upper stage becoming possible only after the socialist stage further develops economic efficiency and the automation of production has led to a superabundance of goods and services.
Marx argued that the material productive forces (in industry and commerce) brought into existence by capitalism predicated a cooperative society since production had become a mass social, collective activity of the working class to create commodities but with private ownership (the relations of production or property relations). This conflict between collective effort in large factories and private ownership would bring about a conscious desire in the working class to establish collective ownership commensurate with the collective efforts their daily experience. "At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production or – this merely expresses the same thing in legal terms – with the property relations within the framework of which they have operated hitherto. Then begins an era of social revolution. The changes in the economic foundation lead sooner or later to the transformation of the whole immense superstructure."  A socialist society based on democratric cooperation thus arises.
Che Guevara attempted to inspire the peasants of Bolivia by his own example into a change of consciousness. He said in 1965:
Socialism cannot exist without a change in consciousness resulting in a new fraternal attitude toward humanity, both at an individual level, within the societies where socialism is being built or has been built, and on a world scale, with regard to all peoples suffering from imperialist oppression.
In the middle of the twentieth century, socialist intellectuals retained considerable influence in European philosophy. Eros and Civilisation (1955), by Herbert Marcuse, explicitly attempted to merge Marxism with Freudianism. The social science of Marxist structuralism had a significant influence on the socialist New Left in the 1960s and the 1970s.
The distinction between "utopian" and "scientific socialism" was first explicitly made by Friedrich Engels in Socialism: Utopian and Scientific, which contrasted the "utopian pictures of ideal social conditions" of social reformers with the Marxian concept of scientific socialism. Scientific socialism begins with the examination of social and economic phenomena—the empirical study of real processes in society and history.
For Marxists, the development of capitalism in western Europe provided a material basis for the possibility of bringing about socialism because, according to the Communist Manifesto, "What the bourgeoisie produces above all is its own grave diggers", namely the working class, which must become conscious of the historical objectives set it by society. In Capitalism, Socialism and Democracy, Joseph Schumpeter, an Austrian economist, presents an alternative mechanism of how socialism will come about from a Weberian perspective: the increasing bureaucratization of society that occurs under capitalism will eventually necessitate state-control in order to better coordinate economic activity. Eduard Bernstein revised this theory to suggest that society is inevitably moving toward socialism, bringing in a mechanical and teleological element to Marxism and initiating the concept of evolutionary socialism.
Utopian socialists establish a set of ideals or goals and present socialism as an alternative to capitalism, with subjectively better attributes. Examples of this form of socialism include Robert Owen's New Harmony community.
Reformists, such as classical social democrats, believe that a socialist system can be achieved by reforming capitalism. Socialism, in their view, can be reached through the existing political system by reforming private enterprise. Revolutionaries, such as Marxists, Leninists and Trotskyist, believe such methods will fail because the state ultimately acts in the interests of capitalist business interests. They believe that revolution is the only means to establish a new socio-economic system. Marxists do not necessarily define revolution as a violent insurrection, but instead as a thorough and rapid change.
Socialism from above refers to the viewpoint that reforms or revolutions for socialism will come from, or be led by, higher status members of society who desire a more rational, efficient economic system. Claude Henri de Saint-Simon believed that socialism would come from engineers, scientists and technicians who want to organize society and the economy in a rational, logical fashion. Social democracy is often advocated by intellectuals and the middle-class, as well as the working class segments of the population. Socialism from below refers to the position that socialism can only come from, and be led by, popular solidarity and political action from the lower classes, such as the working class and lower-middle class. Proponents of socialism from below — such as syndicalists, orthodox Marxists and Leninists — often liken socialism from above to elitism.
The distinction between technocratic/scientific management and democratic management refers to positions on how state institutions and the economy are to be managed. Technocratic organizational management is distinct from bureaucratic and democratic techniques, with the state apparatus being transformed as an administration of economic affairs through technical management as opposed to the administration of people through the creation and enforcement of laws. Some proponents of technocratic socialism include Claude Henri de Saint-Simon, Alexander Bogdanov, Howard Scott and H. G. Wells. They include proponents of economic planning (except those, like the Trotskyists, who tend to emphasize the need for democratic workers control), and socialists inspired by Taylorism. They show a tendency to promote scientific management, whereby technical experts manage institutions and receive their position in society based on a demonstration of their technical expertise or merit, with the aim of creating a rational, effective and stable organization. Although scientific management is based on technocratic organization, elements of democracy can be present in the system, such as having democratically decided social goals that are executed by a technocratic state.
Proponents of democratic management propose workers' self-management: a system whereby management decisions are made democratically, or a manager is elected by all the members of the institution. Groups that promote democratic management include libertarian socialists, social anarchists and syndicalists. Many Trotskyists argue that the destruction of democratic workers' control of the economy through the workers' councils in Russia by Joseph Stalin was a critical juncture in the growth of the bureaucracy, and led to the poor performance of the planned economy in Russia. They demand a democratic plan of production developed through workers' committees.
Market socialists believe that the market mechanism is either the most efficient or the only viable means of allocating resources and determining what is to be produced. Examples of market socialism include Ricardian socialism, the New Economic Policy and the socialist market economy. Socialist theories that involve the market as the main arbitrator of economic decision-making are sometimes viewed as a temporary, transitional phase between capitalism and a fully planned economy.
Proponents of economic planning argue that the market is inherently irrational and prone to unstable cyclical fluctuations, fails to prioritize production according to a rational plan that conforms to macro-social goals and promotes short-term investment and uncoordinated economic activity. They argue that through either state directed administration or economic planning, the state can allocate resources more effectively than the market.
Proponents of democratic planning reject both state-led planning and the market, instead arguing for inclusive decision-making on what should be produced, with the distribution of the output being based on direct democracy or council democracy. Leon Trotsky held the view that central planners, regardless of their intellectual capacity, operated without the input and participation of the millions of people who participate in the economy and understand/respond to local conditions and changes in the economy would be unable to effectively coordinate all economic activity.
Proponents of equality of opportunity advocate a society in which there are equal opportunities and life chances for all individuals to maximize their potentials and attain positions in society. This would be made possible by equal access to the necessities of life. This position is held by technocratic socialists, Marxists and social democrats. Equality of outcome refers to a state where everyone receives equal amounts of rewards and an equal level of power in decision-making, with the belief that all roles in society are necessary and therefore none should be rewarded more than others. This view is shared by some communal utopian socialists and anarcho-communists.
The English word socialism (1839) derives from the French socialisme (1832), the mainstream introduction of which usage is attributed, in France, to Pierre Leroux, and to Marie Roch Louis Reybaud; and in Britain to Robert Owen in 1827, father of the cooperative movement. Although socialist models and ideas espousing common ownership have existed since antiquity with the classical Greek philosophers Plato and Aristotle, the modern concept of socialism matured in response to the development of industrial capitalism. Early socialism was seen as an extension of classical liberalism by extending liberty and rights to the industrial economic aspect of life, so that these values were compatible with the then-emerging industrial society.
The first advocates of socialism favoured social levelling in order to create a meritocratic or technocratic society based upon individual talent. Count Henri de Saint-Simon is regarded as the first individual to coin the term socialism. Simon was fascinated by the enormous potential of science and technology and advocated a socialist society that would eliminate the disorderly aspects of capitalism and would be based upon equal opportunities. He advocated the creation of a society in which each person was ranked according to his or her capacities and rewarded according to his or her work. The key focus of Simon's socialism was on administrative efficiency and industrialism, and a belief that science was the key to progress.
This was accompanied by a desire to implement a rationally-organised economy based on planning and geared towards large-scale scientific and material progress, and thus embodied a desire for a more directed or planned economy. Other early socialist thinkers, such as Thomas Hodgkin and Charles Hall, based their ideas on David Ricardo's economic theories. They reasoned that the equilibrium value of commodities approximated to prices charged by the producer when those commodities were in elastic supply, and that these producer prices corresponded to the embodied labor — the cost of the labor (essentially the wages paid) that was required to produce the commodities. The Ricardian socialists viewed profit, interest and rent as deductions from this exchange-value.
West European social critics, including Robert Owen, Charles Fourier, Pierre-Joseph Proudhon, Louis Blanc, Charles Hall and Saint-Simon, were the first modern socialists who criticised the excessive poverty and inequality of the Industrial Revolution. They advocated reform, with some such as Robert Owen advocating the transformation of society to small communities without private property. Robert Owen's contribution to modern socialism was his understanding that actions and characteristics of individuals were largely determined by the social environment they were raised in and exposed to.
Linguistically, the contemporary connotation of the words socialism and communism accorded with the adherents' and opponents' cultural attitude towards religion. In Christian Europe, of the two, communism was believed the atheist way of life. In Protestant England, the word communism was too culturally and aurally close to the Roman Catholic communion rite, hence English atheists denoted themselves socialists.
Friedrich Engels argued that in 1848, at the time when the Communist Manifesto was published, "socialism was respectable on the continent, while communism was not." The Owenites in England and the Fourierists in France were considered "respectable" socialists, while working-class movements that "proclaimed the necessity of total social change" denoted themselves communists. This latter branch of socialism produced the communist work of Étienne Cabet in France and Wilhelm Weitling in Germany.
In 1864, the International Workingmen's Association (IWA) – the First International – was founded in London. Londoner Victor le Lubez, a French radical republican, invited Karl Marx to participate as a representative of German workers. In 1865, the IWA had its preliminary conference, and its first congress, at Geneva, in 1866. Karl Marx was a member of the committee; he and Johann Georg Eccarius, a London tailor, were the two mainstays of the International, from its inception to its end; the First International was the premiere international forum promulgating socialism.
In 1869, under the influence of Marx and Engels, the Social Democratic Workers' Party of Germany was founded. In 1875, the SDW Party merged with the General German Workers' Association, of Ferdinand Lassalle, metamorphosing to the contemporary German Social Democratic Party (SPD). The SPD founded and constituted trade unions in Germany in the 1870s and in Austria, France, and other countries, socialist parties and anarchists did like-wise.
Socialists supported and advocated many branches of Socialism – the gradualism of trade unions, the radical revolution of Marx and Engels who emphasised a worker's state and central democratic planning of production, and the anarchists/libertarian socialists who emphasised direct worker control and local power – all co-existing, with Marxism becoming the most influential ideology in the form of Social Democracy on the continent of Europe. The anarchists, led by the Mikhail Bakunin, believed that capitalism and the state are inseparable and neither can be abolished without abolishing the other.
In 1871, in the wake of the Franco-Prussian War, an uprising in Paris established the Paris Commune. According to Marx and Engels, for a few weeks the Paris Commune provided a glimpse of a socialist society, before it was brutally suppressed by the French government. Large-scale industry was to be "based on the association of the workers" joined into "one great union", all posts in government were elected by universal franchise, elected officials took only the average worker's wage and were subject to recall. For Engels, this was what the Dictatorship of the proletariat – the political, democratic control or governance of the working class – looked like. Marx and Engels argued that the state is "nothing but a machine for the oppression of one class by another" and a new generation of socialists, "reared in new and free social conditions, will be able to throw the entire lumber of the state on the scrap-heap".
After the Paris Commune, the differences between supporters of Marx and Engels and those of Bakunin were too great to bridge. The anarchist section of the First International was expelled from the International at the 1872 Hague Congress and they went on to form the Jura federation. The First International was disbanded in 1876.
As the ideas of Marx and Engels gained popularity, especially in central Europe, socialists founded the Second International in 1889, the centennial of the French Revolution. Three hundred socialist and labor union organisations from 20 countries sent 384 delegates. The Second International expelled individuals and member organisations that it considered to have an anarchist outlook, most notably Swiss, Italian, and French anarcho-syndicalists such as Errico Malatesta and Mikhail Bakunin. This created a rift, lasting to this day in many parts of the world, between what anarchists describe as libertarian socialism and authoritarian socialism.
In 1890, The Social Democratic Party of Germany used the limited, universal, male suffrage to exercise the electoral strength necessary to compel rescission of Germany's Anti-Socialist Laws. In 1893, the SPD received 1,787,000 votes, a quarter of the votes cast. Before the SPD published Engels's 1895 introduction to Karl Marx's Class Struggles in France 1848–1850, they deleted phrases that they felt were too revolutionary for mainstream readers.
The Swedish Social Democratic Party, (Swedish: Sveriges socialdemokratiska arbetareparti, SAP, 'Social Democratic Labour Party of Sweden'), which today contests elections as 'Labour Party – Social Democrats' (Arbetarepartiet-Socialdemokraterna), is the oldest and largest political party in Sweden, founded in 1889. Commonly referred to as 'the Social Democrats' (Socialdemokraterna) or colloquially 'the Socials' (Sossarna), this party suffered a schism in 1917, when the communists and other Revolutionary Left factions split from the Social Democrats to form what is now the Left Party.
In the UK, politically moderate New Model Unions dominated unionised labor from the mid–nineteenth century until the founding of New Unionism, which arose after the successful London matchgirls' strike in 1888. Unskilled workers such as the Dockers and the Gas Workers were unionised through the activities of socialists such as Ben Tillett, a founder of the Independent Labour Party, Tom Mann (who together with Tillett founded the dockers union) and Will Thorne, who founded the Gas Workers union. Also under pressure from socialists such as Keir Hardie, the UK trade union movement broke from the Liberal Party and founded the Labour Party in the early twentieth century.
The first U.S. socialist party was founded in 1876, then metamorphosed to a Marxist party in 1890; the Socialist Labor Party exists today. An early leader of the Socialist Labor Party was Daniel De Leon. De Leon helped found the Industrial Workers of the World (IWW) which influenced the formation IWW unions beyond the United States.
When World War I began in 1914, the leaders of the most prominent European Socialist Parties organised under the banner of the Second International, at first vocal opponents, supported the belligerent aims of their national governments: the British, French, Belgian, and German social democratic parties discarded their political commitments to proletarian internationalism and worker solidarity to co-operate with their imperial governments. In Russia, by contrast, Vladimir Lenin denounced the Europeans' Great War as an imperialist conflict and urged workers worldwide to use the war as an occasion for proletarian revolution. The Second International dissolved during the war. Lenin, Leon Trotsky, Karl Liebknecht, Rosa Luxemburg and other anti-war Marxists conferred in the Zimmerwald Conference in September 1915.
By 1917, the patriotism of World War I changed into political radicalism in most of Europe, the United States, and Australia. In February 1917, revolution exploded in Russia. Workers, soldiers and peasants established soviets (councils), the monarchy fell, and a provisional government convoked pending the election of a constituent assembly. In April of that year, Vladimir Lenin arrived in Russia from Switzerland, calling for "All power to the soviets." In October, his party, the Bolsheviks, won support of most soviets at the second All-Russian Congress of Soviets, while he and Leon Trotsky simultaneously led the October Revolution. On 25 January 1918, at the Petrograd Soviet, Lenin declared "Long live the world socialist revolution!", He proposed an immediate armistice on all fronts, and transferred the land of the landed proprietors, the crown and the monasteries to the peasant committees without compensation.
On 26 January, 1918, the day after assuming executive power, Lenin wrote Draft Regulations on Workers' Control, which granted workers control of businesses with more than five workers and office employees, and access to all books, documents and stocks, and whose decisions were to be "binding upon the owners of the enterprises". Governing through the elected soviets, and in alliance with the peasant-based Left Socialist-Revolutionaries, the Bolshevik government began nationalising banks, industry, and disavowed the national debts of the deposed Romanov royal régime. It sued for peace, withdrawing from World War I, and convoked a Constituent Assembly in which the peasant Socialist-Revolutionary Party (SR) won a majority. The Constituent Aassembly elected Socialist-Revolutionary leader Victor Chernov President of a Russian republic, but rejected the Bolshevik proposal that it endorse the Soviet decrees on land, peace and workers' control, and acknowledge the power of the Soviets of Workers', Soldiers' and Peasants' Deputies. The next day, the Bolsheviks declared that the assembly was elected on outdated party lists, and the All-Russian Central Executive Committee of the Soviets dissolved it.
The Bolshevik Russian Revolution of January 1918 engendered Communist parties worldwide, and their concomitant revolutions of 1917-23. Few Communists doubted that the Russian success of socialism depended upon successful, working-class socialist revolutions in developed capitalist countries. In 1919, Lenin and Trotsky organised the world's Communist parties into a new international association of workers – the Communist International, (Comintern), also called the Third International.
In November 1918, the German Revolution deposed the monarchy; as in Russia, the councils of workers and soldiers were comprised mostly of SPD and USPD (Independent Social Democrats) revolutionaries installed to office as the Weimar republic; the SPD were in power, led by Friedrich Ebert. In January 1919 the left-wing Spartacist uprising challenged the SPD government, and President Ebert ordered the army and Freikorps mercenaries to violently suppress the workers' and soldiers' councils. Communist leaders Karl Liebknecht and Rosa Luxemburg were captured and summarily executed. Also that year, in Bavaria, the Communist régime of Kurt Eisner was suppressed. In Hungary, Béla Kun briefly headed a Hungarian Communist government. Throughout, popular socialist revolutions in Vienna, Italy's northern industrial cities, the German Ruhr (1920) and Saxony (1923) all failed in spreading revolutionary socialism to Europe's advanced, capitalist countries.
In Russia in August 1918, Fanya Kaplan shot Lenin in the neck, leaving him with wounds from which he never fully recovered. Earlier, in June, the Soviet government had implemented War Communism to repel the invasions by Germany, Britain, the United States and France, who were interfering in the Russian Civil War beside royalist White Russians. The great powers orgainsed a crippling economic boycott of Russia. Under War Communism, private business was outlawed, strikers could be shot, the white collar classes were forced to work manually and peasants could be forced to provide to workers in cities.
By 1920, the Red Army, under its commander Trotsky, had largely defeated the royalist White Armies. In 1921, War Communism was ended and, under the New Economic Policy (NEP), private ownership was allowed for small and medium peasant enterprises. While industry remained largely state-controlled, Lenin acknowledged that the NEP was a necessary capitalist measure for a country unripe for socialism. Profiteering returned in the form of "NEP men" and rich peasants (Kulaks) gained power in the countryside.
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.
In 1923, on seeing the Soviet State's growing coercive power, the dying Lenin said Russia had reverted to "a bourgeois tsarist machine... barely varnished with socialism." After Lenin's death in January 1924, the Communist Party of the Soviet Union – then increasingly under the control of Joseph Stalin – rejected the theory that socialism could not be built solely in the Soviet Union, in favour of the concept of Socialism in One Country. Despite the marginalised Left Opposition's demand for the restoration of Soviet democracy, Stalin developed a bureaucratic, authoritarian government, that was condemned by democratic socialists, anarchists and Trotskyists for undermining the initial socialist ideals of the Bolshevik Russian Revolution.
The Russian Revolution of October 1917 brought about the definitive ideological division between Communists as denoted with a capital "С" 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 1945, the world’s three great powers met at the Yalta Conference to negotiate an amicable and stable peace. 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 economist Friedrich Hayek 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 1951, the Socialist International was re-founded 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."
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.
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 programmes. In many instances, these nations nationalised 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.
In 1945, the British Labour Party, led by Clement Attlee, was elected to office based upon a radical, socialist programme. Social Democratic parties dominated the post-war French, Italian, Czechoslovakian, Belgian, Norwegian, and other, governments. In Sweden, the Social Democratic Party held power from 1936 to 1976 and then again from 1982 to 1991 and from 1994 to 2006. Labour parties governed Australia and New Zealand. In Germany, the Social Democrats lost in 1949. In Eastern Europe, the war-resistance unity, between 'Social Democrats and Communists, continued in the immediate postwar years, until Stalin imposed Communist régimes.
In the UK, the Labour Party was influenced by the British social reformer William Beveridge, who had identified five "Giant Evils" afflicting the working class of the pre-war period: "want" (poverty), disease, "ignorance" (lack of access to education), "squalor" (poor housing), and "idleness" (unemployment). Unemployment benefit, as well as national insurance and hence state pensions, were introduced by the 1945 Labour government. However Aneurin Bevan, who had introduced the Labour Party’s National Health Service in 1948, criticised the Attlee Government for not progressing further, demanding that the "main streams of economic activity are brought under public direction" with economic planning, and criticising the implementation of nationalisation for not empowering the workers with democratic control of operations.
Bevan's In Place of Fear became the most widely read socialist book of the post-war period. It states: "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?" 
Socialists in Europe widely believed that fascism arose from capitalism. The Frankfurt Declaration of the re-founded 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 post-war social democratic governments introduced social reform and wealth redistribution via state welfare and taxation. The UK Labour Government nationalised major public utilities such as mines, gas, coal, electricity, rail, iron, steel, and the Bank of England. France claimed to be the world's most State-controlled, capitalist country.
In the UK, the National Health Service provided free health care to all. Working-class housing was provided in council housing estates, and university education available via a school grant system. Ellen Wilkinson, Minister for Education, introduced free milk in schools, saying, in a 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?" Clement Attlee's biographer argued that this policy "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 said that 25 per cent of British industry was nationalised, and that public employees, including those in nationalised industries, constituted a similar percentage of the country's total employed population. However, the Labour government did not seek to end capitalism, in terms of nationalising of the commanding heights of the economy, as Lenin had put it. In fact, the "government had not the smallest intention of bringing in the ‘common ownership of the means of production, distribution, and exchange’", yet this was the declared aim of the Labour Party, stated in its 'socialist clause', Clause 4 of the Labour Party Constitution. Cabinet minister Herbert Morrison argued that, "Socialism is what the Labour Government does." Crosland claimed capitalism had ended: "To the question, ‘Is this still capitalism?’, I would answer ‘No’."
Many social democratic parties, particularly after the Cold war, adopted neoliberal-based market policies that include privatization, liberalization, deregulation and financialization; resulting in the abandonment of pursuing the development of moderate socialism in favor of market liberalism. Despite the name, these pro-capitalist policies are radically different from the many non-capitalist free-market socialist theories that have existed throughout history.
In 1959, the German Social Democratic Party adopted the Godesberg Program, rejecting class struggle and Marxism. In 1980, with the rise of conservative neoliberal politicians such as Ronald Reagan in the U.S., Margaret Thatcher in Britain and Brian Mulroney, in Canada, the Western, welfare state was attacked from within. Monetarists and neoliberalism attacked social welfare systems as impediments to private entrepreneurship at public expense.
In the 1980s and 1990s, western European socialists were pressured to reconcile their socialist economic programmes with a free-market-based communal European economy. In the UK, the Labour Party leader Neil Kinnock made a passionate and public attack against the Party's Militant Tendency at a Labour Party conference and repudiated the demands of the defeated striking miners after a year-long strike against pit closures. In the 1990s, released from the Left's pressure, the Labour Party, under Tony Blair, posited policies based upon the free market economy to deliver public services via private contractors.
In 1989, at Stockholm, the 18th Congress of the Socialist International adopted a new Declaration of Principles, saying 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.
In 1995, the Labour Party re-defined its stance on socialism by re-wording clause IV of its constitution, effectively rejecting socialism by removing any and all references to public, direct worker or municipal ownership of the means of production.
The objectives of the Party of European Socialists, the European Parliament's socialist bloc, are now "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." As a result, today, the rallying cry of the French Revolution – "Egalité, Liberté, Fraternité" – which overthrew absolutism and ushered capitalism into French society, are promoted as essential socialist values.
In 1995, the British Labour Party revised its political 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."
Those who championed socialism in its various Marxist and class struggle forms sought out other arenas than the parties of social democracy at the turn of the 21st century. Anti-capitalism and anti-globalisation movements rose to prominence particularly through events such as the opposition to the WTO meeting of 1999 in Seattle. Socialist-inspired groups played an important role in these new movements, which nevertheless embraced much broader layers of the population, and were championed by figures such as Noam Chomsky. The 2003 invasion of Iraq led to a significant anti-war movement in which socialists argued their case.
The Financial crisis of 2007–2010 led to mainstream discussions as to whether "Marx was right". Time magazine ran an article 'Rethinking Marx' and put Karl Marx on the cover of its European edition in a special for the 28 January 2009 Davos meeting. While the mainstream media tended to conclude that Marx was wrong, this was not the view of socialists and left-leaning commentators.
A Globescan BBC poll on the twentieth anniversary of the fall of the Berlin Wall found that 23% of respondents believe capitalism is "fatally flawed and a different economic system is needed", with that figure rising to 40% of the population in some developed countries such as France; while a majority of respondents including over 50% of Americans believe capitalism "has problems that can be addressed through regulation and reform". Opinions regarding the demise of the Soviet Union are also heavily divided between the developed and developing world, with the latter believing the disintegration of the Soviet Union was a bad thing.
African socialism continues to be a major ideology around the continent. In South Africa the African National Congress (ANC) abandoned its partial socialist allegiances after taking power, and followed a standard neoliberal route. 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 creation of a market economy in land and housing.
The People's Republic of China, North Korea, Laos and Vietnam are Asian countries remaining from the wave of Marxism-Leninist implemented socialism in the 20th century. States with socialist economies have largely moved away from centralised economic planning in the 21st century, placing a greater emphasis on markets, in the case of the Chinese Socialist market economy and Vietnamese Socialist-oriented market economy, worker cooperatives as in Venezuela, and utilising state-owned corporate management models as opposed to modeling socialist enterprise off traditional management styles employed by government agencies.
In New 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 programme of market-based reform that was more sweeping than had been Soviet leader Mikhail Gorbachev's perestroika program of the late 1980s. Deng's programme, 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.
Elsewhere in Asia, some elected socialist parties and communist parties remain prominent, particularly in India and Nepal. The Communist Party of Nepal in particular calls for multi-party democracy, social equality, and economic prosperity. In Singapore, a majority of the GDP is still generated from the state sector comprising government-linked companies. In Japan, there has been a resurgent interest in the Japanese Communist Party among workers and youth. In Malaysia, the Socialist Party of Malaysia got its first Member of Parliament, Dr. Jeyakumar Devaraj, after the 2008 general election.
In Europe, the socialist Left Party in Germany grew in popularity due to dissatisfaction with the increasingly neoliberal policies of the SPD, becoming the fourth biggest party in parliament in the general election on 27 September 2009. Communist candidate Dimitris Christofias won a crucial presidential runoff in Cyprus, defeating his conservative rival with a majority of 53%. In Greece, in the general election on 4 October 2009, the Panhellenic Socialist Movement (PASOK) won the elections with 43.92% of the votes, the Communist KKE got 7.5% and the new Socialist grouping, (Syriza or "Coalition of the Radical Left"), won 4.6% or 361,000 votes.
In Ireland, in the 2009 European election, Joe Higgins of the Socialist Party took one of three seats in the capital Dublin European constituency. In Denmark, the Socialist People's Party (SF or Socialist Party for short) more than doubled its parliamentary representation to 23 seats from 11, making it the fourth largest party.
In the UK, the National Union of Rail, Maritime and Transport Workers put forward a slate of candidates in the 2009 European Parliament elections under the banner of No to the EU – Yes to Democracy, a broad left-wing alter-globalisation coalition involving socialist groups such as the Socialist Party, aiming to offer an alternative to the "anti-foreigner" and pro-business policies of the UK Independence Party.
In France, the Revolutionary Communist League (LCR) candidate in the 2007 presidential election, Olivier Besancenot, received 1,498,581 votes, 4.08%, double that of the Communist candidate. The LCR abolished itself in 2009 to initiate a broad anti-capitalist party, the New Anticapitalist Party, whose stated aim is to "build a new socialist, democratic perspective for the twenty-first century".
Socialist thought and practice has influenced politics regimes in Mexico (Mexican Revolution), Cuba (Cuban Revolution), and Chile (Salvador Allende's government). In some Latin American countries, socialism has re-emerged in recent years following the Cuban model, with a populist, anti-imperialist stance, the rejection of neoliberalism, and the nationalisation or partial nationalisation of oil production, land and other assets.
Venezuelan President Hugo Chávez, Bolivian President Evo Morales, and Ecuadorian president Rafael Correa, refer to their political programmes as socialist. Chávez has adopted the term socialism of the 21st century. After winning re-election in December 2006, Chávez said, "Now more than ever, I am obliged to move Venezuela's path towards socialism."
Although Chile has had two socialist presidents, Ricardo Lagos and Michelle Bachelet, in the recent 2000-2010 period, their political views and public policies have been much closer to those of the European social democracy than to Chavez's government.
Socialist parties in the United States reached their zenith in the early twentieth century, but currently active parties and organizations include the Socialist Party USA, the Socialist Workers Party and the Democratic Socialists of America, which has approximately 10,000 members.
A December 2008 Rasmussen poll found that when asked whether Americans supported a state-managed economy or a free-market economy, 70% preferred free-market capitalism, with only 15% preferring a state-managed economy. An April 2009 Rasmussen Reports poll, conducted during the Financial crisis of 2007–2010, suggested that there had been a growth of support for socialism in the United States. The poll results stated that 53% of American adults thought capitalism was better than socialism, and that "Adults under 30 are essentially evenly divided: 37% prefer capitalism, 33% socialism, and 30% are undecided". The question posed by Rasmussen Reports did not define either capitalism or socialism, allowing for the possibility of confusing socialism with regulated capitalism or authoritarian communism.
Criticisms of socialism range from claims that socialist economic models are inefficient or that former and existing socialist states are incompatible with civil liberties to condemnation of specific socialist political philosophy. Pro-capitalist libertarians, Anarcho-Capitalists and proponents of Lassiez-faire often believe that private ownership of the means of production is a moral and natural arrangement from which all other rights extend from, and therefore condemn public ownership of the means of production, cooperatives and economic planning as infringements upon this natural order of liberty.
Critics from the Neoclassical school of economics argue that public ownership of the means of production is typically less efficient than private business because state managers lack a hard-budget constraint and thus an incentive to act on information. Other criticisms are directed toward workplace democracy and cooperative socialism, usually arguing that such arrangements are impractical. In the economic calculation debate, Austrian economist Friedrich Hayek argued that a socialist command economy could not adequately transmit information about prices and productive quotas due to the lack of a price mechanism, and as a result it could not make rational economic decisions. Ludwig von Mises argued that a socialist economy was not possible at all, because of the impossibility of rational pricing of capital goods in a socialist economy since the state is the only owner of the capital goods. Hayek further 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 refers to a broad array of doctrines or political movements that envisage a socio-economic system in which property and the distribution of wealth are subject to social control
Socialist (not comparable)