Socialism and its Economic Texture — Dr. Sovit Lal Bajracharya



This article endeavors making clear of identification, pros and cons and marrows of socialism. Even if Nepalese constitution 2072 B.S. has encompassed the socialism oriented economy but not stated specific form of socialism. This study will support to adopt socialism in accordance with our soil and air. The Industrial Revolution took place in England during the period from 1750 to 1850, had augmented wealth accompanied by inequality. Due to the adoption of laissez-faire economic policy, government was unable to reduce sufferings of the masses workers, disease, hunger and misery of the workers and so on. There were no political rights for women and they had no right of organization. All these things gave rise of socialism.


Keywords: Inequality, Wealth, Constitution, economic growth, socialism, economic planning, productive employment and income distribution.



                      Constitution of Nepal (2072 B.S.) has committed to disseminate socialism based on democratic values and institutions for making the country prosperous.  So, Self reliance, prosperity and socialism oriented economy are long-term visions of Fourteenth (Current) Plan (2016/017 – 2018/ 019) of Nepal. To enrich Nepal as Middle Income Group Countries of the world through social justice based welfare of the people has been the goal of the current plan. This plan has set numerous objectives such as to promulgate social and economic transformations through high rate of economic growth and poverty reduction with the inclusion of productive employment and justice based distribution.   Thus, it is required to know about forms, marrows, pros and cons followed by identification of socialistic economic system. Actually socialism refers to” all things to all men”. It refers to the government ownership of the means of production, planning by the government and income distribution in general.

The Industrial Revolution took place in England during the period from 1750 to 1850, had augmented wealth accompanied by inequality. And there were exploitations of workers in the form of low level wages, hard and long hour’s workings, social evils like employment of children and women labor and so on. Due to the adoption of laissez-faire economic policy, government was unable to reduce sufferings of the masses workers, disease, hunger and misery of the workers and so on. There were no political rights for women and they had no right of organization. All these things gave rise of socialism.

Marrows of socialism

In general, there are some core features of socialistic economy or socialism.

  1. Collective ownership:   In socialism, all means of production are owned by the community i.e. government and individual can hold private property beyond certain limit. Therefore, it is government which utilizes these resources in the interest of social welfare.


  1. Economic, social and political equality: Under socialism, there is almost equality between rich and poor. There is no problem of class struggle.


  1. Economic Planning: It is simply the technique of allocating scarce resources among various alternative uses. Economic planning encompasses the formation and execution of economic programs so as to obtain certain specific objectives taking into account the limited resources. Under socialism, government determines specific objectives. So as to attain these objectives, government makes economic planning. All types of decisions regarding the central problems of an economy are taken in the economic plans. There is a central planning authority that plans for the economy.


  1. No competition: Unlike capitalistic economy, there is non-competition in the market. It means there is dearth of competition as state is the sole entrepreneur. Resources are utilized by government through national planning commission.


  1. Positive role of government: In socialism, government plays significant role in decision-making. Thus, government has complete control over economic activities like distribution, exchange, consumption, production, investment and foreign trade.


  1. Work and Wages: Work is distributed according to efficiency and preferences and wage is given according to needs and abilities of the laborers.


  1. Maximum social welfare: The only motto of government is to enrich people with optimum satisfaction. It means that there is no scope of exploitation of labor class. Government keeps a close eye on the needs of the poor masses while formulating plans.


Forms of Socialism


          There are different types of socialism. So, it is required to be known about it before going through the nature of socialistic economy.


(i)  State socialism:   It is also regarded as authoritarian state socialism. Under this system, with strict central planning of the economy, all productive enterprises are owned by the state as it is controlled by the selected few of a single party. The government will own and operate certain sectors of the economy for overall social objectives rather than for profit. State socialism is different from state capitalism. State capitalism refers to a system under which the government in a capitalistic society owns and operates industries with a profit motive. It will try to maximize profit and minimize loss. It will act just like a private entrepreneur.


(ii)   Democratic state socialism:  This system is a more democratic version of state socialism that arguably aligns more closely with Marx original ideals than Marx – Leninism where more open (but still representative) democratic control manages the means of production and economic planning.


(iii)   Mixed economies:   Under this economic system, free enterprise coexists with central regulation of the economy. Some socialized production and welfare programs with markets ultimately subject to representative democratic controls.


(iv) Utopian socialism:   Its thought started at the beginning of 19th century. Saint – Simon Charles Fortier and Robert own are regarded as the profounder of Utopian socialism. Due to absence of labor’s rights establishing organization and their weak position led to develop utopian socialism. Utopian socialism regards competitive system of capitalistic society as unjust and irrational. They announced special program for social arrangement and adopting it by the workers. They are not in favor of class struggle. Utopian socialists appealed to the capitalists co-operating with them and furnish fund to execute their programs.  They have advocated association with limited membership.


(v)   Christian socialism:   This system was originated in England and Germany after 1848. Charles Kingsley was a leading advocator of Christian socialism in England. They requested to rich persons to use their property as a fund for the benefit of common people.


(vi) Marxian socialism:   It is synonym with scientific socialism. Marxian socialism is dependent on the theory of surplus value and materialistic interpretation of history. It tries

to show that all the historical events are the consequences of economic struggle between different classes and groups in society. The main reason behind this struggle is the conflict between the mode of production and the relations of production. Marx uses his theory of surplus value as the economic basis of the class struggle under capitalism and is on the basis of his theory of surplus value that he builds the superstructure of his analysis of economic development. Class struggle is simply the outcome of accumulation of surplus value in the hands of a few capitalists. The extra labor that a laborer put in and for which he receives nothing.


(vii)   Revisionism:   Fabian socialism is a glaring example of revisionism that emerged in England. Revisionism led priority on reducing poverty and inequality of income and wealth disapproving class struggle, revolution and violence. But, they believe in gradual change on the basis of education, persuasion and parliamentary reform. Revisionists are not in favor of total abolition of capitalist institutions but for their modification.


Controls of monopoly power and state ownership on public utilities are the thrusts of revisionism. Due to the emphasis of the revisionists on ownership and management of public utilities by government, revisionism is also known as ‘gas and water’ socialism.


(viii)   Green socialism:   It is a socialistic economy that expounds high values and the maintenance of natural resources. This will be achieved through public ownership of large corporations. It also emphasizes on transit and locally sourced food. Production will be focused on making sure everyone has enough of the basics instead of consumer products they don’t really need. Everyone will be guaranteed a livable wage.


(ix)   Market socialism:   Production is owned by the workers, who decide how to distribute among themselves. They would sell excess production on the free market or it could be turned over to society at large, which would distribute it according the free market.


(X)   Communism:  It has many of the features of Libertarian socialism but differentiates itself mainly that it seeks a more complete, stateless and facilitates collective or communal concerns. Communism is next advanced stage of socialism. The work is distributed to the people according to abilities and needs.  In the ultimate stage of society where there will be no class conflict, the state will mitigate it.


              Pros and cons of socialism


Under socialism, works are benefited rather than they are being exploited since, all the factors of production are tenured by themselves. On the basis of worker’s capacity, contribution and need, profits are equally distributed. Mutual good-will and co-operation are also the core values of this system. The tranquility of socialism is that even those who might not work must have their basic needs met for the welfare of all. Thus, poverty is alleviated and everyone has equal access to health care and education. Natural resources are used and preserved for the welfare of all.


The strong demerit of socialistic economy is that it recognizes the co-operative nature of human to work. So, those within who are competitive not co-operative will always try to overthrow and demolish it for their own benefit. Secondly, this system does not provide returns to people for being entrepreneurial and competitive. So, it would not be as innovative as capitalistic society. The third criticism is that the government set up to represent the masses may abuse its position and claim for itself.





Even if, Nepalese constitution 2072B.S. has declared on the provision of socialistic economy, but not specified its form. So confusions and controversies may arise while implementing our constitution.


There are no countries that are 100 percent socialist. Most have mixed economies that incorporate socialism with capitalism, communism or both. Norway, Sweden and Denmark countries have strong socialism. The state provides health care, education and pension facilities. However, these countries also have successful capitalists. Cuba, China, Vietnam, Russia and North Korea countries incorporate characteristics of both socialism and communism. So, it is still left to select form of socialism that is suitable in our soil.






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NPC, (2016), An approach paper to the fourteenth plan (2016/017-2018/019) Kathmandu: NPC.