Q 4- Discuss in detail business under public ownership (Socialism)
State characteristics, advantages, and disadvantages of socialism (Business under public ownership)
(BUSINESS UNDER PUBLIC OWNERSHIP)
Socialism is that economic system in which means of production and distribution are held under collective ownership and control in public interest and establishing a society free of class conflicts.
ADVANTAGES OF SOCIALISM:
All means of production, heavy industries , utilities services and communication are put under government ownership. The state of affair is both good for public from the viewpoint of prices to the consumer and harmful as it becomes the source of corruption for bureaucracy.
2-Interest Free Economy:
Like Islam socialism is free of interest. Capitalism, on the other hand is based on it. It is surprising that promoters of both capitalism and socialism were Jews. Now around the world the interest is taking root with great might after the demise of socialism and break-up of the U.S.S.R.
There does not exist competition because there is only one producer or supplier which is the government. Since all means of production are owned by the state and private sector does not exist the state enjoys the monopoly.
Prices are controlled and not fixed on the principle of demand and supply. The fixation of prices by the government ignoring economic principle of demand and supply is in fact on favor of the consumer who get commodities at a lower rate.
Socialism eliminates the nation of rich, poor, or middle class. Lifestyle of the people at large is more or less the same. Most of the consumer goods are within the reach of everyone.
Since government owns heavy industries, controls transportation and communication system, fixes prices and does not allow private section to exist, the whole economy is fully controlled by the state.
7- Compulsory Employment:
Every person, man or woman, has to work for the state or state-run organization according to his or her own capabilities. Unemployment does not exist. Once a baby is born, it becomes the responsibility of the state.
8- No Advertising:
As monopolistic conditions prevails, advertising is mostly not required.
DISADVANTAGES OF SOCIALISM:
1- Salary Fixation:
Wages, salaries and allowances are fixed by the state in socialistic economy.
Most government employees morale is considerably low compared with the private section. Absenteeism, work- shirking, lack of motivation and interest in work are common.
2- Slow Growth:
Socialistic economy grows very slowly. Liabilities of the government increase faster than the riches, especially if population growth rate is higher than the economic growth rate.
3- Possibility Of Rampant Corruption:
Most government owned organization are likely to indulged in corruption, nepotism, inefficiency, and fudged accounts. Absenteeism, work- shirking, lack of motivation and interest in work are common.
4- Lack Of Professionalism:
Government owned corporations are mostly run by bureaucrats who are non professionals. The vacancies are also filled by retired army personnel whose efficiency is debatable.
5- Public Utilities:
Most public utilities are owned and run by the government. Telephone, water, sewerage, gas, power, are the cases in point.
Demerits/Disadvantage of Capitalism Next Post:
Characteristics of Mixed economy/open market economy