Economic system; advantages of socialistic economy

Economic system

An economic system is the organised way in which a society decides what to produce, how to produce and for whom, using its limited resources (land, labour, capital, enterprise). It consists of the institutions, rules and methods by which production, distribution and consumption take place. The main types are capitalistic, socialistic and mixed economy.

Advantages of a socialistic economy

1. Reduced inequality. Wealth and income are distributed more fairly, because the state owns the main means of production.
2. Planned use of resources. Central planning directs resources to national priorities, avoiding wasteful duplication and competition.
3. Full employment. The state provides work for all, so there is less unemployment and job insecurity.
4. Social welfare first. Basic needs such as food, health, education and housing are guaranteed to everyone.
5. No exploitation and no class conflict. Without private profit-making, workers and consumers are not exploited and monopolies are avoided.
6. Balanced regional development and economic stability. The state can develop backward areas and avoid trade cycles of boom and depression.