17 Major Advantages and Disadvantages of Socialism

Socialism is a government structure, system of social organization, or a theory which advocates the vesting of control and ownership of production and distribution in a society to the community as a whole instead of to the individual. Any practice or procedure which works with this process in accordance to its principles would be considered part of the overall structure.

There is a secondary definition of socialism which uses Marxist theory where it is the stage following capitalism as a society begins to turn toward communism as the primary government structure. This result occurs when there is an imperfect implementation of collectivist principles on a national level.

It is essential to remember that socialism is more of a social theory, whereas communism uses the foundation of a totalitarian government commune to dictate how each person can live their life.

Socialism believes in the idea of collective cooperation making all government institutions become public. Paying taxes to the government in exchange for highway access or healthcare would be a form of this theory. It includes multiple levels of government because each community represents its interests. Communism is made up of only one government which maintains strict controls over the society.

List of the Major Advantages of Socialism

1. Socialism helps to reduce the threat of price fixing in the economy.
The goal of socialism is to help everyone in the community see an increase in their standard of living because each person pitches in to help their neighbor. Instead of relying on the principles of supply and demand, every household gains access to the basic needs of life without a significant expense to their finances. Everyone works together to ensure there is food, water, clothing, and shelter available. There is no threat of a price increase from a greedy corporation.

When Mylen obtained the rights to the EpiPen product, the price for two injections was a little over $100. Now the cost is over $600, even though the actual medication you use can sometimes cost less than $10 with the right insurance. Socialism would not allow this price-fixing action to occur.

2. Socialism focuses on equality as humans instead of wealth separation.
Community ownership is the top property in a socialism structure. Everyone gains access to the production and distribution that occurs in society, portioning out shares based on household need. You are always treated the same as your neighbor. There are no first preferences because of net worth, social status, or popularity. This advantage even applies to those who are elected to leadership, giving each person a chance to run for office through an elective process that is similar to democracies. Only Communism dictates who gets to be in charge, and that is only one small branch of this theory.

3. Socialism encourages income equality between neighbors.
Socialism admittedly creates a shift in priority for households where they are working toward the greater good of all instead of what they can achieve on their own. If someone isn’t pulling their “fair share” of the production weight, then this system can seem unfair. The idea is that when everyone puts in an equal amount of labor, then there should be equality in the compensation received. Instead of focusing a majority of the profits at the top of the leadership hierarchy, everyone takes an equal cut of the distribution profits that become available.

4. Socialism encourages everyone to find their definition of success.
Capitalism allows people with pre-existing wealth, status, or opportunity an advantage because they have more resources at the start of their journey. That makes it easier for them to discover whatever their definition of success happens to be. Socialism changes this by allowing anyone who wants to work toward a common goal to create their own version of success. Critics might suggest that this redistributes wealth, but what it is really doing is redistributing opportunities.

Imagine if the United States did not have a public school system. The families who could pay for their children to attend school would have more future opportunities than those who did not have this wealth. Because we as a society felt it was essential for every child to receive an education, previous generations instituted a form of socialism that allows for families to still go to school if private or homeschooling options are unavailable.

5. Socialism reduces the impact of economic cycles.
During global recession years that started in 2007, many households around the world were struggling to make ends meet. Jobs were challenging to find, and employers started paying and hiring less. Workers were forced to find underemployment positions because they needed to pay their bills somehow.

Since those 36 months of struggling, the earnings have exploded for the upper income brackets in capitalist economies, growing by more than 200%. For the bottom tier of workers, some individuals haven’t even seen a pay raise since 2007 – and some have taken multiple pay cuts over the past decade. Socialism reduces the threat and impact of these economic cycles, making it a simpler process for households to manage their basic needs while still having discretionary income available to pursue their dreams.

6. Socialism provides the economy with more value judgment opportunities.
One of the criticisms of socialism comes from the communism branch where the government mandates the production and distribution of goods. The general goal of socialism is to make decisions based on what households need in the community instead of making choices based on profit margins. Communities can subsidize the production of needed items using this governing structure to ensure anyone who needs something can have it. That advantage provides a superior result compared to structures that place more value on profits than genuine need.

7. Socialism creates an efficient economy.
The structures of Socialism do not require businesses or households to try to sell goods or services that are unwanted or unneeded in their community. If there is a currency in that society, then more of it is freed up to use on needed items because fewer expenses are necessary to extend the brand message and reach. There is no longer a requirement to convince shoppers that they need something because the society produces everything that is necessary for life. That means there are more opportunities to innovate, additional resource availability to use, and the satisfaction in knowing that your work helps others at the same time.

8. Socialism can nationalize the critical industries of society.
When socialism is present in society, then the governing leadership can take over the entire sector of production for the vital areas of the economy. Because there is more stability present with the state in charge, publicly-owned companies can then come in to manage the daily operations that are necessary for creating and distributing goods and services. This structure makes it easier for the benefits of publicly-funded research to directly apply in each segment of the economy, allowing more people to have their needs met effectively.

This advantage also makes it possible for the profits from the company to be used for the overall national good. If that results in an increase in foreign trade revenues, it can even reduce the tax burden placed on domestic households.

List of the Major Disadvantages of Socialism

1. Socialism only works well when corruption stays out of the process.
The idea of socialism is one that is idealistic. It relies on the concept that humans are generally good and will do what is necessary to help others succeed. There is a harsh reality check that becomes a disadvantage rather quickly with this governing structure in the fact that some humans are not this way. There will never be 100% compliance at a national level for this government, even if it legally mandated to do.

Even communism struggles to force people into a specific way of life. From the Russians and their desire for jeans to North Koreans with wealth buying whatever they need despite food scarcity issues in the country, there will always be someone who goes against the rules of the system. When there are fewer checks and balances available, it is easier to manipulate the production and distribution results.

2. Socialism increases the risk of experiencing zero societal motivation.
The United States is experiencing record lows in its labor force in 2019 in some employment categories. People are choosing non-traditional routes for income, such as the gig economy, as a way to make ends meet. Socialism has a similar influence on the economy, but because it offers a different outcome. If someone knows that their basic needs will always be met, no matter what they choose to do in life, then there is less motivation to hold down a job.

Socialism increases the risk of unmotivated workers growing in number within society. When there is no reward for creating a higher production level and unemployed people receive the same benefits as those who have a job, then fewer people typically enter the labor force.

3. Socialism causes more government spending to occur.
There must be a balance between foreign trade and domestic spending for an economy to thrive in today’s world. Because innovation can decline at times with this governing structure since funding comes from the leadership, it can cost more to produce items. State-based industries are almost always less efficient than a private enterprise because there is no motive for profits present in each transaction. When efficiency rates decline, then maintenance costs begin to rise. That means the community starts spending more to produce needed goods, which reduces what is available for research and development.

This cycle results in a slow spiral downward in the quality of life that people receive unless someone takes it upon themselves to be creative on their own time.

4. Socialism typically expands bureaucracy instead of reducing it.
When socialism is the emphasis of the governing process, then there are more layers of bureaucracy present because every need or action must receive approval from the community’s leadership. Although this disadvantage isn’t always a bad thing to have because it provides another level of safety for each project or industry, it also means that the equalization of services will require verification for the process to be successful. You will find more government workers in administrative positions under this structure than most others because that is the only way to verify equalization.

Because there are more layers of bureaucracy present in the government, the time it takes to implement services can be significantly higher than in other governing structures as well. When there is an emergency need to receive something, there may not be enough manufacturing or industrial output to create the desired results.

5. Socialism can sometimes reduce innovation levels.
Socialism proponents often point to the advantage that people are given employment positions that reflect their strengths and passion frequently with this governing structure. There are also a lot of compromises in that process as well. You are typically given a “best possible job” based on the needs of the overall society rather than what you actually excel at with your talents, skills, and gifts. Since most production and distribution focuses on domestic needs, there is limited innovation available for each position because there is limited influence coming from the outside world.

6. Socialism can discourage competition.
Another adverse influence in innovation that happens through socialism is a decrease in competition. Everyone is a partial owner of the process in some way, which means there aren’t independent companies out there trying to innovate to lower their prices. If the government is in charge of the company, then there is little motivation to become effective or efficient because it can legislate other firms out of business if it so chooses. All of these factors come together to create a society where competition rarely exists, which means the number of product launches are fewer than they are in different structures.

7. Socialism discounts the safety of the worker for the ease of production.
Although this disadvantage doesn’t exist in small communities that practice socialism, it can become a significant problem at a state, provincial, or national level. The rights of the workers are often given a lower priority to the need to produce and distribute. When those in leadership decide that something does not benefit their society, then one decision can get rid of it for good. This process can result in unsafe working areas, wages that eliminate discretionary income for spending, and fewer incentives to work if the government is already meeting the standard living needs for families.

8. Socialism can often create a net financial loss even with production gains.
Socialism works when households pay taxes to the government to meet their core needs. Even in the United States, people pay a tax on gasoline as a way to fund roads and bridges. Americans pay a small percentage of their income into the Medicare program, and then gain acceptance to it once the reach qualifying factors. Most forms of socialism still place a massive funding responsibility on those who make less each year, which means higher income earners can maintain their quality of life while those in the lower tiers must start relying more on the stipends offered by their leadership.

9. Socialism requires individuals to grant more control of their daily choices to the government.
Socialism might allow for the election of leaders, but it also means that the government gets to control more of the choices that families would typically make for themselves under other governing structures. You will have less of a say in how you live your life. This disadvantage can take many forms, ranging from the types of jobs that you can hold to the names that parents are authorized to use for their children. There are more benefits to access under this structure compared to other governing styles, but there is also significantly more income going back to the government based on the work that you do.

A Final Thought on These Key Points on Socialism

Whether we like the idea of its presence or not, socialism is a part of most societies. Even in the United States, people pay taxes to the government to receive services. If you receive government benefits through Medicaid or Medicare, then that is a form of socialism. The roads you drive on each day to get to work or run errands happened because of this structure.

Even though democracies and republics often limit the influence of socialism to favor free-market principles, much of the developed world employs a mixed economy that tries to take advantage of the benefits this option provides while limiting the potential problems that may develop.

The major advantages and disadvantages are important to consider because it is rare for an individual to scratch out their personal success without the help of someone else. By pooling the resources of a community together to benefit everyone, the goal of this structure or theory is to make life better. Although some might try to use this power for selfish purposes, the emphasis is to push everyone toward an outcome of equality that other community structures cannot always provide.