Question

Discuss the chief merits of socialism.

State three merits of a socialist economy.

Answer 1

1. Better Allocation of Resources: Under socialism, allocation of resources can be made in a better and more rational manner than under capitalism. Better allocation of resources is ensured because of the following reasons:
   1. Socialism is based on the motive of welfare instead of profit motive.
   2. Allocation of resources is made by the Central Planning Authority to promote social welfare. 
   3. There is no wasteful expenditure on advertisement, etc., under socialism.
2. Social Justice: The chief merit of socialism is that it ensures social justice. Under socialism, inequalities of income are reduced to the minimum and there is a just and equitable distribution of national income. Nobody is allowed to earn large unearned incomes, viz., rental and interest incomes. Exploitation of man by man is eliminated. Everybody is provided with equal opportunity to develop his talent and get necessary training and education regardless of his caste, class and religion.
3. Economic Stability: Since a socialist economy is essentially a planned economy, there will be neither surpluses nor shortfalls. Thus, there will be no price fluctuations and no unemployment. Instead, economic stability is maintained.
4. Social Security and Welfare: Socialism guarantees social security to everybody. Government undertakes various social security measures such as compensation for unemployment and accidents, sickness and maternity benefits, old-age pension, death grants, etc.  The state also provides the basic facilities of housing, education and health to the people.
5. Rapid Economic Growth: Socialism ensures rapid economic growth of a nation in the following manner.
   1. All the available productive resources are used properly and in a planned way. Therefore, there is no scope for wastage of scarce resources. 
   2. Under socialism, the state adopts economic planning which is certainly a superior way of development as compared to the mechanism of price. 
   3. Under socialism, rates of saving and investment can be greatly raised which are very essential for rapid economic development.