Topic 2

Part 2
The socialist system

Marxists
This is the main ideology of the socialist
system which was introduced by Karl
Marx
It was developed in the early and mid
19th century
Marx was an atheist charismatic and he
criticized any religion
Marx said that the capitalist system has
led to "isolation" or "separation"

 Capitalist society has resulted in two

groups; workers and capitalists
Workers or employees do not have the
resources of production, there is only
their labor,
so in exchange for their labour, they
just received wages
Capitalist on the other hand, own the
other factors of production
Such as land and capital
For land they receive rent, and for
capital they receive profits

 Although workers receive wages, it is

just enough for them to survive and
raise their families
Any surplus in the economy will be
exploited by the capitalists
In the end, capitalists are becoming
more powerful economically, while
workers continue working as paid
slaves

 These exploits lead to the division of

society into classes, which are always
hostile
Marx introduced the concept of
isolation" in which groups of workers
will lose their dignity and be reduced to
"human debris"
Isolation can only be eliminated when
all members of society equated
upgraded, so there are no more slaves
and no more masters

 One way to eliminate the "isolation" is

to abolish private rights
Private property is said to be the
source of power in society
Without private properties, the
privilege of the capitalists will end
And all power held by the capitalists
will disappear

 The most effective tool is a revolution

by the working class, which will turn off
the capitalist system by force
The next proposed strategies to follow
include;
i. to nationalize private property
(production resources) and
ii. implement central planning

 Those who opposed the ideology of

Marx contended that;
i. Private property is just one of the
sources of power in society
ii. Because there are various other
causes such as physical strength,
mental abilities, education, creativity,
ambition and determination, family
relationships and position in society
and the state

 Thus action to nationalize resources will

not solve the problem in the long term
After the revolution and central
planning, more power will be transferred
to government officials and politicians
Their power is much greater than the
power held by the capitalist.
There is no guarantee that they will not
exploit these power to direct all
production resources to serve their own
needs

Imperfections and its effects

After the revolution, the sources of
production are nationalized
This is expected to bring efficiency and
fairness
But this is not the case in socialist
countries, as few imperfections can be
detected

 For example;
1. Suspicions and trust
2. Various interests of harmony
3. Privilege information
4. Benefits of various subsidies
5. Benefits of various enterprises and
community farms

1. Suspicions and trust

After socialism was introduced, people in
their capacity as consumers, workers ,
management and government officials
are motivated to do their best for the
community not thinking of their selfinterest
i. People work efficiently, honestly and
without excess material reward as
encouragement
ii. Manager of the company will operate
efficiently, in making their own
decisions about the sale and purchase

iii. Government officials will not reap undue

advantages from
the great executive
power and decision-making powers which
they held
It can be seen that these assumptions are
not realistic , because for people who do not
have spiritual principles in the development
of their life , may not be able to sacrifice
their own interests for the benefit of society

2. Various interests of
harmony
It is assumed that the state machineries will be
managed by a group of people interested in
creating harmony with the whole community
They will not damage the chances of reaching
improvements in the society
But these assumptions are not true, because
the socialist countries are not free from the
interests and privileges that arise from factors
such as the state , nation and regions
Without the moral consciousness , the various
interests of harmony could not be achieved

3. Privilege information
It is assumed that those who make central
planning have the information about
consumer preferences , production costs
and the prices, when they are making
important decisions
However, such information does not
actually exist
Therefore the results are often slow to be
made , or made without sufficient
justifications

4. Benefits of various
subsidies
The socialist state also expects that those
large public subsidies to benefit the poor
But it has been proven in the Soviet
Union , most public subsidies benefit the
wealthy who have more purchasing
power than the poor
Farmers are forced to accept lower prices
because of subsidies

5. Benefits of various enterprises

and community farms
Large estates belonging to the state
are assumed to operate efficiently even
when they are ;
i. Have no competition ( monopoly )
ii. Operate not by economies of scale
iii. Do not have a market signals

 Actually, these large farms are involved

with these practices ;
i. Exploitation of land until they became
infertile
ii. Forcing many workers to remain
working in the plantations, despite
the pressure on land use

 Output incurred on small private farms

are proved to be more productive than
state owned large farms .
In 1989, a small private plot , ranging
from 0.5 % of total agricultural land in
the USSR , has supplied 29 % of all
agricultural output
This shows that a large state owned
farm is inefficient and ineffective
19

Faulty dreams
Marxist dream of the brotherhood of the
community without wages, without social
classes and reduced power of the state
has not been achieved
Instead, the societies in socialist countries
are split into several social classes ,
i. workers still receive salaries and have
limited freedom ,
ii. state has become powerful

 Possible causes for these failure ;

i. goals that are not harmonized with
the strategies and policies being
carried out
For example, the goal is to achieve a
socialist society with no classes , so no
one will be victimized , there is no
injustice in income and wealth

 However , policies that followed actually

have been encouraging ;
i. Social classes consist of workers,
bureaucrats , the army and politicians
This has given rise to hatred , conflict
and elimination
because the bureaucrats and
politicians are given so much power
The small group dominate what
happens to all the people

ii. Control of the resources by the state

Government officials will act worse

than capitalist ,
as there is no system or mechanism to
stop them from acting selfishly or for
the sake of their families

Conclusions
Through the experience of the Soviet
Union , we see that the socialist system
has failed
Some of the causes of these failures
include;
1. Economic inefficiency
2. bureaucracy
3. hierarchies
4. Despotic system
.The ambition to establish a society
without wages , without money and