In this chapter, we shall study socialism which was developed by Karl Marx as an alternative to capitalism, its salient features, and its merits and demerits. After reading this chapter, you will be able to understand what is socialism and appreciate the fact that this system, too, shows certain defects when put to practice and is in no way superior to capitalism.


A socialistic economy is one where conscious and deliberate choice of economic priorities is made by some public authorities. Some features of a planned economy are:

  1. A central planning authority
  2. Pre-determined and well-defined objectives
  3. Fixation of targets
  4. Administration of controls
  5. Growing role of the public sector
  6. State is the final arbiter of ...

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