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Socialism is a mode of production[1] and transitional phase[2] between two other modes of production, capitalism and communism, characterized by workers' ownership of the means of production, achieved through the expropriation of the bourgeoisie by a dictatorship of the proletariat. Socialist economies are based on central economic planning, absence of the profit-motive and collectivization.

The scientific socialist definition of the term, as used by Marxist–Leninists, refers to a particular stage of historical development -- specifically the transitional state between the capitalist and communist modes of production (for this reason, it is also known as "the lower stage of communism", although it is generally considered distinct enough from communism to constitute its own separate mode of production).[3] However, the term "socialism" is often misused in broader left-wing discourse to denote public works, welfare programmes and/or small-scale forms of economic planning practiced by capitalist countries.

Among the first successful experiments in the scientific development of socialist economics was the Soviet Union in the late 1920s, when the the means of production were brought under social ownership, namely the land and agricultural economy was brought under the ownership of the state and expropriated from private landowners called kulaks.

Socialism can be summarized by the motto "From each according to their ability, to each according to their work."

Means of production


Socialist industry is highly concentrated and technically advanced and based on public ownership. Economic concentration is planned to benefit the entire population.[4]


Socialist agriculture organizes the scattered peasant economy into large-scale collective and state farms. It is highly mechanized and uses machinery such as tractors and grain harvesters.[4]


As socialism is a way of organizing society that lies somewhere between capitalism and communism, it naturally retains properties of both systems. This is due to the material reality of the world and, in short, that one cannot simply erase the past (capitalism and all that it built and led to) but must work with it when going through revolution. For example, the people that comprised the bourgeoisie in capitalism will still be alive and here in socialism, they are not going anywhere and the revolutionary state must decide what to do with them. The same goes for factories that were built under a capitalist framework (leading for example to highly specialised towns that were known for producing only steel and are now very poor due to the mass closing down of steel plants that happened in the Global North) : these are things that the revolutionary socialist state will inherit and have to work with.

Communism can be succinctly described as the complete abolishment of private property, which is specifically the means of production or, in other words, the tools, machines, resources and locations used to produce economically and socially relevant products. In Principles of communism, Friedrich Engels describes the conditions for the birth and the abolishment of private property. The abolition of private property is only possible under the condition that it becomes necessary to develop the productive forces of society.[5]

Personal property, items that are relevant to private usage, exists in socialism and communism.

In China, for example, the financial system, energy, oil, insurance, education and aerospace sectors are all under strong government control, with state-owned enterprises directing the majority of these sectors' resources and manpower in accordance with China's various 5-year plans. Through the guidance of China's vanguard party, China is steadily socializing its bourgeois elements.

At the same time, there are large privately-owned, capitalist enterprises, such as in the real estate industry. These are kept on a tight leash, preventing them from being able to turn their economic power into political power. Thus we see the characteristics of both. These two contradictory halves ebb and flow with the aggregate effect being a country whose socialist economy has grown 2-3 times faster than the capitalist USA for the past 30 years.

Socialism as the First Phase of Communism

But the scientific difference between Socialism and Communism is clear. What is usually called Socialism was termed by Marx the "first" or lower phase of communist society.

Vladimir Lenin in The State & Revolution develops Marx's analysis in Critique of the Gotha Program of not only in how a socialist society would function but he also attacks the misconception that under socialism, workers will receive the full extent of his or her labour. In Lenin's analysis and interpretation, he maintains that Marxists are not utopians who would assume that wealth inequality would vanish overnight in a socialist society. He makes it clear that as a socialist society is:

A society which has just emerged into the light of day out of the womb of capitalism and which, in every respect, bears the birthmarks of the old society[6]

As such, socialism is marked as the first phase of communism. In this phase, the differences and injustice in wealth will still exist but makes it clear what will disappear is the ability for one person to exploit another due to their inability to seize the means of production by the conversion of private property into common property. This in turn is directly related to abolishing of bourgeois right to private property. However, it does not mean that "bourgeois rights" disappear as a whole. On the contrary, in this first stage, the bourgeoisie continue to receive certain rights related to the capacity of regulator (determining factor) in the distribution of products and the allotment of labour among the members of society. This stage, although admitted by Lenin and Marx to be a "defect", Lenin's reiteration that Marxists are not utopians justifies this stage:

...if we are not to indulge in utopianism, we must not think that having overthrown capitalism people will at once learn to work for society without any standard of right; and indeed the abolition of capitalism does not immediately create the economic premises for such a change, and indeed the abolition of capitalism does not immediately create the economic premises for such a change.

From Lenin's quote, it is clear that contradictions will continue to occur but the curtailing of bourgeois rights in relation to their ability to own the means of production for the time being until the material conditions will set the higher stage of communism.

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  4. 4.0 4.1 Economics Institute of the Academy of Sciences of the U.S.S.R (1954). Political Economy: 'The Material Production Basis of Socialism'. [PDF] London: Lawrence & Wishart. [MIA]
  5. Was not the abolition of private property possible at an earlier time?
    No. Every change in the social order, every revolution in property relations, is the necessary consequence of the creation of new forces of production which no longer fit into the old property relations.
    Private property has not always existed.
    When, towards the end of the Middle Ages, there arose a new mode of production which could not be carried on under the then existing feudal and guild forms of property, this manufacture, which had outgrown the old property relations, created a new property form, private property. And for manufacture and the earliest stage of development of big industry, private property was the only possible property form; the social order based on it was the only possible social order.
    Now, however, the development of big industry has ushered in a new period. Capital and the forces of production have been expanded to an unprecedented extent, and the means are at hand to multiply them without limit in the near future. Moreover, the forces of production have been concentrated in the hands of a few bourgeois, while the great mass of the people are more and more falling into the proletariat, their situation becoming more wretched and intolerable in proportion to the increase of wealth of the bourgeoisie. And finally, these mighty and easily extended forces of production have so far outgrown private property and the bourgeoisie, that they threaten at any moment to unleash the most violent disturbances of the social order. Now, under these conditions, the abolition of private property has become not only possible but absolutely necessary.”

    Friedrich Engels (1847). Principles of communism: 'Was not the abolition of private property possible at an earlier time?'.
  6. Vladimir Lenin (1917). The State & Revolution: 'Chapter V - The Economic Basis of the Withering Away of the State; The First Phase of Communist Society'.