SOCIOLOGY OF DEVELOPMENT (BS 3)

                                                             THE SOCIALIST MODEL OF DEVELOPMENT

1. Socialist Model of Development: What it is?

The socialist model of development was one of the reigning paradigms of development in the post Second World War period. This model had its root in the Soviet Russia. It is based on the philosophy of equity and state ownership as against the growth and market driven strategy of development propounded by the capitalist model of development. Simply it can be said that when the ideology of “Socialism” are put into development practice, it is called a socialist approach or model of development.

2. History of the Socialist Model of Development

The word “Socialist” is a derivation from the ideology called socialism. The word ‘socialism’ finds its root in the Latin word “sociare”, which means to combine or to share. Modern socialism originated in the18th-century.During this period there was an intellectual and working class political movement against the blind process of industrialization that was taking momentum in the west. The movement also raised voice against the concept of private property that was emerging as an off shoot of the growing capitalism and was generating inequalities of ad deep magnitude in the society. The revival of republicanism in the American Revolution of 1776 and the egalitarian values introduced by the French Revolution of 1789 became the founding values of socialism as an ideology.

In the early 19th century, “socialism” gained currency as a practicing ideology to curb the evils of capitalism. However, by the late 19th century, “socialism” got its root as a contrast to the capitalist system of development and production. It advocated for some form of social ownership. During this time, German philosopher Karl Marx and his collaborator Friedrich Engels published works on socialist trends and ideologies. To these philosophers, socialism would appear as a phase of development. It will be established through a revolution by the people against the conflicting class interests and exploiting relationship. To the socialist thinkers development of a society becomes impossible with gross inequalities, lack of distributive justice and exploitation of a group by the other. To be more specific, in 1888, the Marxists used the term socialism in the place of communism. The socialist movement came to be the most influential worldwide movement and political-economic worldview of the 20th century. It was after the Bolshevik Revolution Vladimir Lenin used it as an intermediary model between capitalism and communism. Gradually this model was adopted by different nations as an operational model of development.

3. Features of the socialist model of development

The socialist model of development has its typical features which can be stated as follows.

1. Public or Collective Ownership of Resources:

The socialist model of development opposes ownership of private property. To the advocates of the socialist model of development, private property is the root cause of social inequality and social disparity which challenge development of a society. In the socialist economic model of development, all the material means of production are owned and used by state organs in order to avoid private ownership and control. However, it does not mean that private enterprise and private property are totally nonexistent in socialist economy. But state ownership surpasses them and the bulk of the means of production are state owned and state run.

 

 

2. Economic Planning:

Under socialist model of development, the economy is well planned. Planning may be centralized or decentralized. All the basic decisions for the control and regulation of the economy are taken by government. Similarly all the basic and strategic functions are performed according to a definite plan. Formulation of plans is the responsibility of a central planning authority which is again state decided, state established and state directed in nature. Emphasis is given on economic planning to avoid unwanted production and to put a check on unwanted production. Economic planning tries to make production according to the real needs of the people and to synchronise production and distribution.

3. Social Welfare Motive:

The socialist model of development aims to maximize the welfare of the people. It focuses on equal rights of all individuals and equal opportunity for all members. Social welfare becomes the basis of all economic decisions and economic policies. Price policy is guided by social welfare motive. Everyone is entitled to the benefits of socialized production on the basis of equal rights. According to the socialist model of development, welfare of the people is not only the aim of development but the prime measure to assess development.

4. Little Importance of Price Mechanism:

A socialist model of development is not growth centric, but people centric in nature. Therefore, price regulation remains in the hands of the state to benefit all. The state too does not emphasize on hiking prices to ensure access, equality and quality for all people. Availability of the product remains the goal rather than making profit through fixing high price. Thus the socialist model of development tries to maximize availability, accessibility and affordability of resources and opportunities for the people.

5. People’s Co-operation:

Socialist model of development rests on the ideology of people’s participation through cooperation rather than cut throat competition. It aims at a planned economy. No plan can possibly succeed without the active participation of people. Therefore, while fixing the priorities of plans the central planning authority keeps in mind the interest of the community to seek the active participation of people in the implementation of plan. The government makes provisions for special incentives to seek people’s cooperation in the process of production. Community planning, bottom up planning ideas later on became outcomes of the socialist model of development.

6. Lack of competition:

The resources are under government ownership in a society adhered to the socialist model of development. Therefore, government decides-what to produce, how to produce and for whom to produce. Prices are determined by government because productive enterprises are monopolized by the state. Govt., avoids all sorts of rivalries and competition among state enterprises. Thus there is absence of competition in a socialist model of development. The socialist model of development thus promotes partnership, collaborations rather than competition.

7. Non-existence of Social Parasites:

The socialist model of development tries to break the division between haves and have-nots or between ‘master and servants’ or the economically rich and economic under dogs. It does not create a group of producers and a group of consumers. Everyone is both a producer and a consumer. The philosophy of a socialist model of development is “to each according to his needs and from each according to his ability.” Thus there is no place of social parasites and no possibility of exploitation.

8. Equality of Opportunity:

Under a socialist model of development design, the state guarantees equality of opportunities and equal pay for equal work. Government does not discriminate among members of the society on the basis of caste, creed, religion and sex. In short, a socialist economy is not regulated and driven by market mechanism. It is a comprehensively planned economy. This economy is in sharp contrast to a capitalist economy. In contrast to a capitalist economic system which goods and services are produced to generate profit, a socialist economy is a system which goods and services are produced directly for use.

                                Socialist vs. Capitalist model of development

Thus, the socialist model of development emerged as a sharp reaction against the capitalist model of development. The basic differences between the two models of development can be described as follows.

	Criterion				Capitalist model of development	Socialist model of development
Equity					Capitalist model of development remains unconcerned about equity. It is argued that inequality is essential to encourage innovation and economic development.	Socialist model of development believes in egalitarianism. This model of development is concerned with redistributing resources from the Rich to the poor. This is to ensure everyone equal opportunities and equal share in outcomes
Ownership					Capitalist model of development strongly believes in private ownership of property. Privatization of the institutions and production are its principles. It always advocates for minimum state intervention. It promotes the state as a facilitator rather than an interventionist	Socialist model of development believes in collective ownership either through the state or workers cooperatives. The State will own and control the main means of production. In some socialist models of development, ownership would not be by the government but worker cooperatives
Efficiency, and innovation					Under capitalist model of development there is cut throat competition. This approach to development encourages efficiency. It is argued that the profit incentive encourages people to be more efficient, cut costs of production and to introduce innovation of new products that people want. So, there is competitive price, expanding market and product diversity in the societies opting for a capitalist development model	Under socialist model of development, competition is discouraged. It is argued that state ownership often leads to inefficiency because workers and managers lack any incentive to cut costs. Welfare of the people is the target of the socialist models of devel
Unemployment				Under the capitalist model of development, the state doesn’t directly provide jobs. Labour displacements are frequent under capitalist model. Therefore in times of recession, unemployment in capitalist economic systems can rise to very high levels		Employment is often generated and directed by the state. Therefore, the state can provide full employment even if workers are not doing anything particularly essential. Labour displacements are not common under socialist model. Socialist model ensures job security
Price Controls				Prices are determined by market forces in capitalist mode of development models. Capitalist producers have a free hand to monopolise the process of production, distribution, prices and exploit the labour force. Here inequalities are ever on rise. The gap between the rich and the poor is perceptible. There is fast development, but not a balanced development.		Under the socialist model of development price control is in the hands of the state. The state decides the process of production, distribution and price keeping the larger interest of the population. Here inequalities are curbed. There is slow development, but a balanced development.

 

During the 20th century many countries like, Soviet Russia, Poland, Yugoslavia, Austria, Cuba, Hungery, China, Vietnam opted for a socialist model of development.

Types of Socialist Model of Development

In the 20th century, there are three major established “socialist” economic models of development. Though the ideology remains almost the same, there is a little variation in practice among them. These models are:

1. Soviet model (centrally-planned / command economy)

2. European social model (social democratic mixed economy)

3. East Asian Model (socialist market economy)

The chief features of the three socialist models of development are cited below.

The Soviet Model: The chief features adhered to by the Soviet socialist model of development can be described as below.

1. Centralized state planning done through Gos plan (state planning

committee)

2. Decisions regarding the quantity of goods and services to be produced are planned in advance by a planning agency. The planning process is to balance economic inputs with planned output targets for the planning period.

3.Five-year plans are prepared to fix the targets.

4.Production quotas are pre fixed to avoid short falls and unnecessary surplus.

5.Allocation of resources and jobs are done through bureaucratized political control.

6.Prices of goods and services are determined by the government.

7.Full employment is guaranteed.

8.There is a system called bureaucratic collectivism where the bureaucratic state owns the means of production, while the surplus is distributed among the layer of party’s bureaucratic elites, rather than among the working class. It is the bureaucracy –not the working class or the people in general – who control the economy and the state.

Thus, the Soviet model is neither genuinely socialist nor truly capitalist.

Achievements:

The socialist model of development proved to be quite successful in the former Soviet Union. Soviet Union evolved from a mainly (backward) agrarian society to one of the world’s top manufacturers of a large number of capital goods and heavy industrial products. Soviet become a second superpower that matched the might of imperialist US for over 40 years after World War II.

Decline of the Soviet Socialist Model of Development:

Economic liberalization during Perestroika under Mikhail Gorbachev moved the economy towards a market-oriented economy and contributed to the dissolution of the Soviet Union. The last years of the socialist model of development in Soviet Union witnessed the poor governance of bureaucratized state apparatus, inefficiencies with the centrally-planned economy, pervasive corruption and socio-economic stagnation. All these led to a demand for economic reformation and there was the demise of the Soviet socialist model of development. Social Democratic Mixed Economy Model of development This model of socialist development emerged during the post-World War II period. This came as a response by European bourgeoisie to working class movement after World War II to curb the post-war revolutionary waves in

Europe. Social democratic mixed economy model of development

The chief features adhered to by the social democratic mixed economy model of development can be described as below.

1,There is the co-existence of public and private sector enterprise.

2. There is the nationalization of key industries.

3. National planning is done by the state authorities for industrial development.

4. The state implements welfare state policies like minimum wage, social insurance, pension, full employment.

5. The state recognizes the organization and functioning of trade unions etc.

6, Care is taken for the redistribution of wealth through progressive taxation. Pakistan opted for this model of development.

Challenges faced by the Social Democratic Mixed Economy Model of development:

This model of socialist development encounters the following

challenges. Under this typical model of development, there is a cyclical fluctuation of capitalist economy that threatens the functioning of the welfare state. The collapse of Eastern Bloc opened up doorways for capital flight from social democratic economies. Neo-liberalism – privatization, trade liberalization, and deregulation gave a death blow to this model of development. In the era of globalization social democratic parties embracing the “third-way” become more aggressive in implementing neo-liberal agendas.

Socialist Market Economy Model of Development:

This type of development model is based on a largely free market. Capital accumulation for profit and substantial private ownership along with state ownership of strategic industries are the other remarkable features of this type of socialistic development model. State ownership is monopolized by a single political party. China (socialist market economy with Chinese characteristics);

Vietnam (Socialist oriented market economy) opted for this variety of socialist model of development.

Socialism in China is a mixture of economic planning with a market economy. It was spearheaded during the regime of Mao when land reform was introduced to break the monopoly of landlordism and semi-feudal relations in rural areas. The Chinese revolution prior to market reform brought huge social gains for the impoverished population. People’s Republic of China has “emerged” into an important economic power in the world today through its “market reforms”. Although poverty reduction and the levels of development achieved by China after its market reform are commendable, but capitalist restoration as an unavoidable result of market reform also created tremendous problems (social inequality, environmental destruction etc.) and posed threat to socialist construction.

Socialist-oriented market economy in Vietnam is a form of mixed-economy consisting of state, private, co-operative and individual enterprises coordinated by market mechanism. The state is playing the leading role in the diversification of forms of ownership and modes of production. It is intended to be a transitional stage in the development of socialism.

Problems and challenges faced by the Socialist Market Economy Model of Development:

The following are the challenges faced by the socialist market

economy model of development It ultimately restored capitalist commodity relations and production.

1.This model gave birth to sharp increase in social inequality resulting from widening income gap.

2. This model disempowered the working class.

3. This model reflected the domination of state bureaucratic capitalists/elites.

Advantages of Socialist Model of development

Prof. Schumpeter has advanced four arguments in favor of socialism: which are reflected in the model of development based on this ideology. These advantages are: greater economic efficiency; welfare due to less inequality; absence of monopolistic practices; and absence of business fluctuations. These

are discussed below.

·         Under this model of development there is efficient use of resources to produce socially useful goods without taking the profit margin into account. Production is increased by avoiding wastages of competition.

·         In this type of development model, over-production and unemployment are arrested. There is no business fluctuation. The economy is stable as production and consumption of goods and services are well regulated by the state mechanism.

·         Under this model of development social welfare is well ensured and basic needs for human development are met.

·         There is no corporate monopoly under the socialist model of development.

·         This type of development practises egalitarianism. Social inequality is prevented to a great extent

Disadvantages of Socialist model of Development

A socialist model of development has the following shortfalls. These shortfalls

are discussed in detail below.

1. Loss of Consumers’ Sovereignty:

There is loss of consumers’ sovereignty in a socialist economy. Consumers do not have the freedom to choose the products they want in terms of quality, diversity and quantity. Often the quality, variety and quantities which they can buy are fixed by the state.

2. No Freedom of Occupation:

There is also no freedom of occupation in such a society. Every person is provided job by the state. But he cannot leave or change it. Even the place of work is allotted by the state. All occupational movements are sanctioned by the state.

3.Mal allocation of Resources:

Under socialist model of development, the central planning authority often commits mistakes in resource allocation because the entire work is done on trial and error basis.

4.Bureaucratic:

Under the socialist model of development model there is heavy dominance of bureaucrats. A socialist model of development is said to be a bureaucratic designed and driven model of development. Here people have least autonomy and motivation and room for innovation. So, sometimes the quality of production becomes poor.

PRESENT STATUS

However, it can be concluded that with the rise of global capitalism due to the process of globalization, the socialist model of development has lost its popularity and is in a process of decline. The onset of globalization in the 1980s–90s coincided with the shift in China and Russia from socialistic model.