UNIVERSITY OF PETROLEUM AND ENERGY STUDIES DEHRADUN

2017- 2018

SEMESTER – THIRD

SUBJECT: INTERMATIONAL RELATIONS

TOPIC: SOCIALIST MODEL GOVERNANCE AND ITS RELEVANCE IN

COMTEMPORARY WORLD

SUBMITTED TO: SAM BABU SIR

SUBMITTED BY: KAMAKSHI JOSHI

ROLL NUMBER: 450216044

SAP ID : 500055206

BATCH : 01
 SYNOPSIS

INTRODUCTION

Socialism governance is a type of government where , planning , producing and

distribution of good is controlled by a central government. The aim of the
government to do so is to seek more just and equitable distribution of property and
labor.

OBJECTIVE

The objective of this research is to understand the theory of socialist governance

with its relevance in contemporary world.

HYPOTHESIS

Socialism is means a chance to develop all individual capacities and potentials

within a free community of free individuals

RESEARCH METHODOLOGY

The research is analytical research to make evaluation of the material collected and
is descriptive in nature

CHAPTERISATION

1) INTRODUCCTION: This chapter covers the origins of socialism with

definition with advantages, disadvantages and characteristics of the theory.
2) TYPES OF SOCIALISM: this chapter discusses the eight types of socialism,
the major branches according to “ socialism by branch” in the basics of
philosophy.
3) SOCIALIST ECONOMIES: Using the example of China, Cuba and North
Korea this chapter discusses about democratic socialist economies and its
working in present era. It also discusses about recent developments.
4) INFLUENCE OF SOCIALISM: The influence of socialism in contemporary
world, politics and culture will be dealt in this chapter. It will further discuss
the political ideology held by groups regarding purpose and scope of
government.
5) CONCLUSION: it discusses the working of local and national government
for democratic control of individual rights and socialism is or is not aspect.
The methods needed or suggestions to obtain socialist governance.

LITERATURE REVIEW

1) Karl Max (1848). Samuel Moore. The Communist Manifesto: Theories

about the nature of society and politics.
2) Wlodimierz Brus. Socialist Ownership and Political Systems. Routledge &
Kegan Paul, London, 1975.
3) W. Paul Cockshott and Allin Cottrell. Towards a New Socialism.
Spokesman, 1993.
4) N. Harding. Lenin’s Political Thought. Macmillan, London, 1981.
5) Agnes Heller. The Theory of Need in Marx. Allison & Busby, London,
1976.
6) Karl Held and Audrey Hill. From 1917 to Perestroika: The Victory of
Morality over Socialism. Resultate Verlag, Munich, 1989. Available through
Gegenstandpunkt Verlag, T¨urkenstr. 57, D-80799 Munich, Germany.
7) Don Lavoie. Rivalry and Central Planning: The Socialist Calculation Debate
Reconsidered. Cambridge University Press, Cambridge, UK, 1985.
8) Mary McAuley. Labor Disputes in Soviet Russia. Oxford University Press,
1969.
9) Michael Albert and Robin Hahnel. The Political Economy of Participatory
Economics. Princeton University Press, Princeton, New Jersey, 1991.
CHAPTER 1 – INTRODUCTION

Socialism

As a political ideology, socialism emerged as a rival to classical liberalism in the

19th century. It was a political response to the often-horrific conditions of
industrial workers in the advanced capitalist countries and laid claims to
representation of the working class. Although it spawned many variants, socialism
sets forth the following basic arguments –

First, the free market (capitalist) system so adored by classical liberals is not free at
all. Disproportionately few property owners wield true economic power and use
their ownership of the means of production to exploit hired workers.

Second, the democratic system is mainly a facade for the economic elite. Given the
true foundations of power in society, formal legal and political opportunity is not
enough. Only when those who work for wages wield economic power will society
find true equality and freedom.

Origins of Socialism

Vintage photo of Karl Marx although it developed independently as the outgrowth

of the practical concerns and political interests of industrial workers, socialism is
influenced by the powerful theory of Karl Marx. Marxism views history as being
driven by the struggle of economic classes.

The socialist tradition splits into those designating themselves as Socialist or

Communist. The main difference between the two groups lies in the Communist‘s
claim to follow a more pure version of Marxism while the Socialists have greater
openness to working within the political framework of liberal democracy.

Example- By contesting elections and following constitutional processes.

Communists were traditionally more likely to believe in the inevitability of armed
revolution to establish an egalitarian society. As its name implies, socialism holds
that the economy should be managed in the interest of society as a whole. Where
Adam Smith viewed market forces as an ultimately benevolent invisible hand,
socialists see many market failures that are not self-correcting.
Low wages, unhealthy or dangerous working conditions, pollution of the
environment, unemployment, and insufficient vacation time are all problems that
socialism sees as fit for state intervention.

EXAMPLES

1. Classical conservatism, socialism accepts the responsibility of government to

take care of society's less fortunate but goes much farther by elevating equality as a
cardinal value.

2. Classical liberalism, socialism advocates the separation of church and state.

Unlike classical liberalism, socialism endorses not only equality of opportunity but
also equality of results.

Socialists are more likely to accept the principle of progressive taxation, with
higher income earners paying more in taxes, due to considerations of fairness.

Socialism accepts the responsibility of government to provide a variety of services

to the poor and working classes and so embraces the welfare state. Socialism
supports government employment programs, universal health care, and generous
payments to the unemployed or disabled. Although enthusiasm for such a policy
has waned considerably in recent decades, socialism used to stand for the
nationalization, or government ownership, of major industries in the economy.

Marx's saying "from each according to ability, to each according to need" cogently
captures the spirit of socialist ideology. Put another way, in striking a balance
between equality and freedom, socialism favors equality while classical liberalism
favors freedom.

Definition: Socialism is an economic system where everyone in the society

equally owns the factors of production. The ownership is usually through a
democratically-elected government. It could also be a cooperative or a public
corporation where everyone owns shares. The four factors of production are labor,
entrepreneurship, capital goods and natural resources.
Workers receive their share after a percent has been deducted for the common
good.

Examples - Transportation, defense and education.

Some also define the common good as caring for those who can't directly
contribute to production.

Examples - the elderly people, children and their caretakers.

Advantages

1. Workers are no longer exploited, since they own the means of production.
2. All profits are spread equitably among all workers, according to his or her
contribution.
3. The cooperative system realizes that even those who can't work must have their
basic needs met, for the good of the whole. That means poverty is eliminated
and everyone has equal access to health care and education.
4. No one is discriminated against. Everyone works at what they are best at and
what they enjoy.
5. If society needs jobs to be done that no one wants, It offers higher
compensation to make it worthwhile.
6. Natural resources are preserved, again for the good of the whole.

Disadvantages

1. The biggest disadvantage of socialism is that it relies on the cooperative nature

of humans to work. Therefore, those within society who are competitive, not
cooperative, will always seek to overthrow and disrupt it for their own gain.
2. It doesn't reward people for being entrepreneurial and competitive. Therefore, it
won't be as innovative as a capitalistic society.
3. The government set up to represent the masses may abuse its position and claim
power for itself.
 Characteristics

1. A socialist economy offers collective ownership, either through a state-

controlled agency or worker cooperative; or else property/capital might be
commonly owned by the society as a whole, with delegation to representatives.
2. Socialist economies discourage private ownership. Goods and services are
produced for their usefulness, with the aim to eliminate the need for a demand-
based market for products to be sold at a profit.
3. In this way it discourages accumulation, which is assumed to be the root cause
of wealth imbalance across the society.
CHAPTER 2 – TYPES OF SOCIALISM
There are eight types of socialism. They differ on how capitalism can best be
turned into socialism. They also emphasize different aspects of socialism.

The major branches, according to "Socialism by Branch," in The Basics of

Philosophy are-

1. Democratic Socialism: The factors of production are managed by a

democratically-elected government. Central planning distributes common
goods, such as mass transit, housing, and energy, while the free market is
allowed to distribute consumer goods.

2. Revolutionary Socialism: Socialism will emerge only after capitalism has been
destroyed. The factors of production are owned by the workers and managed by
them through central planning.

3. Libertarian Socialism: Libertarianism assumes that the basic nature of people

is rational, autonomous and self-determining. Once the strictures of capitalism
have been removed, people will naturally seek a socialist society that takes care
of all. That's because they see it is the best for their own self-interest.

4. Market Socialism: Production is owned by the workers, who decide how to

distribute among themselves. They would sell excess production on the free
market or it could be turned over to society at large, which would distribute it
according to the free market.

5. Green Socialism: A socialistic economy that highly values the maintenance of

natural resources. This will be achieved through public ownership of large
corporations. It also emphasizes public transit and locally-sourced food.
Production will be focused on making sure everyone has enough of the basics
instead of consumer products they don't really need. Everyone will be
guaranteed a livable wage.
6. Christian Socialism: Christian teachings of brotherhood are the same values
expressed by socialism.

7. Utopian Socialism: This was more a vision of equality than a concrete plan. It
arose in the early 19th century, before industrialization. It would be achieved
peacefully through a series of experimental societies.

8. Fabian Socialism: A British organization in the late 1900s that advocated a

gradual change to socialism through laws, elections, and other peaceful means.
CHAPTER 3 – SOCIALIST ECONOMIES

The most commonly followed economic system, modern-day capitalism, was

based on a framework to secure supply of the key elements required for industry –
land, machinery and labor – as disruption in any of these would lead to increased
risk and loss for the venture.

Socialists viewed this commoditization of labor as an inhuman practice, and that

led to the birth of socialism and socialist economies across a few countries.

Socialism, similar to communism, advocates that the means of production be

owned by the people, either directly or through government agencies. Socialism
also believes that wealth and income should be shared more equally among people.

Democratic socialism is a political ideology that advocates political democracy

alongside social ownership of the means of production, often with an emphasis on
democratic management of enterprises within a socialist economic system.

Democratic socialists see capitalism as inherently incompatible with the

democratic values of liberty, equality and solidarity; and believe that the issues
inherent to capitalism can only be solved by superseding private ownership with
some form of social ownership.

1. DENMARK
Denmark has a wide range of welfare benefits that they offer their citizens.
As a result, they also have the highest taxes in the world. Equality is
considered the most important value in Denmark. Small businesses thrive,
with over 70 percent of companies having 50 employees or less.

2. FINLAND
Finland has one of the world’s best education systems, with no tuition fees
and also giving free meals to their students. The literacy rate in Finland is
100 percent. It has one of the highest standards of living in the world.
Like Denmark and other European countries, equality is considered one of
the most important values in society.
 3. SWEDEN
Sweden has a large welfare system, but due to a high national debt, required
much government intervention in the economy.

4. NORWAY
In Norway, the government controls certain key aspects of the national
economy, and they also have one of the best welfare systems in the world,
with Norway having one of the highest standards of living in all of Europe.
Norway is not a member of the European Union.

The three prominent socialist economies across the globe are Cuba, China and
North Korea.

1. CUBA

The Cuban Economy Cuba is one of the most prominent socialist nations,
having a mostly state-run economy, a national health-care program,
government-paid education at all levels, subsidized housing, utilities,
entertainment and even subsidized food programs. These subsidies compensate
for the low salaries of Cuban workers, making them better off than their
international counterparts in many other countries.

Cuba does not have a stock exchange – a crucial indicator of a capital-free

economy. Around 80% of Cuba's workforce is in state-owned facilities

EVOLUTION OF THIS ECONOMY -Starting with the modern day and

tracking backward, President Raúl unveiled economic reforms in 2010 aimed to
shift toward a mixed economy that would allow free-market mechanisms,
remove government control of small businesses, lay off unnecessary state
workers and make self-employment easier.

NEED OF THE CHANGE - Well, it seemed that state-run subsidies had

become insufficient to support the numerous social programs. Despite the
enormous aid received from the unified Soviet Union, there were high poverty
levels, a widening gap of rich and poor, and a massive burden on social
programs.
As of today, Cuba seems to be better situated with a parallel financial system –
one that operates on the usual social programs in common sectors, while
operating as a free-market economy in the tourism, export and international
business sectors. The latter actually assists the social system.

Around 20% of Cuban workers are currently employed in this private sector.
On the heels of reports that half a million workers were being laid off, further
plans and reforms will allow up to 40% of the government workforce to move
into the private sector, enabling the inception of income tax payment, which in
turn will lead to more self-reliance.

RECENT DEVELOPMENTS

1. Introducing better reforms through new laws aimed to bring in higher

foreign investment, the changes to the closed “socialist economy” are already
on their way to mixing with the market-based open economy.

2. Tax-free special development zones are being introduced for foreign

companies to conduct business freely and allow transfer of tariff-free profits
abroad, among other benefits. This is a significant change from the central
“socialist” planning.

2. CHINA
A significant portion of the Chinese economy is still government-controlled,
although the number of government programs has declined significantly.
Example: Universal health care is being discontinued.

China's foreign policy continues to be pro-socialist, but it has essentially

become a free-market economy. In essence, China no longer remains a “pure
socialist economy."
The privately owned firms reportedly generate a substantial portion of GDP
for China (figures vary from 33% to 70%)

After the U.S., China is the second-largest economy in the world, and the
number-one largest manufacturing economy.
The communist regime in China quickly realized that it would be to its
disadvantage to keep China's economy secluded from the rest of the world.
It has been able to successfully strike a balance between the “collective” and
“capitalist” approach.
Policies allow entrepreneurs and investors to take profits, but within the
controls of the state.

RECENT DEVELOPMENTS
1. Around 2004, the government began to allow a person’s right to private
property.
2. Establishing a special economic zone and opening up to international
trade have allowed the country to embark on fast-paced economic growth
(all courtesy to the right changes to the socialist policies at the required
time)

3. NORTH KOREA

Like Cuba, North Korea has an almost entirely state-controlled economy,

and it has similar social programs to those of Cuba. There is no stock
exchange in North Korea either.

Around mid-1975, North Korea was better educated and more productive
than China (going by international trade per capita). However, North
Korea also has the terrible misfortune of being the only educated and
developed society in human history to face a mass famine – and during
peacetime at that.

The country’s hunger problem reportedly has not been resolved. If the
tightly controlled socialist economic system had been a success in North
Korea, the nation would probably not have deteriorated to this level.

Challenges with North Korea

The discontinuation of major aid (and trade) from the Soviet Union and
sanctions by other world powers are significant developments that restrict
the Korean economy.
However, other countries like Vietnam have managed to improve during
the same post-Soviet period, while the North Korean economy declined.

Apart from the challenges of dynastic rule in North Korea, which

prevents the country from becoming self-reliant, the campaign of
"military-first politics" imposes a heavy burden on the economy.

North Korea’s only foreign-trade partner is China, and the business is

dominated by middlemen who broker the deals between Chinese
companies and Korean firms. This has completely closed off North
Korea on nearly all fronts.

RECENT DEVELOPMENTS

1. Due to a lack of self-sufficient manufacturing facilities and markets in

the country and increasing dependency on China, private firms and
businesses are on the rise in Korea.

2. Irrespective of the existing situations and causal factors, the

development of parallel “second” markets, where citizens and firms
trade or barter for goods and services, are thriving.

3. Indicating a significant shift from the heavily controlled “socialist”

economy of North Korea, this parallel system is seeing involvement
from all – housewives exchanging unused goods for the ones required,
farmers selling their produce locally and an increasing number of
firms importing Chinese goods through agents.

4. Lack of credible official information on North Korea makes it hard to

observe the economic development but available information does
point to the existence of a different financial system.
CHAPTER 4 - INFLUENCE OF SOCIALISM

Socialism's influence on the politics and culture of most democracies, with the
exception of the United States and Japan, is deep and persistent.

European countries in particular reflect socialist policies. Europe's eastern half

underwent an unsuccessful forty-year experiment with communism. More
countries of Western Europe such as Sweden, France, and Germany implement
socialist priorities through state ownership of major industries, high levels of
public employment, strict legal requirements providing job security, and extensive
welfare states.

Workers in most European states get several weeks of guaranteed paid vacation. In
France, most workers are limited to 35 hours of work per week. Tellingly, every
country in Europe has an influential Socialist party that contests and wins
elections. Once considered one of the most conservative states, Spain is currently
run by the Spanish Socialist Party.

Britain's socialist-inspired party, Labor, has governed that country since 1997. The
developed world is not the only place where socialism's legacy is important.

India spent decades of uninterrupted rule by a Socialist political party.

Senegal's young democracy in Western Africa recently emerged from four decades
of Socialist rule; its government still employs approximately forty percent of the
official workforce and controls major industries.

1904 U.S. Socialist Party campaign poster with candidate Eugene V. Debs in
America by contrast socialism's influence has been relatively feeble. Trade unions
did and do exist in the United States but never came under the sway of Marxist
doctrine. While a Socialist party does exist, and has even fielded candidates for the
US presidency, it never achieved electoral success at the national or state level.
The Roosevelt administration introduced welfare policies similar to, if less
extensive than, those found in Europe during the 1930s, but only as a response to
the Great Depression, war, and as a matter of pragmatic politics.

Marxism has never flourished in the United States outside of the university
subculture.
 Socialist ideas have always seemed like fish out of water, never capturing the
popular imagination. A partial explanation is our country's long Cold War struggle
with the communist Soviet Union. This military, economic, and above all
ideological struggle went far in discrediting socialist theory. Man holding up two
signs reading Stop Socialism and No National Healthcare yet socialism's failure to
sink roots in America is also a tribute to the overwhelming dominance of classical
liberalism.

Belief in individual responsibility, belief in economic success for those who work
hard, and a distrust of big government have severely handicapped socialism's
ideological challenge. Americans are more likely to admire businesspersons and
entrepreneurs than vilify them.

Indeed, it is hard to imagine the almost cult-like celebrity of a Warren Buffet or

Donald Trump in any other country but the United States. Americans are more
concerned about acquiring private property than making sure it is equally
distributed.

Socialism's fortunes have recently waned outside the United States as well.
Experiments with state ownership of the economy, such as those in France, India,
and Sweden failed to sustain attractive growth rates after the 1970s and left
countries less competitive in a globalized market.

Socialist parties have toned down both their ideological rhetoric and policies in
response to an evolving world economy. The continued appeal of socialist values
in other countries, however, still explains wide differences between politics in
America and the rest of the world because it has dramatically reset the baselines of
political debate. The political values of a conservative in Britain or France are
much more likely to appear liberal in the United States.
RELEVANCE OF KARL MARX’S IDEA TODAY

Karl Marx, it seems was partly right in arguing that globalization, financial
intermediation run riot, and redistribution of income and wealth distribution of
income away from labor to capital could lead to capitalism to self-destruct .

Firms are cutting jobs because there is not enough final demand. But cutting jobs
reduces labor income, increased inequality and reduces final demand.

The beginning of August stock markets internationally have been convulsed with
fear of a “double dip recession” in the world economy. The term “double dip
recession” itself implies that there has been a noticeable recovery in economic
growth since 2009 when capitalism faced its worst crisis since the great depression
of the 1930s.

Clearly for most working class people this has not been the case given the return of
mass unemployment and a vicious onslaught on wages and conditions, combined
with austerity, being on the order of the day. Within this context workers and
young people will begin to embrace the analysis and ideas of Marxism in much
more deep and meaningful way.

In a number of his key writings Karl Marx explained the inherently exploitative
and unequal nature of capitalism. He argued that the “value” of all commodities or
goods that are produced within an economy was created by the labour of the
working class. Yet workers only receive a certain proportion of this value that they
have created through payment of their wages, the remainder of this value, or
“surplus value” would go to the capitalists in the form of profits. Fundamentally
these profits represent the theft of the wealth created by working people.

Since the 1970s capitalism internationally has sought to increase its share of the
value created within society by increasing its exploitation of the working class.
This as meant that real wages have declined globally and despite the advances in
technology workers are forced to work for longer hours. In 1981 the average
worker in Britain worked 69,000 hours over his or her lifetime, by 2008 this figure
stood at over 82,000 hours.
“Accumulation of wealth at one pole is, therefore, at the same time the
accumulation of misery, agony of toil, slavery, ignorance, brutality, mental
degradation, at the opposite pole”. Despite being written more than 100 years ago,
these words accurately sum up what the dictatorship of the capitalist market means
for the vast b-ulk of humanity today.

Globally vast sums of wealth are being amassed and hoarded by a tiny minority,
the richest 300 people in Ireland now one €57 billion, while working and
unemployment people face a future of increasing poverty and hardship. Only by
fighting for a socialist world, where its resources are collectively owned, controlled
and planned by the majority for the majority can we ensure that this is not
inevitable.
CHAPTER 5- CONCLUSION

Socialist economies across the globe have existed and continue to progress.
However, there may not be any standard pure socialist economy remaining.
Timely, fundamental shifts in programs and policies have allowed such economies
to thrive and flourish – China being the world leader among them. The ones taking
a rigid stand are facing severe problems or developing parallel markets.

There are no countries that are 100 percent socialist, according to the Socialist
Party of the United Kingdom. Most have mixed economies that incorporate
socialism with capitalism, communism or both.

list of countries that are considered to have a strong socialist system: Norway,
Sweden, and Denmark : The state provides health care, education, and pensions.
But these countries also have successful capitalists. The top 10 percent of each
nation's people hold more than 65 percent of the wealth. That's because most
people don't feel the need to accumulate wealth since the government provides a
great quality of life.

Cuba, China, Vietnam, Russia and North Korea: These countries incorporate
characteristics of both socialism and communism.

Algeria, Angola, Bangladesh, Guyana, India, Mozambique, Portugal, Sri

Lanka, and Tanzania: These countries all expressly state they are socialist in their
constitutions. Their economies are primarily run by the government. All have
democratically-elected governments.

Belarus, Laos, Syria, Turkmenistan, Venezuela, Zambia: These countries all

have a very strong aspect governance, ranging from healthcare, the media, or social
programs, that are run by the government.

Many other countries, such as Ireland, France, Great Britain, Netherlands,

New Zealand and Belgium have strong socialist parties and a high level of social
support provided by the government. However, most businesses are privately-
owned, making them essentially capitalist. Many traditional economies use
socialism, although many still use private ownership.
BENEFITS

1. Under socialism, all authority will originate from the workers, integrally
united in Socialist Industrial Unions. In each workplace, the rank and file
will elect whatever committees or representatives are needed to facilitate
production. Within each shop or office division of a plant, the rank and file
will participate directly in formulating and implementing all plans necessary
for efficient operations.
2. Besides electing all necessary shop officers, the workers will also elect
representatives to a local and national council of their industry or service—
and to a central congress representing all the industries and services. This
all-industrial congress will plan and coordinate production in all areas of the
economy.
3. All persons elected to any post in the socialist government, from the lowest
to the highest level, will be directly accountable to the rank and file. They
will be subject to removal at any time that a majority of those who elected
them decide it is necessary.
4. Such a system would make possible the fullest democracy and freedom. It
would be a society based on the most primary freedom—economic freedom.

INDIVIDUAL RIGHTS

For individuals, socialism means an end to economic insecurity and exploitation. It

means workers cease to be commodities bought and sold on the labor market, and
forced to work as appendages to tools owned by someone else. It means a chance
to develop all individual capacities and potentials within a free community of free
individuals. It means a classless society that guarantees full democratic rights for
all workers.

SOCIALISM IS OR IS NOT

Socialism does not mean government or state ownership. It does not mean a closed
party-run system without democratic rights. Those things are the very opposite of
socialism. "Socialism," as the American Socialist Daniel De Leon defined it, "is
that social system under which the necessaries of production are owned, controlled
and administered by the people, for the people, and under which, accordingly, the
cause of political and economic despotism having been abolished, class rule is at
end. That is socialism, nothing short of that."

Socialism will be a society in which the things we need to live, work and control
our own lives—the industries, services and natural resources—are collectively
owned by all the people, and in which the democratic organization of the people
within the industries and services is the government. Socialism means that
government of the people, for the people and by the people will become a reality
for the first time.

SUGGESTIONS TO OBTAIN SOCIALISM

1. To win the struggle for socialist freedom requires enormous efforts of

organizational and educational work. It requires building a political party of
socialism to contest the power of the capitalist class on the political field,
and to educate the majority of workers about the need for socialism.

2. It requires building Socialist Industrial Union organizations to unite all

workers in a class conscious industrial force, and to prepare them to take,
hold and operate the tools of production.

3. You are needed in the ranks of Socialists fighting for a better world—to end
poverty, racism, sexism, environmental disaster and to avert the still potent
threat of a catastrophic nuclear war.