Socialism - Definition, Types, Advantages,
                     SOCIALISM - DEFINITION, 
TYPES, ADVANTAGES, AND 
DISADVANTAGES
What is Socialism?
Socialism is a system in which every person in the 
community has an equal share of the various 
elements of production, distribution, and exchange of 
resources. Such a form of ownership is granted 
through a democratic system of governance. 
Source: corporatefinanceinstitute.com
About Socialism
Socialism has also been demonstrated through a 
cooperative system in which each member of the 
society owns a share of communal resources.
Source: corporatefinanceinstitute.com
The rule of 
engagement
The rule of engagement in a socialistic system is that 
each person receives and contributes according to his 
ability. For this reason, individuals in a socialistic 
society tend to work very hard. 
Source: corporatefinanceinstitute.com
Types of Socialism
Many forms of socialism exist around the world, and 
they all differ when it comes to ideas on how best to 
incorporate capitalism into a socialistic structure. 
In addition, the different forms of socialism emphasize 
the diverse aspects of social democracy.
Source: corporatefinanceinstitute.com
Democratic socialism
In democratic socialism, factors of production are 
under the management of an elected administration. 
Vital goods and services such as energy, housing, and 
transit are distributed through centralized planning, 
while a free market system is used to distribute 
consumer products.
Source: corporatefinanceinstitute.com
Revolutionary 
socialism
The running philosophy of revolutionary socialism is 
that a socialistic system can’t emerge while 
capitalism is still in play. Revolutionaries believe that 
the road to a purely socialistic system requires a lot of 
struggle.
Source: corporatefinanceinstitute.com
Libertarian socialism
Libertarian socialism works on the assumption that 
people are always rational, self-determining, and 
autonomous. 
If capitalism is taken away, people naturally turn to a 
socialistic system because it is able to meet their 
needs.
Source: corporatefinanceinstitute.com
Market socialism
Under market socialism, the production process is 
under the control of ordinary workers. The workers 
decide how resources should be distributed. 
The workers sell off what is in excess or give it out to 
members of the society, who then distribute 
resources based on a free market system.
Source: corporatefinanceinstitute.com
Green socialism
Green socialism is protective of natural resources. 
Large corporations in a green socialistic society are 
owned and run by the public. 
In addition, green socialism promotes the 
development and use of public transit, as well as the 
processing and sale of locally grown food. 
Source: corporatefinanceinstitute.com
Advantages of 
Socialism
1. Absence of exploitation: A socialistic system 
ensures that no worker is exploited. 
2. Rejection of discrimination: The system 
disapproves discrimination, and each person does 
what he is good at or what he enjoys best.
Source: corporatefinanceinstitute.com
Disadvantages of 
Socialism
1. Dependence on cooperative pooling: Perhaps the 
greatest disadvantage of a socialistic system is its 
reliance on cooperative pooling to get things 
done.
2. Lack of competitiveness and innovation: Socialism 
does not reward entrepreneurial ventures or 
competitiveness. Consequently, a socialistic 
system does not encourage innovation as much 
as capitalism.
Source: corporatefinanceinstitute.com