What is Socialism (in Simple Terms!)

Hey, welcome! So you want to learn about socialism. How’d you get here? I’m guessing that socialism may have sparked your interest when you heard Bernie Sanders throw around the term.

That’s what got me interested. Bless his soul, Bernie never did a good job at explaining socialism. So I had to figure it out on my own.

And trying to figure it all out took me to a very unexpected place. My journey first took me to this video, than to the dank memes of the socialist Reddit sphere. Finally, I got to reading the materials of Marx, Engels, Lenin, and other left-wing big heads. And to make sure I really got it, I went to do a masters in Urban Planning and Politics, and am currently completing a thesis on private property rights for squatter populations. I plan on doing a PhD in Political Economy to learn more.

Instead of you having to do that, I created this short, simple guide.

You may have some prejudices on what socialism is, and might think it’s a disastrous concept. You may have heard the word “socialist” used as an insult.

Whatever you’ve heard, I challenge you – I dare you – to put those prejudices to rest for the brief minutes it takes you to read this article. Learning about socialism was an eye-opening and life-changing experience for me – quite literally. It could change our collective lives if we so let it. But let’s start with the basics first.


Socialism offers an economic and social structure which would allow humanity to move away from having to producing stuff for profit, and instead, produce stuff for human use. It is a political system based on democratic control of the economy. It strives to give everyone the opportunity to develop as unique human beings by granting them full and free (or cheap) access to essential human needs, including (but not limited to) food, housing, health care, education and water.

The Basics of Socialism

Like capitalism, socialism defines how we interact as players in the economic field. It defines the “rules” that people who make stuff, buy stuff, sell stuff can play. Socialism offers very different set of rules than capitalism. There are lots of details, but for this basic guide, here’s what we’ve got:

No private owners of productive assets

“Productive assets” are any machines, buildings, pieces of land and people that are able to produce masses amount of products for sale.

What this typically represents are factories, large corporations and conglomerated farms. Under socialism, you wouldn’t have large corporations held by a small group of shareholders and run by an even smaller executive board. You wouldn’t have newspapers run by an old billionaire guy. The concentration of businesses in the hands of the few would not happen.

In capitalism, a few companies (and therefore, a few people) control nearly all of the products on the market. Under socialism, all products would be collectively owned by the workers that create them.

Any organization that requires more than one person to run would come under the collective control of all of the people working at that organization.

All workers at a company would ‘own a piece’ of where they work. That ownership must entail an equal vote in how the company runs and an equal share in the company’s profits. It’s democracy – but for the workplace.

No markets

Markets are places where people with stuff to sell come and bid against other people to get the buyers for what they are selling. It’s a competitive space where everyone is playing a zero-sum game. The better price a buyer is able to negotiate, the less profit the seller receives (and vice versa). Some sellers are not able to sell their products at a good price or at all – they come out with a loss.

Under capitalism, markets have become global affairs, with billions of sales every hour. The cumulative effect is that prices are determined by overall supply and demand – or at least, according to classical economic theory. Marx had different ideas.

You might think markets are a completely natural and inevitable products of human society. But this is wrong. Many societies have existed without markets and bartering, using gift economies to manage the distribution of goods and services instead. As anthropologist David Graeber argues in his 2014 book Debt: The First 5000 Years: “there is good reason to believe that barter is not a particularly ancient phenomenon at all, but has only really become widespread in modern times.” 

And markets are not entirely benign invention either – markets are full of problems and cause tons of harm. They are an economic arrangement that forces competition between producers and consumers, and a situation where a person must always lose the more the other gains.

Socialism would do away with markets, and would instead run on a democratically planned and ecologically sound economy. This means that we would harness the power of computing, big data and mathematics not to sell you ads, but instead to gain an understanding of what a population needs, and produce according to that need.

Under capitalism, you have multiple competing firms attempt to interpret signals from the market to understand how much of something to create. They will all unilaterally produce the amount they think they need in order to generate a high enough profit. There is no collaboration, nor any direct attempt to fulfill genuine human needs.The result is that there is incredible widespread waste – check out how much food I got from dumpster diving.

Socialism will seek to take the guesswork out, and use science, demographics, population studies, surveys and analysis to figure out how to effectively use everyone’s time and the world’s resources to meet people’s needs. If you think this is impossible, think again. Soviet economist Leonid Kantorovich won a Nobel Prize for Economics for his modeling of optimum allocation of resources.

Like having democratic workplace, having a planned economy would not be ‘easy’ overall. However, for some essential things – like food, medicine, education – it would actually be easy enough to predict how much will be needed and produce at a slight surplus to take care of any mistakes. It’s definitely very doable.

No unequal wages

If you’re a person with a job, then you are a likely working for a salary or an hourly wage. Seems simple. But this arrangement conceals a lot of unpleasant facts.

Many people assume that how much they are paid has to do with how complicated their job is, how hard it is, how much education you needed for it, how “important” it is to society, and so forth. Although these factors play into it, your wage/salary predominantly represents the supply/demand situation of your skill or trade.

If you have a high salary – like say a doctor – various factors are working into keeping the supply of doctors low, and the need high. This results in a higher salary for doctors. If you are, say, a palliative nurse, and you’re paid poorly, this simply reflects that, for a variety of reasons, there are lots of people who can do this work, and perhaps the demand side isn’t as strong. It’s unreasonable to say that palliative nurses are any less “necessary” or “important” than doctors. My dad died of cancer, and I know how important each of these roles are in the care of a sick people.

To give another example, some top stock market analysts are paid upwards of $500K a year. It’s not that they are having a hugely positive impact on society (in fact, many would argue their impact is overall negative), it’s just that few people are able/willing/invited to do this type of work, and there is a large demand of them.

It’s a supply and demand issue. Check out how the School of Life explains it:

As the video above outlines, this arrangement is cold and inhumane. It explicitly deems some people lifetimes more valuable than others. Because of what you do for a living, your prospects for your health, your children, your free time are drastically affected. But if ‘all men were created equal‘, why are our lives pitted against each other in this way?

Socialism would dismiss this insulting way of valuing peoples’ lives. Socialism will seek to equalize pay among the different types of work that society needs. This does mean that a doctor will be paid the same as a janitor. But because everyone, by virtue of being a human being, will have everything they need to not only survive but thrive, no one will care. Higher wages are only good because they let you have a better life than everyone else. If everyone had an awesome life, unequal wages wouldn’t make sense.

The Difference between Socialism and Capitalism

The main and fundamental difference are that socialism, as a opposed to capitalism, is democratic and it produces things for human use, not for exchange on markets for profit. Another difference is that under capitalism, people are divided into economic classes, and your experience of life will be very different depending on which class you are born in.

The thing is, socialism is already something we do a lot of in our personal and family lives. It is in fact the natural default in our everyday lives. An example which David Graeber gives is that when someone asks you to pass something, like a pen. The person you ask don’t usually retort “how much are you willing to give me?” That would be a market interaction, as would happen in a distributive relationship in capitalism. Instead, you’ll pass it to them for ‘free’ if you can.

Take another example, a family dinner. Everyone collaboratively creates the dinner, voluntarily applying their brains and physical capabilities according to their abilities and characteristics. For example, grandma knows how to make the best cranberry sauce, and you’re really great at washing dishes, so you take that task on.

Everyone partakes in the meal according to how much they want/need to eat. You don’t typically have a bidding war for the food, as you would in markets. The dinner, a product of collaborative effort, is “for each according to his ability, to each according to his need“. This is also the basic ethos of socialism.

Are there any Socialist countries around today?

All nation-states in existence today are capitalist. That is, their economics are run by privately held productive assets, they have competitive marketplaces and most people are wage or salaried laborers. In capitalism, there is a small class of people that live off the work of other people – the capitalist class – who do little to no work, but make money off the assets they own.

There is widespread difficulty trouble distinguishing a country with socialistic policies with a country which is socialist.

For example, I’m Canadian. Canada has adopted some socialistic policies such as free health care. However, free health care exists and is dependent on a capitalist economy. Plus, when I go to work somewhere, I have no say in how my workplace is run. I definitely do not have a an equitably share in the profit that I generate the company – I’m generally paid a salary and if I’m lucky I’ll get a bonus.

Finally, I have to go into a competitive market to buy all of the necessities of life with the wages I’ve made. So I may enjoy some socialistic services, like health care, but my life is framed in the ethos and rules of capitalism.

Is Socialism Terrible?

There’s no doubt that many evils have been committed by communistic regimes. But lots of evils have been committed by capitalist regimes as well for the sake of capitalist profits – like the war in Iraq by the United States.

I do not think it makes sense to condemn a set of ideas based on the acts committed in their name. For example, it wouldn’t make sense to call Christianity a “terrorist” religion just because a bunch of crazies committed terrorism in it’s name.

Instead, it makes more sense to evaluate the set of ideas for their own merit. To read the economists, political scientists and thinkers which help build those ideas. Do they make sense? Are they realistic? Might to be a basis on which to build a better society?

It’s important to remember that socialism has been systematically vilified for decades since the Soviet Union. For a lot of people, the reflex is socialism/communism = bad. The truth is that socialism and socialists are responsible for a lot of the good we do see in capitalist society. It was socialists which led the fights for the 8-hour workday, medical leave, weekends, health care and social security.

Is Socialism Realistic?

If Elon Musk is allowed to pretend that we can colonize Mars in time to avert the looming ecological human extinction event and be celebrated for it, then I think it’s realistic to work towards reorganizing the way we interact economically. In fact, I think there are far less technical, moral and logistical complications to implementing socialism than Elon’s plan.

Intrigued? Tempted? Don’t stop at this blog post.

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