Socialistic economy has got the following important features:
State ownership of resources:
Land, labour, capital, equipment and other wealth of the society are owned by the Government. Right to own property is not granted to individuals. Law of inheritance is suspended. All the resources are owned by the state.
The resources of the economy are used for the welfare of the society. Economic activities are controlled by the state. The government is always above the individual interest and works for the maximum welfare of the economy.
Basic problems of the economy are tackled with a view to provide service to the people. Economic decisions are made according to the needs of the society. These decisions are made by the Planning Commission.
Absence of private ownership:
Private ownership of the property is not allowed. The resources of the economy are owned and controlled by the government.
Socialistic economy has got the following advantages:
Reasonable use of resources:
The resources of the society are used reasonably. Wastage of resources are avoided. Economic resources of economy are used according to the needs of the society.
It is the responsibility of the government to offer employment to every individual. There is no unemployment. Old age and disability pension are paid to the people. The government guarantees food, clothes and other necessities to the people.
Supremacy of public interest:
Economic resources are owned and controlled by the government. Individual interest subordinate to group or public interest. Basic economic problems are tackled with a view to public interest.
Absence of inequality of income due to ownership of property:
The inequality of income which is the disadvantage of the capitalistic economy is not found in socialistic economy. There is no right to an individual to own property and acquire assets by inheritance, so there is lesser inequality of income.
Planned developmental economy:
The economy is controlled by the planning commission of the state. Ali importance decisions regarding, what to produce, how to produce and for whom to produce are taken by the planning commission, the central agency of the government.
The socialist economy suffers from the following disadvantages:
Lack of personal initiative:
Individuals do not have initiative to work more. They do not have personal interest and attachment with the economic affairs. Wages are paid according to needs and efficiency, so individual interest is lacking.
Concentration of power:
Economic power is concentrated in the hands of the state. All the resources of the economy are owned by the government. It kills consumers’ right to consume according to his choice and individuals, right to choose freely their profession, occupation and business.
The economy lacks dynamic approach towards production, consumption and investment.
The economy becomes stagnant. It is handled by the policy of the government.