Socialism is a term with conflicting definitions. Although originally defined by Karl Marx, it has been used by many different groups to mean different things. The different meanings and uses of the term "socialism" over history and in different places have lead to much political misunderstanding and confusion.
"Socialism" as used Social Democrats and left-Liberals Among most mainstream commentators in the North America and western Europe, the term it generally refers to an economic system based on corporate capitalism, but where the state is an active market intervenor, responsible for broad economic planning in the long term and for protecting the vulnerable from any exploitative or destructive asepects of the market economy. In this sense it is not as much a successor or challenge to capitalism as a refinement.
Social Democrats regard such a system as desirable and achievable, indeed, many would argue it already exists in some states. Conservatives, however, view this type of socialism as bureaucratic, inefficient, and likely to create lazy, dependent people who gain unfairly.
Among a number of right-wing conservatives, particularily in the United States, this type of "socialism" is regarded as essentially equivalent to the almost universally disliked Soviet style (communist-run) economic system. In the US, and to a degree in Canada, and the UK this has made moderate leftists quite reluctant to use the term socialism even when advocating policies most Europeans would immediately identify as "socialist".
To an extent all capitalist states incorporate elements of these social democratic policies. The term mixed economy is often used to describe this practical reality. In this description all real economies involve both free markets and government control. Among those of major countries, the economy of the United States closet approximates a free market, while other economies such as those of Germany or France are closer to a 50/50 split. The Soviet Union under Gorbachev was attempting to move towards a socialist system with significant free market elements when it collapsed. Even under Stalin or Brezhnev there was a thriving black market in the USSR, so it could be said to be a mixed economy as well even though it leaned heavily towards government control.
Many argue that a truly laissez-faire state, with no labour or environmental laws and no role for the government in long term planning, would quickly collapse. However, the "Libertarian" political movement believes that all government economic intervention is both a priori morally wrong and economically counter-productive. It is probably fair to say that most people in the West desire some kind of balance between unrestrained markets and direct government control over large sectors of the economy.
In the era of so-called globalization most mixed economies are shifting towards more capitalistic arrangements.
"Socialism" as in the original Marxist definition In Marxism, "socialism" refers to the stage of history and class structure immediately following the next revolution, in which power has passed to the rural peasantry and the urban proletariat.
Karl Marx specifically focused on control of the means of production, which he saw as passing from monarchs under feudalism, to bourgeois professionals and an upper-middle-class facilitating capitalists under capitalism, and then to the workers themselves, whose contributions he saw as under-valued.
According to Marx, socialism is the period of transition between the overthrow of bourgeois rule and the development of a classless, communist society. While somewhat vague about specifics, Marx described the function of socialism as completing the process of equalizing society, building and developing industry and farming, and militarily defending the revolution from external attack. As this process was completed, the socialist state would "wither away" in favor of the final stage of history, the classless "Communism of Abundance".
"Socialism" as used by Marxist-Leninist states Governments such as those of Cuba, North Korea, and the former Soviet Union and its satellites officially regarded themselves as "socialist" in the true Marxist sense, though many other Marxists hotly contested this. In such states economics are co-ordinated centrally through a hierarchical structure. Decision making power rests almost exclusively with central planners in the capitol city, whose own objectives are set by elite committees or even individual rulers.
The theoretical justification offered for such a seemingly dictatorial structure is that the central planners are not ruling in their own interests, but acting as servants of the workers as a whole. They have not clawed their way to the top of the power structure, but have been called upon by the people to perform a duty. However, critics both internal and external to such societies have described the Marxist-Leninist brand of "socialism" as a highly class-structued society in which Party planners and intellectuals rule.
"Socialism" as used by other Left thinkers Other political and economic theorists have used the term "socialism" to describe their as-yet unrealized social visions. In general their definition of socialism could be "the control of production, consumption, allocation, and distribution of goods and services through democratic means". Exactly how this broad description would translate into practical institutions is a subject of contention.
Some socialists argue that the concept of a centrally planned economy is essentially sound, but that it must be subject to well-structued democratic controls and not allowed to descend into dictatorship. This description fits many dissidents within the Soviet bloc[?] of Marxist-Leninist states, such as Czechoslovakian president Alexander Dubcek, who attempted to implement "Socialism with a Human Face" before his country was invaded and occupied by Warsaw Pact troops. It could also be said to apply to many "socialists" in capitalist countries up into the 1990s, when most people who had previously held this position decided that the collapse of Soviet central planning proved that command economics in general were doomed to failure.
Others have proposed "socialist" economies based not on markets or command planning, but on novel types of institutions they believe will serve better. "Participatory Economics", a system first described by Micheal Albert and Robin Hahnel, attempts to co-ordinate local and largely self-governed councils representing workers and consumers through a few basic rules about how economic institutions may relate to each other. Council Communists[?] and Social Ecologists[?], like some Anarchists before them, have argued that the basic organization of production and consumption ought to happen on the very small scale, with economic activity across communities handled on a case-by-case basis.
Still other "socialists" have argued that, once the means of production and the political system are in the hands of the working class, the free market is a perfectly good economic system. They believe that if individual workplaces are owned and controlled by the workers, economic exchanges between buyer, seller, and nobody else will efficiently and equitably allocate resources without the need for a government bureaucracy.
Marxist-Leninists believe that what is important is not periodic elections, but the class interest represented by the political vanguard which is in power. In the Leninist analysis, representative democracy as seen in the West is a sham because the real reins of power are held by the moneyed class, who would simply ignore the results if an unacceptably radical leader was ever elected. Critics allege that whatever the faults of Western-style democracy, the Leninist plan only works if the leaders are incorruptible and infinitely altruistic, an incredibly naive idea. They see Leninist claims of respect for democracy as cynical propaganda and nothing more.
Most other socialists see some form of political democracy as integral to the existence of socialism itself. This may be a representative democracy in the style of European parliaments and congresses, or another type, usually described as closer to direct democracy.
Conservative critics often charge that all socialist governments are anti-democratic, because the increased "size" and power of such governments represents a concentration of power unseen in capitalist socities. In addition, some believe that all economic organization not consistent with the free market is inherently in violation of individual human rights and by extension democracic principles.