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Socialism is a range of economic and social systems characterized by social ownership of the means of production and workers' self-management, as well as a myriad of political theories and movements associated with them.
Social ownership of the means of production is the common defining characteristics of all the various forms of socialism.
The two major forms of social ownership are society-wide public ownership and cooperative ownership. The distinction between these two forms lies in the distribution of the surplus product; with the society-wide public ownership, the surplus is distributed to all members of the public through a social divided, whereas with co-operative ownership, the economic surplus of an enterprise is controlled by all the worker-members of that specific enterprise.
The goal of the social ownership is to eliminate the distinction between the class of private owners who are recipients of the passive property income and the workers who are the recipients of labor income (wages, salaries, and commissions), so that the surplus product or economic profits in the case of market socialism, belong either to the society as a whole or to the members of a given enterprise.
Social ownership would enable productivity gains from labor automation to progressively reduce the average length of the working day instead of creating job insecurity and unemployment. Reduction of necessary work time is central to the Marxist concept of human freedom and overcoming alienation, a concept widely shared by Marxist and non-Marxist socialists alike.
Socialist systems are divided into non-market and market forms.
Non-market involves the substitution of factor markets and money with engineering and technical criteria based on calculation performed in-kind (a calculation method that would value each commodity based only on its use value; in contract, in money-based economics, a commodity's value includes an exchange value). Non-market socialism aims to circumvent the inefficiencies and crises traditionally associated with capital accumulation and the profit system.
Market socialism retains the use of monetary prices, factor markets and in some cases the profit motive (the motivation of firms that operate so as to maximize their profits) with respect to the operation of socially owned enterprises and allocation of capital goods between them. Profits generated by these firms would be controlled directly by the workforce of each firm, or accrue to society at large in the form of a social divided. The socialist calculation debate concerns the feasibility and methods of resource allocation for a socialist system.
Originating within the socialist movement, social democracy has embraced a mixed economy with a market that includes substantial state intervention in the form of income redistribution, regulation, and a welfare state. Economic democracy proposes a sort of market socialism where there is more decentralized control of companies, currencies, investments, and natural resources.
By the late 19th century, after the work of Marx & Engels, socialism had come to signify opposition to capitalism and advocacy for a post-capitalist system based on some form of social ownership of the means of production.
While the emergence of the Soviet Union as the world's first nominally socialist state led to socialism's widespread association with the Soviet economic model, some economists argued that in practice the model functioned as a form of state capitalism, or a non-planned administrative or command economy.