Demerits of Socialism
1. Socialism involves the predominance of bureaucracy and the resulting ineflciency and delays. Moreover, there may also be corruption, red tapism, favouritism, etc.
2. It restricts the freedom of individuals as there is state ownership of the material means of production and state direction and control of nearly all economic activity.
3. Socialism takes away the basic rights such as the right of private property.
4. It will not provide necessary incentives to hard work in the form of profit.
5. Administered prices are not determined by the forces of the market on the basis of negotiations between the buyers and the sellers. There is no proper basis for cost calculation. In the absence of such practice, the most economic and scientific allocation of resources and the eflcient functioning of the economic system are impossible.
6. State monopolies created by socialism will sometimes become uncontrollable. This will be more dangerous than the private monopolies under capitalism.
7. Under socialism, the consumers have no freedom of choice. Therefore, what the state produces has to be accepted by the consumers.
8. No importance is given to personal eflciency and productivity. Labourers are not rewarded according to their eflciency. This acts as a disincentive to work.
9. The extreme form of socialism is not at all practicable.
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