Published on September 1, 2020

Socialist Economic System

Karl Marx

What is the Socialist Economy?

Socialist Economy is a form of public ownership where goods and services are generated as per government order, not per market demand. Socialist economy is a centralized planning economy where government owned most of the factories and land.

Origin of Socialist Economy

The term socialism was explained by Karl Marx and Friedrich Engels in their book The Communist Manifesto in 1848. The ideology of socialism was spread across Europe in the century. In 1899 the Australian Labour Party first adopt socialism in the world.

Countries with Socialist Economy

Country Start End
Russia /USSR

It was started in October month 1917 Revolution.

The government started five-year planning in 1928.

In December 1991 the Commonwealth of Independent States has found.

In the month of January 1992 transition to a market economy has being in Russia.


The socialism started in 1924 with the foundation of People’s Republic of Mozambique.

The regim of socialism has bee ended in 1991 with the beginning of multipartism and of the transition to the market.


In 1945 the People’s Front wins the elections and a Soviet-type economic system is announced in Yugoslavia.

In 1948 the socialism system broke in Yugoslavia and in the year of 1950 self-management becomes the basis of the Yugoslav. Market economy was introduced in 1965. And in 1991 Yugoslavia break-up.


In 1946 the people’s democracy is established. It was parted from USSR in 1961 and choose a ‘Chinese way’ of development.

In 1991 anti-government demonstrations occurred and communist party elected. But in 1992 new elections occurred and a non-communist government is formed.

Eastern Europe

From 1945 to 1948: the communist win the elections. In February 1948 Communism started in Prague.

From 1946 to 1949: mass nationalisations occurred. In 1948 introduction of central planning.

The first non-communist government in Poland in September 1989. In 1990 Hungary began multipartism.

In Czechoslovakia ‘velvet revolution‘ took place in November 1989. Romania was also free in Dec. 1989.

Bulgaria became free elections in 1991. From 1990 to 1992 the transition to the market has began.

East Germany

In 1949 German Democratic Republic (GDR) had formed.

A large-scale nationalisations and collectivisation was occurred on 1950 -52. In August 1961 the Berlin Wall is erected.

The Berlin Wall was dissolved in 9 November 1989.

In October 1990: Germany is unified as a single State.


The people’s democracy is founded in Oct. 1949.

Since 1980 the economy is moving gradually towards the market.Taiwan got free from China in 2018.


The people’s democracy was established in 1945 in the northern region. In 1976 the socialist republic of Vietnam took over the country.

Since 1980 a market economy gradually emerging.


Khmer Rouge Revolution took place in 1975-6 and the country was renamed Kampuchea. In 1979 Vietnam took over country.

In 1993 free elections took place in the country and development of a market economy took place.


The people’s democracy in 1975.

Since 1980 a market economy gradually emerging.

North Korea

The people’s democracy was founded in 1948. North and South Korea was divided in 1905-03 by Korean war. After that a Stalinist-type economy developed in the North.

In 1991 there was a discussed about reunification between North and South Korea Although no significant change in political or economic trends within the regime.


In 1959 revolution conducted by Fidel Castro laid the foundation of the socialist republic of Cuba.

No evolution toward a pluralistic democracy or a market economy.

Source: The Economics of Transition, Second Edition, MARIE LAVIGNE

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