Economic considerations are central to socialist ideology because socialists strive to create an egalitarian society and economic reform is central to this fundamental aim. As part of their economic reform, socialists advocate the active redistribution of wealth to remove the differences between classes that have emerged since the Industrial Revolution. To answer this question the following need to be considered: the fundamental nature of socialist economics, socialist views toward capitalism and views towards common ownership. Ultimately, it is clear that socialists diverge significantly on the issue of the economy, with modern ‘third way’ thinking being largely unrecognisable to that of revolutionary socialism.

Fundamentally all socialists can be recognised by their opposition to a laissez-faire economy and a completely free market. They are influenced by the heavy inequalities in society that have emerged from free-market economics. Socialists believe that, if left unchecked and unregulated, the economy inevitability falls victim to the unpredictability of the capitalist market, which often leads to social problems such as unemployment that only serve to further the inequality socialists wish to prevent. As such, all three strands accept the need for some public ownership within the economy. Socialists believe that society has been harmed by inequalities between social classes, which emerge due to economic determinism. Therefore, all socialists recognise the need for the safety net of a welfare system to support those in need. Despite these points of agreement, there also points of clear disagreement.

One difference is over the extent to which capitalism can be tolerated. revolutionary socialists are clear that capitalism must be abolished and are willing to advocate revolution, followed by a ‘Dictatorship of the Proletariat’, to achieve this. Marx and Engels argued as part of their belief in historicism that the defeat of capitalism was the next dialectical stage in societies advancement. Revolutionary socialists advocate for ‘equality of outcome’ as the only answer to the problems created by Socialism. However, evolutionary socialists are willing to tolerate implementing socialist policies within a capitalist system in order advance their ideological goals. For example, Beatrice Webb called revolution ‘chaotic and inefficient’ and instead called for ‘gradualism’ whilst Social Democrats including Anthony Crosland advocated the use of Keynesian economics as a method for socialists to moderate capitalism. Crosland believe that the debate of public v private ownership was less important than other issues, such as the levels of public taxation. It is clear therefore that whilst revolutionary socialists and social democrats agree on the limits of capitalism, only revolutionary socialists believe in its destruction. Conversely to both revolutionary and evolutionary socialists, third way thinkers like Anthony Giddens argue that capitalism should not only be tolerated but should be embraced. Giddens believed that it was not abolishing capitalism that should be a goal, but making sure it was working for the most vulnerable in society. Third way socialists argue that the free market creates wealth that can then be used on socialist projects, like improving the NHS. Famously, New Labour figure Peter Mandelson said “we don’t mind people being filthy rich, as long as they pay their taxes”. Therefore, it is clear that Socialists disagree significantly over the extent to which capitalism should be tolerated, with views ranging from the idea that it has to be abolished (revolutionary socialists) to the idea that it should be actively embraced (third way).

Socialists also disagree on the importance of common ownership. Revolutionary socialists believe that as part of a post-capitalist system there should be no private ownership. Marx and Engels believed that private ownership was made possible due to the exploitation of the proletariat by the bourgeoisie. They believed the abolition of private property would be achieved through a ‘dictatorship of the proletariat’ removing the last vestiges of the capitalist state and creating a classless society in which private property would no longer be desriable, let alone a right. Similarly, early evolutionary socialists, like democratic socialists, supported the notion of common ownership. They argued that capitalism had to be replaced by a system that saw workers fully rewarded for their work. As an example of this, the Labour Party, influenced by Beatrice Webb, included Clause IV in their constitution which called for nationalisation of “the means of production, distribution and exchange”. However, social democrats support a mixed-economy, where private property could be regulated through Keynesian inspired government intervention. Crosland argued that a mixed-economy allowed an element of collective planning to the market forces that drive capitalism. Alternatively, third way socialists take an entirely different approach to common ownership, as is seen by New Labour’s decision to abandon Clause IV. Third way socialists believe that only through a privatised and deregulated economy can enough taxation be raised to support the weakest in society. In this thinking they were influenced by Giddens who saw that the fundamental nature of the economy had changed and that governments in the ‘post-fordist’ economy should seek to arm citizens to play a role in the new economy. This helps explains Blair’s statement that his three priorities were ‘education, education, education’. Therefore, whilst there is some compatibility in the views of revolutionary and evolutionary socialists to the notion of common ownership, third way socialists depart entirely from this position and believe common ownership is harmful to implementing socialist policies.

Ultimately, on the issue of the economy socialists do not agree to a significant extent. Revolutionary socialists and evolutionary socialists, including social democrats, generally agree on the same ends, but differ over the means to reach them. However, third way socialists do not even agree on ends – fundamentally rejecting the notion that capitalism should be abolished and that private property is ideologically harmful. Therefore, although there is some agreement amongst socialists on economic issues, it is clearly incorrect to state that socialists agree on the economy.