If the picture didn’t already explain what socialism is then I guess I’ll have to do it. Imagine a shoe factory. There’s 100 workers, 10 managers and an owner. The factory makes and sells $100,000 worth of shoes per week on average. It pays about $40,000 towards the workers’ salaries, $40,000 towards the managers’ salaries, while the remaining $20,000 become dividends*. The workers will probably earn a little above the minimum wage, the managers will earn about $200,000 per year, and the owner pockets about $1,000,000 per year doing absolutely nothing. The workers will do all the work, but are still basically paid with peanut shells all while having no say in the matter; the managers, on the other hand, are paid tons more to keep them in line. The market price of shoes shifts up and down randomly until we get to “recession”, when the price of said product falls for a long time, forcing the factory to make a choice to save money at the cost of firing some workers and cutting pay for others. Laid off workers wound up homeless and unable to feed their family. That’s capitalism.Let’s say we kick the owner out, nationalize the factory, and cut salaries of managers while raising salaries for workers. Now the workers earn $20 an hour, managers earn $75,000 a year, and there’s no owner. Afterwards, we figure out how many shoes are needed and set the national price for them accordingly. The factory keeps on making $100,000 per week regardless of actual short-term demand. Since all of the stores will also nationalized, we can ensure that we’re (the company) still paid. The excess shoes are to be stored away until further use; which will be soon. All the while, we adjust the prices and production levels every year. The money that originally went into the owner’s pocket now goes to provide amazing benefits for workers like free healthcare and pension*. Finally, we’ll try to make sure to give anyone who wants to work gets work. That’s socialism.Eventually the system works so well that everyone is well fed, paid, and all wearing our shoes that it becomes pointless to even set monetary value to the shoes. Like jobs, we remove the price and give pairs out to anyone who wants some. This is where the stored shoes come back. (Obviously, with reasonable constraint, like no more than 100 pairs per year per person.) To prevent people from “mooching”, unlimited access to free goods as an incentive to not to work, we require all able people to work and make voluntary joblessness a crime. That’s communism. (For my personal opinions on communism, comment aye.)There are two major obstacles that prevent the two systems, capitalism and socialism, from working correctly. One, central planning in an economy, as complex as what we have today, is insanely difficult. Imagine that it’s 2005. You have been tasked to allocate engineering and manufacturing resources for the next five years AND you need to predict the relative demand for the products Blackberry and iPhones. The Soviet Union was failing at tasks even easier than this. The other reason is that removal of monetary aspects weakens workers’ motivation. If you can’t be fired and you’re paid a fixed amount no matter how well you work; or if you’re even not paid at all, you may not work as hard.*Dividend: Basic payments to a companies shareholders. *Pension: a regular payment made during your retirement from an investment fund to which you or your employer has contributed during your working life.