Economic system in which the factors of production are owned by the government

socialism

This economic system is called socialism.

Socialism is an economic system where everyone in the society equally owns the factors of production. The ownership as such is in the hands of the government that controls all means of production and distribution of goods.

The factors of production are : land, labor, capital and entrepreneurship.

In a socialistic economy, the land is owned by the state and private property is limited and difficult to obtain. Labor is heavily regulated and most people are employed in state-owned companies. Workers do not have many rights and they have to obey the government which also decides what is being produced and in which capacity (planned economy).

Socialism does not reward people for being entrepreneurial and competitive as competition is no existing and everybody reaps the same benefits of their work.