New Harmony, a model community presented by Robert Owen, 1838

Socialism is an economic system in which major industries are owned by the workers, rather than by private businesses or the state. It is different from capitalism, where private actors, like business owners and shareholders, can own the means of production. The state can also act as a capitalist, by owning the means of production, and by directing the economy. Socialists believe that capitalists owning the means of production is a form of exploitation because it lets them own a majority of the labor that workers produce, even though the owners haven't done any work. By allowing capitalists to own a workers labor, they can extract a surplus value and generate profit. Socialists propose that workers themselves get to own and manage their labor.