The simple answer is that economies are organized around what's commonly referred to as "the means of production." A working definition of means of production is the material means in which products and services are produced within the society. For example, the processes in which food is produced, electricity, water usage and access, oil for heating, cars, computers, cell phones, etc. The way in which all of those things are produced for consumption. The methodology in which that happens can only be organized two different ways. Either that process is organized and controlled by a few people, or it's organized and controlled by everyone. The method of a few people controlling that process is the dominant form of production in operation today that is called capitalism. In this system, production of products is controlled by corporate interests for the purpose of private profit. That means everything about production is designed to insure profitability for the corporations. So, for example, within capitalism, the objective is to produce as much as possible with as few people as possible because this is considered efficient and therefore more profitable. The method of everyone controlling the production process is called socialism. In this system, production of products is planned with the objective of providing resources and services for everyone in society to contribute and reach their full potential. So, for example, in a socialist society, the economy is planned around the number of workers, what they produce, how much revenue is generated by their production and consumer dollars, and from that amount of revenue, how many people can be supported in the areas of housing, education, healthcare, etc. In this system, the objective is collective development and not private profit. So in a socialist society the objective isn't efficiency and profitability. The objective is making a place for everyone to contribute. So, instead of eliminating jobs to insure profitability, a socialist society would plan to create more jobs since the objective is to insure everyone has a job. See the difference? In capitalism, the objective is profitability and insuring people have employment opportunities isn't a priority. In fact, capitalism wants unemployment because the competition for jobs pushes wages down which makes it easier to profit from the labor whereas socialism wants to employ everyone. Actually, socialism makes full employment the law as it's objective.
Now a very simple explanation of socialism has been provided here, but because so much anti-socialist/communist propaganda has been spread and most so-called socialist parties/formations have done very little to clarify the confusion, so many people are still unable to clearly understand this analysis. Also, it has been drilled into us 24/7 for every day of our lives that capitalism is the only legitimate way to organize an economy so many of us are incapable of seeing the world outside of a capitalist vision lense. So, to help in with that regard, here is an FAQ about socialism/communism:
Isn't socialism/communism is a dictatorial system where people have no rights?
Actually, the definition of socialism, as indicated above, is a system where the people own and control the means of production. They own it by planning an economy where production is organized around meeting the needs of society e.g. education, employment, healthcare, etc. Therefore, in order for a system to be socialist it has to meet the criteria of having a planned economy around those principles where people always have a voice around making those principles a reality. This system where these principles exist is called scientific socialism. So, if a system doesn't have those principles, it's not a socialist system, in spite of what people endorsing that system call it. For example, if you study the Soviet Union, that society, although it had components of socialism, can only at best be classified as a state capitalist system because critical aspects of socialist principle such as democratic input e.g. representing and meeting the people's needs, are missing. A socialist system cannot be a dictatorship since the system is organized around what the people want - which is having their needs a priority of the system.
Aren't socialism and communism the same thing? Aren't the words just used on an interchanging basis and can't socialism be adapted for different societies?
Socialism and communism are different stages of the economic evolution process towards creating an economy that is more and more advanced. Socialism is the next stage after capitalism where the means of production are controlled by the people in society and the state apparatus, such as police for example, are used under the collective government to serve the people. Socialism should be seen as the transition between capitalism and communism. On the other hand, communism is a more advanced stage where people's consciousness has advanced far enough under socialism (remember that under socialism you have generations of people who receive free education, etc.) so that people reach a higher level of understanding about taking responsibility to take care of one another so that institutions that are dominant in capitalism, and functional in socialism, like health services, police, social services, are unnecessary and fazed out within communism. Plus, the class structure that maintains order for the ruling classes within capitalism, is fazed out after many years of socialism so that they no longer exist in communism. So, obviously there has not been a time period in our life times where class structure hasn't existed so therefore, communism has yet to exist. We are still moving in that direction. So people that call Cuba, China, the Soviet Union, etc., communist, clearly don't know what they are talking about. Finally, socialism has those universal principles we have talked about here e.g. planned economy, democracy, etc., so although the way those things are implemented will change based on the society, the principles are universal and would exist anywhere socialism is built.
Aren't socialism/communist concepts that originated from Europe? Aren't these systems incompatible to Africa, Central and South America, the Middle East, etc.?
In fact, the concepts of socialism/communism evolved from the early production system of communalism which was most common in Africa, Asia, and other non-European societies. In fact, it was African philosophers like Ibn Khaldun that people like Karl Marx, Frederick Engels, and V.I. Lenin studied to develop their theories on capital and economic transformation. Again, these principles are universal and therefore cannot belong to any one culture or people. Marx doesn't own socialism no more than Newton owns gravity.
Isn't it true that anyone who considers themselves a socialist/communist is a Marxist/Leninist and a follower of the ideas of Marx and Lenin, etc.?
No. In fact, Marx and Lenin had an ideology, and that ideology is good for the conditions of Europe that they spoke and wrote about, but those conditions in which the universal principles of socialism must be applied vary so it's important for people to look to their history and culture to determine the ideology in which scientific socialism can be applied in their reality. For Africa, we believe the ideas of people like Kwame Nkrumah, Sekou Ture, Amilcar Cabral, and others express the best way to apply socialist principles. In Asia it may be Ho Chi Minh, Mao Tse Tung, Kim Il Sung, etc. In Ireland it's James Connelly. In Central and South America there are other ideologues. These ideologies shouldn't be seen as in contradiction with each other, but in concert and harmony as the masses of people of the Earth should be in order to make socialism dominant which is a pre-requisite to creating a communist society.