In school, we learned that "Socialism is an economic system based on state ownership of capital." However, there are many versions of that one statement.
Socialism Explained in Simple Terms
It is very important that we understand the different types of economies. Firstly, one major type of economy is Capitalism. This type focuses on private ownership of entities. Next comes mixed economy. This one has some private owned and some public owned entities. Lastly, there is socialism. It includes complete or partial public ownership of all entities.
Considering that you target the question on socialism. It is the various theories of economic firm advocating public or direct worker ownership and management of the means of production and allocation of resources, and a society characterized by equal access to resources for all individuals with a method of compensation based on the amount of labor utilized.
Now, coming to simpler terms, we can gather that socialism is a theory that focuses on parity of all classes. A socialist will always find the flaw in capitalism that it makes the rich richer, and the poor poorer. That is because socialism, as a principle, avoids such a phenomenon. There are two branches of socialism as well.
One branch advocates complete nationalization of all means of production, distribution and exchange. Basically, it encourages all ownership to be shared by all the citizens of the country. However, the flaw in the plan occurs when the parity faces the raw end.
In this kind of economy, everyone will have the same opportunities despite difference in talent and ability. This may seem unfair to many. Nonetheless, the positive of this plan is that class distinction does not occur in such an economy. More so, there is complete transparency and no concept of monopoly.
The other branch advocates that the ownership should be divided as per states. The state will have ultimate control of the capital. However, the basic framework will resemble that of a typical market economy. In a market economy, the means of production, distribution and exchange are run by the principles of demand and supply.
Hence, this branch of socialism believes that while the means and capital may be owned by the states, they will be governed by demand and supply. This can be a very comfortable principle to follow. However, it may disagree with the concept of socialism because there may end up being disparities of status between different states.
Hence, from both the branches, one thing is very clear. Socialism is a very citizen-centric philosophy. It allows personal entities to have partial ownership of production, distribution or exchange, to maintain the parity and equality at all levels.
Who is a Socialist
Many students are asked this question; while they may be very good with the explanation of socialism, they may not be able to understand (and hence have difficulty in explaining) who is a socialist. One thing that would simplify the term would be that a socialist is simply an individual or an entity who believes and follows socialism and socialist concepts.
No matter what economy he lives in, this person will still believe in socialism and will follow it. There are many great socialists who have made a very big impact on the world, because of their beliefs. Karl Marx being one of the most well-known ones, has propounded the principle with immense practicality.
Hope that you understand socialism as a concept. You should, at least, not blank out when you are asked it.