Socialist holding flag withdrew (7)
I believe the answer is:
retired
'withdrew' is the definition.
('retire' can be a synonym of 'withdraw')
'socialist holding flag' is the wordplay.
'socialist' becomes 'red' (socialism is often associated with the colour red).
'holding' means one lot of letters goes inside another.
'flag' becomes 'tire' (I've seen this in other clues).
'red' placed around 'tire' is 'RETIRED'.
(Other definitions for retired that I've seen before include "Stopped working" , "retreated" , "Withdrew from active participation" , "In bed, withdrew" , "Pensioned off" .)