What is the difference between Communism and Capitalism?

Communism vs Capitalism
The term Communism comes from the Latin word communis, which roughly translates into English as belongs to all or shared. Ideally communism is an idea of a free society where all are equal, undivided by any class or creed. Where no one is oppressed and there is no scarcity. Such a society would have a collective ownership of all means of production and there would be no government or division of states. However in modern context communism is often used to refer to semi-socialist states, which have socialist government, and just one single party that claims to represent the interest of the common people and the working classes, and forms the government. (list of socialist countries)

In such a country the state usually owns all the means of production. This is why such states are considered the antithesis of capitalist states. Examples of states that used this ideology or a variation include the erstwhile United Soviet Socialist Republic and China. However these states never referred to their own ideology as communism or even claimed that it was based upon communism.

Capitalism on the other hand is more of an economic system than a political ideology. It is a scenario where capital, resources and goods are in private or corporate ownership. The main characteristics of such an economic system are the freedom enjoyed by the investors to buy and sell products with almost negligible government control. The prices are not fixed or set by the state, but are determined by a competitive market, which is basically a free market where the competition for profit determines the price of goods. Over 80% of countries in the world use capitalism (source: wiki.answers.com)

We could take an example to understand the difference clearly. Suppose a mother has 4 children each earning say $100pm, $200pm, $300pm and $400pm respectively. Now suppose at the end of the month each child would give their complete earnings to her/his mother. Mother would collect all the earnings (a total of $1000) from all her children and pay each $250 again. So the income has been distributed equally and everything is controlled by one common entity (the mother). This would be communism. While in capitalism all the children are independent and do not share their income with their mother (though each of them may pay her mother a bit of money for her living : just like paying taxes to government (the mother of mother and father of father)). Read more here the major differences.

In the twentieth century capitalist ideology overcame communism to become the dominant economic system in the modern world. Today, the United States of America is the leading example of a capitalist economy. Other countries like India are in transition towards capitalism. In India the move to open FDI in retail goods was to be a step in that direction. Know more here : Is India a capitalist country?

So the major difference between communism and capitalism, to put it in simple terms, is the distribution of resources and wealth. This also leads us to the advantages and disadvantages of both. Critics of communism argue that in a state where all prices and progress are controlled, the technological and social advancement tends to slow down or outright stagnates. Incentives to the workers are reduced along with a slowing of growth in their prosperity. It is also argued that ideal communism is unfeasible and not practically possible in any modern state.

Other criticisms are leveled at the modern day states which have been labeled as communist states and their modus operandi. These one party states have had sub par human rights record with famines, purges and war deaths being in excess of those recorded in other regimes. In fact it has even been argued that in the twentieth century itself, communism has been responsible for the murder of over a hundred million people.

On the other side of the coin, capitalism too has been argued to have some serious flaws and disadvantages. The biggest criticism leveled against capitalism is a skewed distribution of wealth, where a small percentage of the wealthy elite, hold and consume a large percentage of the total available resources. This leads to social and economic inequality. Large organizations can also cause market monopoly and develop an imperialistic attitude.

Repression of trade unionists, economic and cultural exploitation of workers, unemployment and social alienation are also argued to be the effects of capitalism. Another drawback of capitalism as seen by socialists is that the idea of an economy where the production and direction are unplanned is simply irrational. Other criticisms come from anti globalization movements, and the unlikely source of environmentalists who argue that to maintain a capitalist economy, continuous growth is required, and that this would eventually lead to a depletion of the finite natural resources of our planet.

Thus it is evident both the ideas of communism and capitalism have some major differences, some advantages and some considerable disadvantages. This is in keeping with the old adage that, with the good comes that bad. Either way, for now, capitalism has triumphed over communism on the global stage.

Written By: Rajesh Bihani, New Delhi, India

Useful books on Amazon

Available on Amazon : A book written by Harvard University professor Richard Pipes showing what communism did in the history during times of Karl Marx and Friedrich Engels.

The Black Book of Communism: Crimes, Terror, Repression : Already famous throughout Europe, this international book is the bestseller written by multiple authors like Jean-Louis Pann, Andrzej Paczkowski, Karel Bartosek, Jean-Louis Margolin, Nicolas Werth, St'phane Courtois, Mark Kramer and Jonathan Murphy.

The Communist Manifesto : A book written by Karl Marx with more than 400 customer reviews

Go Back to Politics and Government for more.

Edited by: Rajesh Bihani ( Find me on Google+ )

Disclaimer: The suggestions in the article(wherever applicable) are for informational purposes only. They are not intended as medical or any other type of advice