Difference Between Communism and Capitalism

Are you curious about what makes capitalism and communism fundamentally different? Surprisingly, these two political and economic systems have been the subject of contentious debate for centuries.

Capitalism is an economic system in which the means of production are owned by private individuals and companies and function financially. A communist economic system, on the other hand, is one in which the community as a whole owns and controls the means of production.

Although these systems may share certain characteristics, they also differ greatly. This blog post will thoroughly discuss the differences between capitalism and communism and analyze their respective political and economic frameworks and social effects.

We will also examine each system's benefits and drawbacks. Now, fast-forward to the exploration of the philosophies.

Communism

Communism is an economic and political philosophy that seeks to establish a single, central government that will make all decisions. Its primary goal is to satisfy the needs of society as a whole, not to maximize profits. The market's operations will be regulated and guided by central decision-making, and company houses will not have the authority to make business decisions. In this case, the established central unit will guide companies and the private sector regarding market pricing, offerings, and wage scales. Following a review of the capitalist system, the private sector is granted limited decision-making authority.

Communism Types

1. Marxism

According to him, no economic class-wage workers, landowners, and so forth-should be in a position of dominance over another. Marx believed that everyone should receive what they need and should give what they can. Marx held that each person ought to provide for their own needs and offer what they are able to.

2. Marxism-Leninism

During the 1920s, Communist parties adopted this communist philosophical system as their prevailing ideology. Leninism, which emerged as the theoretical underpinning of Soviet Communism, was a philosophy that developed from Marxism after the Russian Revolution of 1917 and the creation of the Soviet Union. The degree to which it follows the ideas of either Marx or Lenin is indicated by the term "Marxism-Leninism."

3. Trotskyism

Trotskyism is the name given to Leon Trotsky's (1879-1940) Marxist philosophical system. His declaration of the necessity of a universal proletarian revolution and his unwavering support for a true proletarian dictatorship founded on direct autonomous ideology set his views apart from Joseph Stalin's Marxism-Leninism.

4. Luxembutgism

Luxemburgism is a revolutionary theoretical framework classified as Communism based on Rosa Luxemburg's writings (1870-1919). She rejected Lenin and Trotsky's idea of "democratic centralism," which she saw as anti-democratic, which was the main reason her ideas diverged from theirs.

5. Maoism

Maoism is a subset of Communism that originated from the ideas of the Chinese leader Mao Zedong, also known as Mao Tse-tung (1893-1976). Following the Chinese Revolution of 1949, Maoism was implemented in the People's Republic of China.

• Stalin's Marxism-Leninism gave rise to Maoism, which introduced new concepts like social imperialism (Mao claimed that the Soviet Union exploited and dominated smaller nations within its sphere of influence, organizing their economies around Soviet needs instead of domestic ones), the Mass Line (a leadership approach that aims to learn from the masses and immerse the political leadership in people's concerns), and the Cultural Revolution.

6. Left Communism

Marxist perspectives espoused by the Communist Left assert that they are more proletarian and Marxist than Leninism, and its offspring are collectively referred to as Left Communism. While opposing the Bolsheviks' tactics, leftist communists supported the Russian Revolution.

7. Council Communism

A broad left movement that emerged in Germany and the Netherlands in the 1920s, Council Communism is an activist and theoretical stance that is currently prevalent in both Libertarian Socialism and Left-Wing Marxism.

8. Anarchist Communism

Anarchist Communism proposes the complete elimination of capitalism and the state in favor of a horizontal network of commons, workers' councils, and voluntary associations that enable each person to take care of their own needs. Russians Mikhail Bakunin (1814-1876) and Peter Kropotkin (1842-1921) led the movement.

9. Euro Communism

Throughout the 1970s and 1980s, a number of Communist parties in Western Europe flourished in an effort to formulate a social change ideology and program that was less aligned with the party line of the Communist Party of the Soviet Union and more suitable to Western European egalitarianism.

10. Communism Based on Religion

Religious communism is a subset of communism that draws its principles from several religions, including Buddhism, Taoism, Jainism, Hinduism, and Christianity. It usually refers to a collection of utopian, classless religious societies that advocate the voluntary eradication of private property, allocating society's advantages according to each person's needs and requiring labor from all.

Capitalism

An economic system known as capitalism is one in which private individuals own and manage property in accordance with their interests and in which supply and demand freely determine market prices in a way that is most beneficial to society. A capitalist economy permits the private sector to own and operate capital assets such as factories, railroads, and mines.

Additionally, it permits the purchase of labor for monetary wages, the accumulation of capital gains for the benefit of private owners, and the market-based pricing system for the distribution of capital and labor among competing uses.

The foundations of capitalism include self-interest, private property ownership, the limited role of government in defending individual rights, the decentralization of market mechanisms that determine prices, customer satisfaction, and the freedom of choice for investment, consumption, and production.

Types of Capitalism

1. Responsible Capitalism

Social Market Economy, also known as "Responsible Capitalism," is essentially a free market economy with some government oversight to avert the excesses and injustices of capitalism.

2. Advanced Capitalism

The macroeconomic and macro cultural system that goes by this name has a big impact on people's quality of life.

3. Turbo Capitalism

This is a form of capitalism that is less regulated has financial deregulation, privatization, and lower taxes for the rich.

4. Crony Capitalism

Crony capitalism characterizes an environment in which a business's capacity to prosper rests on its capacity to strategically sway legislators, public employees, and other individuals in positions of power. There is "crony capitalism" in South Korea, China, and Latin America.

5. State Capitalism

State capitalism occurs when publicly traded companies dominate large portions of the market economy. Under state capitalism, the government plays a big part in planning as well, for example, when determining how much money to invest in communication and transportation.

6. Vulture Capitalism

This refers to the practice of acquiring failing companies, liquidating their assets, and enabling a small number of venture capitalists to make money off of the backs of respectable companies and regular employees. The vulture bird, which hunts down and murders distressed animals, is the source of the expression.

7. Mercantilism

Governments used this economic tactic to fortify their states at the expense of other countries. The goal was to ensure that exports exceeded imports and amass a substantial wealth in gold and silver.

Key Difference Between Communism and Capitalism

When it comes to the distinctions between capitalism and communism, the following points are significant:

1. Capitalism is the name given to an economic system in which private individuals own and manage the economy's trade and industries to make profit. Communism is a socioeconomic structure in which the community controls a nation's trade and industry, and each person's part is determined by his or her needs and skills.
2. The foundation of capitalism is the Principle of Individual Rights, while the foundation of communism is the Principle of Community Rights.
3. Because capitalism encourages class division between the working class and the capitalist class, there is a significant degree of class difference between the rich and the poor. Conversely, communism is against class distinctions in society because it advocates for a society in which there is no distinction between the rich and the poor.
   
4. The government plays a little role in capitalism, but there is much more government intervention than under communism.
5. In a capitalist society, each person must labor for themselves to generate money. Conversely, in a communist society, wealth is allocated based on skill and requirements.
6. In a communist system, the state controls the means of production, but people and businesses own the labor, capital, and land individually.
7. In communism, society is prioritized over the individual, whereas in capitalism, the individual's freedom is paramount.
8. Under capitalism, there is intense rivalry amongst the companies, but under communism, since the state controls the market, there is little to no competition.
9. Under communism, the economy's profit is shared by all of its participants. In contrast, the owner is the only one who benefits from the enterprise's profit in a capitalist system.
10. While capitalism is practiced in some Western nations, socialism is more common in those in the East.

Communism Vs. Capitalism: The Impact on Society

Innovation and Economic Development

Economic progress and Innovation have long been identified as being fueled by capitalism's emphasis on market competition and individual incentives. Entrepreneurs are driven by the desire to make money to create new goods and services, which advances industry and technology. On the other hand, the state-run markets and the absence of private incentives under communism may hinder economic growth and innovation.

Social Mobility and Income Inequality

Due to money getting concentrated within a small number of people, capitalism frequently produces large income disparities. This prevents social mobility and prolongs poverty as the rich become richer and the poor get poorer. Communism aims to solve this by more fairly distributing wealth, but it might do so at the expense of personal freedom and economic expansion.

Education and Healthcare

In capitalist economies, the ability to pay is frequently a determining factor in obtaining high-quality services, which results in income inequality and constrained prospects for the less fortunate. On the other hand, universal healthcare and education are generally available in communist countries, guaranteeing that every individual has an equal opportunity to develop.

Environmental Resilience

Due to corporations' preference for short-term profitability above long-term sustainability, capitalism's concentration on expansion and profit can frequently have negative effects on the environment. Communist economies may provide more effective environmental preservation because of their focus on the welfare of the group as a whole and their preference for environmental issues over personal profit. Numerous historical instances demonstrate these countries' contempt for environmental sustainability as a result of pressure to industrialize rapidly in order to compete on a global scale.

Difference Between Communism and Capitalism

Conclusion

To sum up, capitalism and communism are two distinct political and economic systems with unique traits. Under a capitalist economy, the market determines how resources are distributed, while the means of production are privately owned and managed. The only duties assigned to the government are defending property rights and supplying public goods and services.

Conversely, communism is an economic and political system in which all economic decisions are made by the government and the means of production are jointly owned and controlled by the state or community. The ultimate aim of communism is a society devoid of classes and states, where no one is exploited by another. Both systems have benefits and drawbacks, and how these are actually implemented in various nations has varied substantially.