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Difference Between Capitalism and Communism

Capitalism vs Communism

Capitalism and Communism are two of the most popular political, social and economic ideologies of the world, and for decades, there has been a hot debate going on in the world as to which one of the two is better for the people. The two systems are totally opposite to each other, in the sense, it is the private enterprise and individualism that is emphasized in capitalism, while, in the case of communism, individual gains are sacrificed for the collective gains of the society. However, there are many other differences between the two, which will be highlighted in this article.

Until the time communism was giving a stiff battle to capitalism, as it was being practiced in Soviet Union and other Eastern Bloc countries, it was hailed as the great alternative to capitalism. The ideology was being put forward as being better than capitalism in many ways until the bubble burst and economies of the communist countries failed one after another.

The first and foremost difference between capitalism and communism lies in ownership of resources or the means of production. Land and other resources are under the control of the state in communism which is the society or the people in effect. On the other hand, private ownership of resources is accepted and even encouraged in capitalism. No one having control over the means of production implies that everything is shared by all in communism. There are equal wages for all, and no one is richer or poorer than others are.

In capitalism, entrepreneurship ability decides how much a person will earn. Most of the profit from a business goes to the person owning the means of production while those responsible for the production get very small share of the profit. Thus, in capitalism, those who control means of production are richer and they have the power to make all the decisions.

Thus, individual enterprise is discouraged and never allowed to bloom in communism, while, in capitalism, individualism is encouraged with the result that wealth remains concentrated in the hands of a few people known as capitalists.

The level of freedom that people enjoy in capitalism is much higher that that in communism. This is because, in communism, the society is always above individuals. While the economy in communism is regulated by the government, in capitalism, individual enterprise gives wings to the economy though the basic rules and regulations are made by the state. Even the prices of commodities are left for the market forces to decide whereas, in communism, it is the state that decides the prices of communities keeping financial interests of the people in mind.

There are incentives in the form of private property and profits in capitalism, which motivates people to work more. So a man can earn in proportion to how much he works, also based on his merit. This means, in capitalism, a person can hope to rise in stature, but in communism, he continues to get the same share. With no rich and poor, communism strives to create a classless society while class divide is the backbone of capitalism.

What is the difference between Capitalism and Communism?

• Communism was popular in the eastern Bloc countries, while capitalism is popular in the western world

• Communism strives for a classless society, where all share everything and there are no rich and poor

• Capitalism encourages private enterprise and private property

• Resources are controlled by the state in communism while capitalists control resources in capitalism, and therefore, derive most profits.


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