Difference Between Capitalism and Communism

Capitalism vs Communism

One main difference between capitalism and communism that comes to everyone’s mind immediately is the private ownership and public ownership that each entertains respectively. 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.

During 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.

What is Communism?

Communism is a political system where land and other resources are under the control of the state, which is the society or the people in effect. 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.

Thus, individual enterprise is discouraged and never allowed to bloom in communism. This is simply because communism wants to see a country where all the people are equal; not a country where a handful of wealthy enjoys life while most starve.

The level of freedom people enjoy is less in communism. This is because, in communism, the society is always above individuals.

The government regulates the economy in communism. Moreover, in communism, it is the state that decides the prices of commodities keeping financial interests of the people in mind.

In communism, no matter how much a person works he continues to get the same share. He cannot think about moving up as everyone is treated equally. With no rich and poor, communism strives to create a classless society.

Difference Between Capitalism and Communism

What is Capitalism?

Capitalism is a political system where private ownership of resources is accepted and even encouraged. Therefore, you will see certain individuals having the ownership for the means of production while some have none other than their own labour.

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 a 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.

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 than that in communism. 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.

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. The class division, that is created thus, is the backbone of capitalism.

 Capitalism vs Communism

What is the difference between Capitalism and Communism?

• Definitions of Capitalism and Communism:

• Communism is a political system where government controls the whole society including economy.

• Capitalism is a political system where government involvement is minimal and individual efforts of the people are admired.

• Popularity:

• Communism was popular in the Eastern Bloc countries when the Soviet Union existed.

• Capitalism is popular in the western world.

• Class Classification:

• Communism strives for a classless society. There are no rich and poor.

• Capitalism has a class system. In capitalism, the rich and the poor exist.

• Distribution of the Products and Earnings:

• In communism, all share everything.

• In capitalism, people earn what they work for.

• Public vs Private Ownership:

• Communism encourages public enterprise and public property.

• Capitalism encourages private enterprise and private property.

• Resources:

• Resources are controlled by the state in communism.

• Individuals control resources in capitalism, and therefore, derive most profits.


Images Courtesy:

  1. Communism via Pixabay (Public Domain)
  2. Dollars by 401(K) 2012 (CC BY-SA 2.0)