Capitalism, Communism, and Socialism: Economic Systems

People Rallying for Capitalism

Winston Churchill (1874 - 1965)

Prime Minister, United Kingdom until 1955
Prime Minister, United Kingdom until 1955

Karl Marx (1818 - 1883)

Founder of Communism
Founder of Communism

Henri de Saint-Simon (1760 - 1825)

First to coin the term Socialism
First to coin the term Socialism

From 2009 through present day while watching Fox News and CNN, I have noticed how the news media purports Socialism as a political system, ignoring the fact that in actuality it is an economic system. I often wonder if the news media is doing the same for the terms Capitalism and Communism. I have caught them using the term Democracy incorrectly; confusing it with a Republic (Plato, Socrates and Aristotle would find this appalling for these ancient political system terms are distinctly different). I further ponder about the accuracy of the information given to us by the news media. In my opinion, the news media needs to have its facts and terminology correct which includes what is an economic system and what is not.

Capitalism, Communism and Socialism are in fact three distinctive unique economic systems. Capitalism as an economic system developed in Europe around the 16th century when feudalism collapsed. This makes Capitalism the eldest between the three economic systems (Capitalism, Communism, and Socialism). Socialism was not even heard of until Henri de Saint-Simon coined the term about 1832 in France. It was Henri de Saint-Simon who first wrote about and introduced the idea of Socialism as an economic theory. After the Russian Revolution, Socialism became a working economic system in the twentieth century by the Union of Soviet Socialist Republics (USSR). Karl Marx is the founder of Communism and was influenced by Henri de Saint-Simon's theory of Socialism. You can see the influence in Karl Marx's book the Communist Manifesto published February 21, 1848. China purported to have a communist form of economy, but the truth is, China had a political system therefore it implemented Socialism. Communism is an economic system without any form of political system (no government). The economic system in a communistic state runs everything.

Webster's Dictionary defines Capitalism as "a form of economic, industrial, and social organization of society involving ownership, control, and direction of production by privately owned business organizations." It promotes privately owned property and institutions. Capitalism enables one to have equal opportunity in the economy. It is an economic system of individual reward where the common man can better his economic and social standing. Why it has been a long standing working form of economic means and distribution, not only in Europe, but in the United States.

Socialism defined by Webster's Dictionary as "an economic system aiming at public or government ownership of means, of production, etc." Socialism is an economic system run publicly via the government, where the government dictates economic policies and there is no private ownership. The people through the government own and operate the economic system. Karl Marx viewed Socialism as the economic system "precursor to Communism" where the government teaches and implements the economic principles that lead a society into Communism. Winston Churchill described Socialism "as inseparably interwoven with totalitarianism and the object worship of the state. It will prescribe for every one where they are to work, what they are to work at, where they may go and what they may say. Socialism is an attack on the right to breathe freely. No socialist system can be established without a political police."

The definition of Communism given in Webster's Dictionary is "the theory of a social-economic system in which everything is held in common, private property being abolished." Karl Marx's model of Communism had the political system (government) "wither away" and the economic-social system be self-sustaining for everything is held in common (by the public). The economic system runs and owns everything. No such thing as an individual owning anything, not even their clothing. Communism is a class free society (in theory). All work for the good of the society and labor at what one does best for community welfare. In other words, instead of doing what you like to do, you are expected to do what you can accomplish best. For example, you love to act on stage, but are not allowed to become an actor because you are better at throwing a football, in Communism you would end up being a Football Player. Ability would outweigh personal preference. All in a communist state are expected to do something for idleness is not good for the society and community. There is no reward system, because the good of society and community outweigh any personal reward or recognition.

Capitalism was never theorized, merely developed around the 16th century due to the failing of Feudalism in Europe. Books were written about Capitalism after it had already become an established working economic system. It was not introduced as a theory, but is an expression of economic evolution. It evolved from Feudalism.

Socialism and Communism were at first theories, regarded as "Utopian" economic models. They did not evolve from any earlier economic system. Socialism has been implemented as a working economic system in the USSR, North Korea and China. Until a government, that has Socialism as its economic system, "withers away" voluntarily Communism will remain a theory and unproven. There is no individualism, political system, religion and form of government in Communism.

Capitalism and Socialism are economic systems that are sustainable with any form or type of government and political system. The USSR had a one party political system in a Republic form of government with Socialism as its economic system. The United States of America has a multi-party political system where 2 parties are in the majority that is set in a Republic form of government. Capitalism is the economic system of the USA. 16th Century Europe primarily had a monarchical form of government and political system with Capitalism as the economic system.

In Socialism and Communism there is no private ownership, no private property. All is owned by the government in Socialism. In Communism all is owned by the public. Profession is chosen by ability. Very few, if any, civil liberties are given in Socialism and Communism.

In Capitalism the individual has private ownership, private property, and economic freedoms not allowed in Socialism or Communism, including the liberty to choose occupation by preference instead of by ability. More civil liberties are given in a Capitalistic economy.

For more information on Capitalism: http://en.wikipedia.org/wiki/Capitalism

For more information pertaining to Communism: http://en.wikipedia.org/wiki/Communism

For more information about Socialism: http://en.wikipedia.org/wiki/Socialism

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Comments 26 comments

David P Shirk 6 years ago

Very informative and insightful - thank you for sharing :-)


Rajab Nsubuga 6 years ago

I thank you for your analysis, however, it leaves me at pains for you have defined what an economic system is but you have not defined what a political system is. Should we take it therefore, that a polical system is what an economic system is not and that the two are mutually exclusive? I think that would be misleading. I have however noted in your submission references of Karl Max, I think you should give more thought on his idea that a political system and an economic system were entwined and that one led to the other. Thank you!


aliciaharrell profile image

aliciaharrell 6 years ago from Central Oklahoma Author

Yes, political systems and economic systems are exclusive from one another. Neither one is what the other is. A political system is any form of government that with or without a social contract governs a sovereign country or state. Most common forms of government are (in alphabetical order): Democracy (governed by populace via popular vote), Monarchy (King and/or Queen rules over the nation), Parliament (2 houses that together jointly rule, where in one house a seat is inherited by the aristocracy, and the other house a representative is chosen by the non-aristocracy by popular vote.), Republic (a representative form of government where the citizens chose a representative to act as proxy), and a Thing (Iceland has one. It is the oldest form of a representative type of government that dates back to the Old Norse. It is different than a Republic.) Per history, no political system led to any specific economic system for they really have nothing to do with one another. One being the governing body (Political System) and the other the system in which one does commerce domestically and abroad (economic system).

Thank you for your thoughtful feedback Rajab :)


canel2020@yahoo.com 5 years ago

aliciaharrell , I like your comments regarding the explanation of different forms of government. One system you did not speak to is utopian socialism. Which is socialism achieved by the moral persuasion of capitalists to surrender the means of production peacefully to the people. I have actually seen Government go the opposite way. Where legislation thought capitalists should had to give up there business to the Government.


aliciaharrell profile image

aliciaharrell 5 years ago from Central Oklahoma Author

Canel2020, I disussed solely Capitalism, Socialism and Communism without going into the utopian versions of each. Thank you for bringing up the term Utopian Socialism, an economic system that is derived from capitalists giving up their businesses willingly to the government (instead of immediately taken over by the government like what happened in the beginning of the USSR). To me, Utopian Socialism is as unrealistic in occurrence as a government withering away willingly for an economic system to rule (Communism). Utopian Socialism, like Communism, does not take into account the need for incentives leading toward an individual's success. Thank you for your insightful comment Canel2020. I truly appreciated you reading my hub. :)


mistery! 4 years ago

very helpful! thanks


aliciaharrell profile image

aliciaharrell 4 years ago from Central Oklahoma Author

Your most welcome mistery! :D Thank you for reading this hub. :)


aliciaharrell profile image

aliciaharrell 4 years ago from Central Oklahoma Author

Your most welcome mistery! :D Thank you for reading this hub. :)


My Esoteric profile image

My Esoteric 3 years ago from Keystone Heights, FL

Interesting perspective, Alicia, and a great hub. I would argue you only have two economic systems, capitalism and socialism, with variations of each. I would further assert that communism is a composite system that, in its impure state, consists of an economic system (socialism), a social system, a type of anti-religious (Marx would turn-over in his grave) theory, and political component. In its pure state, none of these things exist except maybe some undefined "cooperative" social system who comes to agreement on what is need for the good of the community.


aliciaharrell profile image

aliciaharrell 3 years ago from Central Oklahoma Author

Thank you My Esoteric for your thoughtful kind comment and for reading my hub. :D Communism is an economic system first devised by Karl Marx. In his most famous published work "The Communist Manifesto" he makes it very clear his utopia is an economic system that runs every aspect of a community where individualism, politics and religion do not exist; not a political system.


My Esoteric profile image

My Esoteric 3 years ago from Keystone Heights, FL

Alecia, I think you will find Marx's theory goes further than that; in his utopia, there is no money for there is no need to buy or sell anything, therefore, there is no need for an economic system at all. The people will willing produce what is needed for the whole community and just as willingly consume only what they individually need.

You see a need for something and produce it, afterwhich you and others consume it. Someone else sees a need for something else and produces it; they and others conume it and you may or may not. After everyone is done producing and consuming, I suppose they all join hands and sing Joy to the World, or something like that.


aliciaharrell profile image

aliciaharrell 3 years ago from Central Oklahoma Author

Thank you My Esoteric for sharing this; however even what you described is a type of economic system. Karl Marx in his Communism economic based theory makes it clear that Communism has a bartering-type of economic aspect where things are exchanged for other needs. The united communist communities would willingly barter with one another for what was needed; like exchanging clothing for groceries. It is impossible for one community to produce, create or make all that it needs. Why bartering was invented in the BC periods in the first place. Karl Marx saw money (monetary systems) as a form of corruption in society.


My Esoteric profile image

My Esoteric 3 years ago from Keystone Heights, FL

All that you say is very true in the utopian society; but, even there, not all men, or even women, are angels. Consequently, governments are needed to provide societal stability. In order to insure the utopian economic system of communism, the structure and operation of that political system must meet specific criteria to avoid economic collapse. Unlike socialism, which can work with almost any political system, a pure communist system must also include a specific political component to provide the environment for the economic system to operate, it seems to me.


aliciaharrell profile image

aliciaharrell 3 years ago from Central Oklahoma Author

My Estoteric, thank you for your insights regarding Communism; you are pointing out why Communism remains a theory, never practiced. There is no political system in Karl Marx's theory of Communism (his Utopia) and those in Marx’s model of Utopian economic system of Communism are expected to always do what is best for the entire community instead of the individual without incentives, i.e. no greed, no selfishness, no individualism plus no private property or ownership of anything. In my opinion: due to human nature and man’s need for incentives Marx’s Communism is realistically impossible on a local, county, state or national scale.


My Esoteric profile image

My Esoteric 3 years ago from Keystone Heights, FL

That is essentially my opinion as well, however, I just finished a lecture on Bellamey, or Bellamy, the non-revolutionary socialist. In a nut-shell, his theory is that capitalism naturally leads to socialism. It goes like this. The capitalist system natually leads toward aggregation of wealth in fewer and fewer hands, which, if left unregulated, is very true. At some point in time, it will be concentrated in so few hands that an organization, he apparently doesn't even say a government, steps in and simply takes control of the wealth along with the means of production.

At that point, in some miraculous way, mankind changes because there is no longer any need to compete, the paradigm has dramatically shifted. This board of directors in the sky allocates income to each individual, the same income, and it is charged to some sort of debit card (no such thing in Bellamey's time, btw, he was prescient) with which they wound buy what they needed.

People would choose what they worked at based on three things, their desire, the quality of the work, and the time required to spend working. The time required to work at a given job would decrease as the quality (stinkiness) of the job decreased. In other words, a garbage man would be required to work less hours than an accountant.

Because compition is gone, the vice that is inherent with that activity is also removed and mankind is motivated by different things now. People will want to work, because they enjoy working ... at something. Its a question of finding out what that is and what use that is to the common good. (I believe this to be true of most people, I know it is true of myself so long as my basic needs are met. If I quit working, I would be dead in a year.)

There is no strife, conflict, war, ... it is all just kub-bi-ya, lol.


aliciaharrell profile image

aliciaharrell 3 years ago from Central Oklahoma Author

My Esoteric, there are two men with the last name of Bellamy that fit your description. Which are you referring?

Socialism aka Nanny State interference breeds lack of quality, less product created, and little safety in the work place. This was proven domestically within the USSR during the Cold War. People do not get to vocationally choose in Socialism what they like or love to do; only what they are good at which is entirely different. You can be excellent at doing something and despise it. Why some USSR citizens deflected to the USA when opportunity presented itself. They wanted the freedom to pick a vocation they liked or loved.

If the community garbage trucks ran fewer hours than an accountant works, communities would find themselves very stinky, literally, from garbage pile up in the dumpsters. Individualism and true personal choice are not present in Socialism, why the USSR had to build the Berlin Wall in the first place to keep its citizens from escaping. Socialism is a failed experiment; even China had to add some Capitalism gradually to its Socialistic economy for the purpose of giving incentives for better work ethic.

The USSR never managed the lack of strife, conflict or war by being a Socialist economic based state with a one party Republic. No past or present Socialist economic based state has due to its totalitarian nature. It was a relief to the entire planet Earth when the USSR dissolved into separate nations and became a thing of the past.


My Esoteric profile image

My Esoteric 3 years ago from Keystone Heights, FL

Edward Bellamy who wrote "Looking Backward". The presumpsion, regarding the garbage trucks is that there would be enough people wanting to work shorter hours that all the garbage would be picked up.

Unfortunately, you are right, most utopian minded philosophers simply refuse to understand the basics of human nature; Thomas Paine was another.

Understand, I am getting all of this from a series of lectures on critical ideas that shaped American culture. This one was on Bellamey's idea of a non-revolutionary Socialism. I just finished on on Deb's pacifist Socialism, but who's structure is more like the one commonly understood. Right now, he is covering the first real treasties on active-state liberalism, i.e., progressives.


pramodgokhale profile image

pramodgokhale 3 years ago from Pune( India)

This century has brought more opportunities and challenges and problems. It proved all isms have their shortcomings to tackle problems.

Present global economic crisis completely shattered the myth of successful economic models in the west and and oil rich wealthy nations.

Joseph Stieglitz American Nobel winner economist has written in many of his books , how it happened and suggested solutions also. He was adviser Clinton administration.

People participation and sincere implementation of welfare schemes , it can bring results.

pramod gokhale


aliciaharrell profile image

aliciaharrell 3 years ago from Central Oklahoma Author

Thank you MyEstoteric for your clarification of which Bellamy; the garbage truck model was proven by the USSR inadequate, did not work the way Edward Bellamy theorized. Giving Garbage trucks less time to do their work equaled stinky bins left full; not hygienic for the community. Your lecture series sounds interesting and in depth; you seem to be learning much about economic models.

Pramod Gokhale, thank you for your thought filled comment. Joseph Stieglitz, American Nobel Winner and advisor of the Clinton Administration, has written interesting books. His solutions are liberal and Hamiltonian in perspective. I would not advocate them because I am pro a fiscally responsible and pro individual/taxpayer approach (today they are calling it "conservative economics") to economic issues and government budgeting.

To date and in my opinion, the only economic method that has proven even remotely feasible (good for the individual with incentives) and long withstanding is Capitalism. True, from an economic point of view, it has its set of issues, but they can be worked out a lot easier than the mess Socialism brings economically as well as the strain on any government’s budget. England and Canada had to reintroduce Capitalistic measures to rescue their failing economy.

There are positive and negative results to any Welfare system used. Personally, I feel it should include a "must work" aspect and truly help people get employed so they do not stay on Welfare permanently. It should only be a short-term assistive type of measure. This way everyone ends up a winner. Those who have employment are the taxpayers, where the money for Welfare comes from.


My Esoteric profile image

My Esoteric 2 years ago from Keystone Heights, FL

For what its worth, I just started a 36-course lecture series on "Thinking About Capitalism" by Jerry Z. Muller, from the Catholic University; hope it is interesting.


aliciaharrell profile image

aliciaharrell 2 years ago from Central Oklahoma Author

The course might gift you a hub or 2 to publish My Esoteric. Ready to read them if you write them. :)


My Esoteric profile image

My Esoteric 2 years ago from Keystone Heights, FL

I am hoping so, the Professor is taking a history approach rather than an economic one which brings in all of the other aspects of life that capitalism touches.


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aliciaharrell 16 months ago from Central Oklahoma Author

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