ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel


Updated on December 24, 2014

Socialism and communism are nonetheless, contrasting schools of thoughts in the discipline of economics. The basic argument in the debate concerning communism, and socialism is chiefly concerned on economic equality, and responsibility of the government. In relation to socialism, economic inequality is a bad thing in the society, and that the government is obligated to reduce it through introduction of programs aimed at benefiting the poor. Such programs include but not limited to provision of free medical services, free education, offer of social security especially for the elderly, and tax rich people highly. Capitalism on the other hand, is the belief that the government does not utilize economic resources efficiently as private entities. Therefore, the society would be much better in a free market economy, which determines winners and losers.

This topic is important because essentially, communism and socialism are among the main economic systems, alongside capitalism that have existed since industrial revolution. Both of these systems have their own merits and demerits. It is therefore, with this reason that the author wishes to conduct an evaluation on what these systems are, and the merits and demerits associated with them. Since the Soviet Union abandoned the communism system, the assumption that capitalism may be the only effective economic system has been aggressively marketed in the capitalist media. This view seems to gain credibility owing to the failure of communism and socialism with regard to its aims, corruption, totalitarian, and gross inefficiency.

This topic is related to the discipline of economics in the sense that it makes us understand the meaning of economic success. A comparison of socialism, and capitalism will make us understand the meaning of economic success. An economic system that is perceived as being unjust and then led to a global poverty would be indeed a dubious achievement. It may be rightly argued that the economic justice is jeopardized when the outcome poverty among the people. In another spectrum, an economic system that is perceived as being unjust, and which leads to wealth being concentrated in the hands of a few, is a more dubious realization. Further, an economic system that does not motivate individuals and is inefficient cannot be said to be just or capable of producing much wealth.

2.0 Literature Review 2.1The Context of Socialism and Communism


Most ideologies of communist are derived from the works of Engels and Marx(1845). It must however, be noted that the vision of communism by Marx and what actually came out as a communist ideology were not aligned to each other. Many people perceive communism as a regime that is hungry for power. This was the predominant stand of the communism model taken by communists during much part of 20th century. This conception is however, wrong within this ideology since communism has very few factions within it. Communism is the process by which the proletariat or employees take over from their masters and capitalists with an aim of controlling the production means. In essence, producers end up becoming the owners of their production. Lenin incorporated the ideas of Marx in the context of pre-capitalism. This is unlike the late capitalist economies where Marx had forecasted the emergency of a communist revolution to overthrow the capitalists. In the context of Leninism, a revolution on communism will be spearheaded by a revolutionary vanguard. The vanguard is individuals who are specifically mandated to control, and protect the revolution from capitalist and other threats ( Marx et al, 2005, 114). This means that communism is a brief dictatorship moment by the proletariat or employees.

The Marxist communism originally stated that the Proletariat consisted of the whole working class group of people and not just one single individual. This kind of dictatorship is only brief since its main aim is to suppress the existence of capitalism, the use of money and multiple classes. This cannot however, be said as being a violent stage as neither capital, currency nor classes are existing outside the mind. The theory of labor value can be better used in explaining this. In the case when you are a lone or lost, you may not live off currency and capita irrespective of your class. However, if you live off your labor, then you may go on living. Nobody is expected to own private property since all are expected to be equal. Despite the fact that centralized or Stalinist models of communism have been generally regarded as failed experiments, much of the original communism theory are applied and interpreted in new perspectives. According to Whitefiled (2011) this can relate well with the present situation of capital globalization.


Socialism was in its earliest form a reaction against the stark reality of the miseries and inequalities that was the outcome of increasing capitalism economies and industrial revolution. In this case, political power was rested on those who harbored wealth while those who did not have were subject to oppression and or exploitation (Hill, 1971, 45). Although many people confuse communism and socialism, the two ideologies are different in many perspectives. For instance, socialism is focused on the people’s welfare and therefore is concerned on provision of education, healthcare, as well as other basics of a healthy lifestyle in creating a society that is more at “level”. The reasons behind the nationalization of industry and other societal aspects were varied with regard to the particular socialism system. Communism on the other hand has also these objectives in mind, but in essence, this system is in nature quite anti-capitalistic. In contrast to communism, one of the essential basis for socialism is for the state to control the natural resources and capital within its jurisdiction. This translates that all the people whom are represented by that state will be able to virtually control everything. This will therefore lead to undermining or total elimination of social classes. Hence, some of the important socialistic goals are increasing awareness and education for the people to elect their representatives in a proper way, provision of unbiased media with no private interest and reduction of apathy. The major variation between socialism and communism is that while socialists are seeking change through the means of government, communism perceives this as being slow as typically reflected in Karl Marx’s writings. This according to communism will increase the necessity for revolution, which could change things faster. Marxi’s arguments were that the powerful and elite had no time in history relinquished their wealth or power willingly and that they could only be removed from power by being overthrown. This was why according to them; a revolution was required to overthrow the capitalists (Marx, 1845, 234). There are historical examples where socialism has caused immense change and that many nations have some form of socialist aspects in their governance mechanisms.

General Overview of Communism, Socialism,and Capitalism

Communist System

Communism is an economic system where the planning of economy is rested on the hands of the government. A society that believes or relies on communism distributes evenly all their property among the members of that society. Owing to the massive authority of the state, small businesses are in most cases at a disadvantage in such a society. Stated differently, communism is essentially a social organization where property and production means are commonly held. Presently, the term is being used in reference to the movement that aims at overthrowing the capitalist system by revolutionary methods and create a society that is classless or equal whereby, all property and goods are held in common or socially. Communism theory was introduced by Karl Marx and later expanded by Lenin Vladimir Ilyich (Kotkin, 2009, 456).

This system can be beneficial to international traders when soliciting for business opportunity. This is because in this system, the economy is centrally governed and the trader can approach the responsible authorities directly. Unlike the capitalist system where there are many players in the economy, and which can present difficulties for such a trader on who can best be approached regarding the opportunity, the trader will find it easy to approach the responsible personnel in this system.

The law of demand and supply states that if the price of goods or services goes up, lesser amount of such services or goods are demanded in the market. Stated differently, the demand in goods or services goes up when prices are down and they dramatically fall when the price increases. In a communist society, prices are regulated by the state with disregard to the law of demand and supply (Hayek, 2001, 67). This becomes an advantage to an international trader because he or she can be able to predict the price for his goods or services and evaluate whether he can be able to generate profits by supplying them.

Disadvantages of communism as an economic system are numerous. The political and economic system prevalent in communist determines what can or cannot be done in the business perspective. There are limitations with regard to the amount of business that can be produced ,and how much one is supposed to earn. Furthermore, communism places strict regulations on how a business is expected to operate so as to achieve a classless society (Bradgate, 2003, 37). This means that an individual’s autonomy in the business is lost and only operates at the whims of the state or authorities.

In another spectrum, communism may be regarded as an extreme form of socialism. There are many nations around the world, which harbor dominant socialist political parties, but communist parties are only in a few countries. In essence, many nations such as U.K and U.S, which are staunch capitalism, have government programs that are derived from socialist principles. In another occasions, socialism may be used interchangeably with communism though the two ideologies have some strong variations. The most notable difference is that while communism is primarily a political system, socialism is centered on an economic system, which exists in different forms under a broad range of political systems. This table can be used in comparing the two philosophies.

In a perfect or ideal world, all individuals could have shelter or food. In addition, a true utopian society would not consist of such things as racism, sexism, and other kinds of oppression. However, it just seems that this kind of a perfect world is simply not realistic. Communism proposes a solution to these issues. Majority of people have an understanding of what communism is at its basic level. In simple terms, communist presents the idea that all people thriving in a given society are given equal shares of the benefits accrued from labor. Communism is designed in such a way as poor people are assisted in improving their economic standings. This will also help them to rise in social and financial terms and be equal to middle class landowners.

For all people to be equal, wealth is re-distributed from the members of the elite group to the sense that their wealth is decreased to the level of the other members of the society. This system also requires that are production means are state controlled. Stated differently, no one is required to own his or her own enterprise or produce his or her own products since all things are owned by the state. Engels' postulates that the principle of communism, social and financial equality is based on the logic that this system should spread globally until all states are brought on board. This objective has resulted into many states to be on guard, with the fear that communist practices might penetrate into their countries.


Capitalism is an economic system whereby, the industry, trade and production means are controlled by private owners rather than the public for the purpose of generating profits in a given market economy. The main features of capitalism include competitive markets, accumulation of capital and wage labor. In this economic system, the price at which goods and services in the market are traded are determined by the parties that are involved in the business transaction. Stated differently, capitalism entails private ownership of resources and production inputs, and on production of goods and services for the purpose of making profit. This production of goods and services is based on the law of demand and supply in the market economy (Hayek, 2001, 66).

One of the benefits an international trader can encounter in capitalistic system of economy is that the government will less likely interfere with his or her business operations. Unlike the communism system, business organizations in capitalism economy will experience fewer regulations that can be burdensome to their operations in that specific organizations. Further, the business owner will have the autonomy of operating the business. If a trader happens to be producing products of high quality against other competitors, this will be an advantage to him or her because capitalism tends to reward businesses that produce high quality products for low price. This will subsequently lead to increased market share and competitive edge for such a business.

There are also a number of demerits associated with capitalism system of economy especially to businesses. One notable aspect of capitalism is that it provides freedom to some property owners to create an influence to the market since there is no much regulations on the extent of this spread. This subsequently leads to monopolization where some few players dominate the market. In addition, this gives room for few organization to become dominant in the market and influence essential factors such as price, product quality and quantity without much opposition. Further, these will create an entry barrier for other barriers (including international traders) owing to the high degree of control of the organizations that are already monopolizing the existing market.


Common ownership is the central meaning of the term socialism. This translates that all individuals communally own the world or societal resources. This leaves many queries whether it is meaningful for people to own all things in common. It is obvious that some goods are intended for personal use such as clothing and so on. However, individuals “owning” particular possessions are not a contradiction of the principle of society that is based upon common ownership (Terence, and Dagger, 2006, 334).

In practical sense, common ownership translates that all people have the right to participate on decisions on how the societal or global resources will be utilized. It also means that no individual person is allowed to resources or some aspects of these resources beyond their own personal resources. The meaning of socialism can therefore, be equated to democratic control. In a socialism society, all people are given the right of participating in decision-making processes for their own well-being. Such decisions could be on a broad range of issues, for instance decisions relating to organization in production of goods and services. In this economic system, production is solely for use. With the technical and natural resources in the world being commonly held or democratically controlled, the main goal of production will be to ultimately meet human wants. This means that money, buying or selling is not very necessary. Rather, people are expected to freely take and use what has been communally produced. The traditional saying of “from each according to capability, and to each according to his wants” applies in this perspective.

In effectively classifying what human needs are, we have to reflect on the concept of democracy. This is because, the choices of a society reflects the needs of its members. However, these needs are not similar in all cultures with specific individual preferences. However, the democratic system is easily designed to cater for this variety. In socialism system, all people must have free access to goods and services, which are designed in such a way that they directly meet their needs. There is no system for payment system since each individual has to contribute in production. All the work is done voluntarily. Production is specifically for the purpose of meeting the needs translates that people engages for work, which can be directly useful for them. The satisfaction that would accrue alongside the increased opportunity in shaping the working conditions and patterns could bring new attitudes on work (Yonary, 1998, 29).

2.2 A comparison of Communism and Socialism Economies

Friedrich Engels and Karl Marx changed the world by coming up with two economic systems. Until the publication of the communist manifesto in 1848, much part of the western world followed a path where property was owned by private individuals, business enterprise and the revenues that were generated from investments. Engels and Marx observed that unequal distribution of wealth in the capitalist world and forecasted a global uprising that was aimed at equal distribution of wealth. Since that time, many states have struggled on which direction to undergo concerning their economies.

Karl Marx, who is the founder of communism, was incensed by the increasing gap between those who have and those who do not have. He observed that capitalism was an old-fashioned system of economy that exploited employees. According to him, this could result into an uprising against the rich since the poor were treated in an unfair manner. Marx foresaw that the communism economic system could replace capitalism in future times. He went on to argue that communism principle was meant to correct the ills that are caused by capitalism. Among the major concept of communism is that ownership of private property is disallowed. His belief was that private ownership of property was encouraging greed, and motivated people on competition, irrespective of the consequences. Marx argued that property should be shared equal among the members of the society, and that the people should be the controller of economy. The government should exert control in the name of the people, at least in the transition between capitalism, and communism. The objective is to reduce the gap between the poor, and the rich, and also establish the economic inequality (Marx, 1845, 79).

Socialism may also be similar to communism in some aspects. For instance, it also advocates for putting the major means of production in the hands of people, either directly or through the government. According to socialism, income and wealth should be shared equitably amongst all the people. Socialism is different from communism in sense that it does not belief that employees should overthrow capitalists in a sudden or violent manner. In addition, they also don’t believe there should be an elimination of all private property. Their main objective is to reduce and not to eliminate in its entirety the gap between the poor, and the rich. According to socialists, the government has a responsibility of redistributing wealth, and to make the society more just and fair.

2.3 Economic Differences in Communism and Socialism

Although there is no pure capitalist, communist or socialist economy in the world today, the categorization of these models assists in giving more insights on these different economic systems. As envisioned by Engels and Marx, Socialism was ideally, where all people shared industrialization benefits. Socialism in a pure economic system may not be an effective way to run a large economy. Socialism is not regarded as a political system, rather it is a means of distributing goods and services. At the deal implementation, laissez faire capitalism and socialism may be similar as all the people will produce what is required to whom it is needed. Practically, both may at times, work in micro economic conditions, but miserably fail when applied to national and global economies. The major reason why fail is due to human perversity A lot of people do not want to play fair, and the systems can only work when all people follow the same laws.

Socialism is regarded as liberal in the sense that all people are involved in the running of the economy. This can also be equated to democracy, which is as well liberal. In democracy, all people are involved in the running of the government. According to Marx, “democracy is the pathway to socialism”. Though Marx may have been wrong with regard to interactions of the economics and politics, he foresaw their similar underpinning.

In a socialist economic system, production means as well as distribution of goods is collectively owned. It can also be owned by a centralized government which in most cases is mandated with role of planning and controlling the economy. In another spectrum, there is no centralized government in the socialist economy. Rather, property is collectively owned. Labor is organized for the benefit of all members. For a capitalist society to progress, it first has to start with socialism. From a capitalist perspective, it becomes easier to realize a socialist ideal where distribution of products is done in accordance to the needs of people that is quality and quantity of work done. For communism, (distribution of production in accordance to needs of people, it is essential to have a high production so that it is enough to meet all the needs of people. In a communist society, individuals work not because they must work but because they want to and want to fulfill their social responsibility. Communism may be regard as conservative in the sense that very few people may be involved in the running of the economy.

In a socialist economy, prime entity is considered as the property of the government. The law of supply and market demand is not an applicable here. Instead, the government determines the amount of goods to be produced, how and where it is distributed at what price should it be distributed. In economic terms, there is a relation between communism, and socialism. It can also be rightly argued that while communism has some political affiliations, socialism has only a pure economic aspect of the same thing. The principle in communism is that the society should not be put into classes such as the elite, middle and the poor. Rather, all people should be equal and the wealth should be distributed equal. Rich people should be stripped of their excess wealth, which should then be distributed to those who do not have. No one should be more powerful, richer, bigger or better that the rest. It was not justifiable in communism perspective. The state is the one mandated to control the economic activities, and to produce good and products that are needed in the society. The government is focused at maintaining the welfare of people and is not concerned on profit generation. The communism economic system was successful in countries such as the Soviet Union, before it collapsed. It is still prevalent to some extent in some countries as Vietnam, China and Cuba (Bellamy, 2003, 60).

There are many advantages and disadvantages associated with these economic systems. With regard to the current perspective, the socialist economic system is gradually becoming less popular. Some nations such as India, which had been established by a socialist set up, has now resorted to a mixed system of economy. Despite being there a free market in the country, the government is seen intervening regularly in particular areas. Although China can be regarded as a communist state, it could be true to state that, the economic system has been integrated with the capitalistic economy.

Political Differences

Socialism does not accept classification of society. Socialists believe in the possibility of the transition of capitalism to socialism without the basic changes in the character of a state. Their perception of a capitalist state is that consists of dictatorship for the capitalist elite. Rather, they see it as a flawlessly piece of mechanism which can be employed for the interests of a particular class of people which gets a command of it. In this system, there is therefore, no necessity for the working class in authority to destroy the apparatus for the capitalist’s state and establish their own. The transition to socialism can be made on a gradual within the basis of a democratic society. Socialism as an economic system exists in various degrees, and levels in a broad range of political systems (Mayne, 1999, 316).

On their part, communists have a belief that employees and their allies must strive to alter the character of the state by replacing dictatorship by capitalist with employee’s dictatorship. This is a first step towards the process by which the prevalence of capitalist as a social class (but not individuals) is ended and a classless society eventually established.


3.0 Methodology

Qualitative and desk approach will also be used to find literature in relation to the topic and objectives of the study. The literature will be accessed from research findings, government agencies, and other organizations that had conducted studies on the same area. In addition, peer-reviewed journals such as Academic Search Premier, JSTOR and Business Source Premier will be helpful in exploring the topic under study. The technique employed in finding these journals, studies and information will include using key search words associated with the topic in the identified websites, and databases. Once the articles are accessed, they will be stratified with regard to the questions, which they address. Afterwards, analysis of the main themes will be conducted by relating the findings with the operations.

4.0 Conclusion

Communism is an economic system where the planning of economy is rested on the hands of the government. A society that believes on communism distributes evenly all their property and goods among the members of that society. Stated differently, communism is essentially a social organization where property and production means are commonly held. The term has been presently used in reference to the movement that aims at overthrowing the capitalist system by revolutionary methods and create a society that is classless or equal whereby, all property and goods are held in common.

The main principle behind socialism is that the present state of inequalities in our society is unfair. According to them, there is no sense in a few cliques of people being the owner of a large amount of wealth and therefore controlling the economy. This will amount to monopoly where the poor people who in this case will be the majority survive at the whims of the minority elite group. This would amount to oppression since individuals are full of greedy and self-interest. There are however, differences by the different groups of socialists on how these change should be realized. Others want such a change to be gradual, and by means of parliament while others aspire the change to be rapid, and facilitated through revolution.

Socialism may also be similar to communism in some aspects. For instance, it also advocates for putting the major means of production in the hands of people, either directly or through the government. According to socialism, income and wealth should be shared equitably amongst all the people. Socialism is different from communism in the sense that it does not belief that employees should overthrow capitalists in a sudden or violent manner. In addition, they also do not believe that there should be an elimination of all private property. Their main objective is to reduce and not to eliminate in its entirety the gap between the poor, and the rich. According to socialists, the government has a responsibility of redistributing wealth, a make the society to be more just and fair.


    0 of 8192 characters used
    Post Comment

    • Nyamweya profile imageAUTHOR

      Silas Nyamweya 

      3 years ago from Nairobi, Kenya

      thanks Romanian for your encouragement, it is people like you who keep me writing.

    • Romanian profile image


      3 years ago from Oradea, Romania

      There are quite big differences between a left wing system and a far left wing system. Good informative hub.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)