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Capitalism & Communism: The Debate

Updated on November 26, 2017
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Fatema is a student with keen interest in sociology and the functioning and history of social and economic institutions of societies.

Capitalism and Communism are economic and social systems/ideologies which control and organize means of productions (industries, factories), its ownership, and subsequently, the manner/nature of the distribution of wealth and income. In this way, the type of economic system employed has a great impact on any nation's socioeconomic order and class structure. Communism and capitalism, either have been, or presently are being employed by nations across the world, with the latter being more popular. However, neither come without benefits and adversaries in both thought and practice. In this article we shall explore and understand the functioning of capitalism and communism in both ideology and practice, as well as evaluate its impact and effectiveness

What is Communism?

Communism is a social, political and economic ideology/system, where the ultimate goal is to establish a socioeconomic order based on the common ownership of the means of production, for this would eradicate the presence of social classes, and differences in wealth and income. Common ownership implies that all industries, and factories shall be held indivisibly, as opposed to privately or individually.

What is Capitalism?

Capitalism is an economic system based on private ownership of means of production and the creation of goods and services for profit, which is claimed by the owners of the means of production. In a capitalist market economy, investments and prices for exchange of good is determined by private descisions of the owners. Characteristics of a capitalist economy include private property, wage labor, and competitive markets.

Communist Ideology: Origins

An important pioneer and developer of the communist ideology was Karl Marx (5th March, 1818 - 14th March, 1883), a German philosopher, economist, sociologist, journalist, and revolutionary socialist.

Karl Marx
Karl Marx

Although born in Germany, he spent a large part of his life in London. Hence, he developed a close understanding of the industrial revolution (1760-1840) and the capital industry, in which there was great class divide and disparity in wealth. Marx's work in economics led to the basis of communism and subsequent economic thought.

Marx's theories on society, economics, and politics are termed as Marxism

Marx's theories on society, politics, and economics are often termed as Marxism. It is this that includes his views on class structure, exploitation, and subsequently the idea of a classless society. Marx's theory of communism was instigated from a society fractured by class conflict, where the bourgeoisie (ruling class) would own all the means of production, while the powerless proletariat (working class) would have no choice but to work for the bourgeoisie, and face exploitation at their hands (based on the industrialised society of Britain).

Marx believed that in such capitalist states everything would function on behalf of the ruling class and in their interests. However, he also believed that there would come a time when poverty and exploitation would be extremely severe. It is at this stage that the working class would realize their rights and the extent of mistreatment bestowed upon them. Hence they would ultimately revolt against the bourgeoisie and overthrow them. This would then lead to the creation of a classless, communist society where means of production would be owned by all, with everyone being equally provided with necessary commodities. This is Marx's communist theory, often classified as Marxism.

the size of each tier depicts the quantity of each class. This implies that most of country's wealth lies in very few hands.
the size of each tier depicts the quantity of each class. This implies that most of country's wealth lies in very few hands.

Various Communist movements in the modern world, as well as governments are/were based on Karl Marx's theories of class conflict and common ownership. Apart from that, many intellectuals and labor unions have been largely influenced by Marx's ideas.

Features of a Typical Communist Society

The following are the features of an ideal communist society.

  • In a communist society there is complete abolition of all private property. Hence, one owns no private business, but only the necessities of life.
  • There is collective ownership of all means of productions. In this way, all systems are under state's ownership and control. These include, but are not limited to, factories, farms, and lands. The production and distribution of consumer goods and income is balanced through comprehensive planning.
  • A communist society eliminates unfair gaps in income, by paying each individual according to his/her need. Apart from that, revenue, interest, and private profit is abolished, so wealth could be distributed fairly.
  • Lastly, in such a socioeconomic set up, it is the states's responsibility to provide the necessities of life. Thus, it is their duty to give work and compensations according to the capabilities of each individual.

It is believed that all this will bring about a classless society, without any conflict, disparity, or unequal distribution of wealth and income. Hence, an ideal state and functioning of any communist society, at least in ideology and theory.

To What Extent Can Marx's Theories be Applied Today?

While Marx's communist theory is pure in ideology 'in terms of equality', the extent of its practical application in all sincerity, and exactitude to the aim of the ideology is debatable. In order to understand its effectiveness, we shall look at the history and current sociopolitical situation of China, and understand the extent to which Marx's theories are applied, and its impact on society and economy.

COMMUNISM AND CHINA

Communism in China first arrived in 1921, when the Communist Party of China was formed. By 1921 however, the party was in the control of Mao Zedong, a Chinese Communist revolutionary poet, political theorist, and the founding father of the People's Republic of China. In 1947, the Communist Party obtained control of China, as a result of a revolution led by Mao Zedong.

Initially, Mao followed the Soviet's model of Communist development. However, believing that the Soviet did not preserve the true Communist ideology, he split from traditional communism by 1950 and developed Maoism (Chinese interpretation of communism). Maoism is an anti-revisionist form of Marxist-Leninism (emphasizes on the dictatorship of the working class, by giving them political control). Maoism claimed that among the working class, it is the peasants who should be the essential revolutionary class, as opposed to their industrial working class comrades (Karl Marx theory laid emphasis on the latter). Mao believed rural workers would be more successful in establishing a revolution and communist regime in China. This is likely because the possible fringe benefits left at the bottom of the barrel for the Industrial working class to scrape for and enjoy, were absent for the rural workers, leading to greater agitation and discontent in the latter, and consequently, an effective rebellion.

While Maoism lays greater focus on the country side, and is critical of urban industrial capital powers, it views urban industrialization as a prerequisite to expand economic development to the countryside. The aim being, the achievement of rural industrialization, which would then abolish the distinction between town and countryside.

THE GREAT PROLETARIAT CULTURAL REVOLUTION OF CHINA

In 1966, Mao Zedong, the chairman of the Communist Party, instigated and led the Great Proletariat Cultural Revolution of China, which lasted till 1976 - an uprising vaguely reminiscent of the revolution predicted by Marx. Mao Zedong aimed to preserve the "true Communist Ideology" (Maoism) which he believed people to have deviated from, by perishing all remains of capitalist elements present in society. He laid great emphasis on violent class struggle on part of the proletariat against the Bourgeoisie elements that had infiltrated Chinese government and society. Thus, the Bourgeoisie/rich in every facet of society, as well as those simply associated with this ideology were targeted for humiliation, persecution, and beating. This also included the elite intellectuals and teachers. As a result, there was great bloodshed and anarchy, while China suffered greatly in terms of education and economy, leading to severe poverty and unemployment.

On the other hand, the radical revolution and its severe policies brought forth slight benefits for those living in the country side. For instance, middle school education was provided in the rural areas for the first time, while health personnel were deployed to the villages and health care centers were established there. All this brought about a faint shadow of equality between the villages and industrial centers of China. Ultimately this revolution, at its core, emphasizes on the Communist regime's aim of a classless, equal, society, and attempted to, albeit violently, fulfill it.

THE IMPACT

Mao Zedong's efforts to establish a pure Communist regime in China with political power in the hands of the working class put the country through a series of adversaries. Some, the consequences of Communist economic set up, others the result of the ruler's ruling regime.

Firstly, the Great Leap Forward brought forth various problems and disadvantages for the country, contrary to what was expected. The Great Leap Forward was an economic and social campaign led by the Communist Party of China from 1958-1962, headed by Mao Zedong. Keeping in accordance with his goal of urban industrialization, he aimed to convert the China in to a socialist society through industrialization of collectivism of agriculture. This brought about radical changes in the lives of villagers. For instance, private farming was prohibited, lands were forcefully donated/distributed and mandatory collectivization of farming and farmlands was introduced. In such a case, farming was done by farmers who ran their holdings as a joint enterprise, with the entire process being state-run due to he supervision and surveillance of the state in all matters. These changes, instead of boosting the food production, plummeted it greatly, due to a lack of quality and efficiency that was found earlier when such sectors were privately run. The proof of this is the Great Chinese Famine, which lasted for three years and resulted in millions of deaths (close to 43 million). Moreover, this initiative also consisted of drafting peasants for labor in other industries, such as steel furnaces, which led to worthless and low quality production. As a result overall production across multiple sectors was extremely low, putting China in economic regression. Thus, adversely affecting the poverty of the working class, as opposed to alleviating it.

Apart from that, the Great Cultural Revolution, at its height, almost paralyzed the Chinese economy, as a result of great bloodshed, destruction of infrastructure, and other institutions, such as education. While through this revolution, Mao strove for equality, and transparent classlessness, it only left the country more divided and poor than before.

It is said by some that while the Communist Party of China appeared to adopt a Marxist approach, this was nothing but a facade. Despite claiming Maoism once it came to power, it established nothing close to a proletariat rule by the 1950's. That is because it was a systematic capitalist economy run by and for the designated ruling class (the Communist Party), allowing them to enjoy a great surplus of wealth.

Moreover, instead of elevating the position of the working class, Mao's communist regime systematically trampled their working class rights, which were often an extension of the result of privately owned means of production. For instance, revolutionists were persecuted (right of protest taken away), while trade unions in effect were barred from properly functioning.

All these factors and consequences did not only only undermine the true purpose and goal of Communism, but also added greater suffering and instability in China.


POST MAO'S DEATH

From 1976 onward, after Mao's death, the ideals of China shifted to a form of "Market - Socialism". Socialism (similar to communism) is a political and economic theory which advocates that the means of production, distribution and exchange be owned and regulated by the community. In market socialism, while there is social ownership, the profits generated by the firms are either used to remunerate employees or be distributed among the population equally in a social dividend. Through this, China again aimed to achieve pure Communism, for according to Marx, socialism, of any form, is often the earliest stage of Communism.

However, in order to boost development, these new ideals were molded to suit China's economy and political situation. This allowed China to open herself to foreign investments/companies, as well as import of capital and technology, while at the same time fully using and exploiting its own urban and rural workforce. Hence, despite claiming otherwise, this was a strong shift from traditional communist ideology and theories. Their aim to lure in foreign investments (capitalist elements) allowed them to slowly lift communist/socialist restrictions. This gradual influx in investments and capital greatly developed agriculture, industry, science and technology, and the army, four areas of important focus for the government, and have helped make China the world power that it is today. However, alongside industrial development, there was simultaneous rise in poverty, which shot up to 84% by 1981.

Communism, as pertinent to its core nature, prevents a sense of independence and individual freedom in business dealings. This notion, along with rise in poverty instead of the promised decline, led to great agitation and students' protests for individual freedom in 1989. This led to resignations all over the country, while the seeds of entrepreneurship were gradually sowed.

MODERN DAY COMMUNISM IN CHINA

In recent times, the influx of Western technology and capital, which truly undermines the communist theory, along with other factors, has caused the communist ideology to largely fail. Firstly, the state's ownership of means of production in the past, along with collectivization of farmlands, did not lead to a better lifestyle for the common people, as seen in the high poverty and death rates.

Apart from that, various capitalist forces, brought in through foreign investments, companies, and capital have been powering China's economic development. Moreover, small systems of local private ownership are growing in China and have been given legal status. This can be traced back to the seeds of entrepreneurship sowed in the 80's, due to protests. As a result of all this, China's economic success today is largely due to profits from international trade, investments, and private industries, as opposed to their state owned/socialist businesses.

More importantly, the Marxist-Leninist ideology, and later Market-socialism, that is claimed to have been adopted, is a thin facade shielding the actual Chinese system. This is because while capitalist forces are powering the economy, being given legal status and consequently bringing forth a capitalist socioeconomic order, the Communist Party continues to exert full control over the military forces, media, education system, and to some extent the economy (farming), thus, severely limiting freedom of speech. This makes it more evident than ever that Communism no longer exists in China, but rather is a pretense used to hide the Party's rule based on totalitarianism and convenience.

While a capitalist economy is prospering in urban China, almost 850 million peasants living in rural areas, are made to work on state-owned land, in order to maintain the country's notion of socialism. This brings forth a divide in living standards between those working in capitalist economy and state employed peasants. However, the peasant's economic transformation to a more industrial and urban standard can be achieved if the people have a say about where to live and work. This, not being convenient for the part, is not possible, leaving people with no possible way to improve their economic situation and thus allowing the inequality to ensue. This further emphasizes on the pretentious nature of Marxist-Leninist ideology.

Despite its confusing economic state, poverty in China was brought down to 12% by 2010

By taking into account China's past and present, with the former having tried so hard (or appeared) to achieve an almost radical form of communism, this political ideology has largely failed.The past of China, under a fluctuating and unstable communist regime, has been characterized by great poverty, bloodshed, periodic economic regression, and constant discourse. This implies that the communist ideology in China failed to achieve its underlying goal of a classless society where each individual's needs are fulfilled.

On the other hand, China's significant economic progression, making her a powerful country, only occurred after the development of its four main sectors. A large extent of their development in turn, can be attributed to foreign capital, technology etc. Moreover, the poverty rates were brought down in a time when not state owned, but rather capitalist and small-scale private industries powered the economy. All this implies that China, never truly followed the pure purpose an ideology of communism (deliberately or by consequence), despite claiming otherwise. However, China's past could also imply that while pure in theory, communism simply cannot be applied to produce perfect results in the practical world, regardless of how much one twists and molds it to suit their conditions, With only former Soviet Union as another Communist country (now disintegrated), it is difficult to make any other claim about the effectiveness of a communist society.

Capitalism

Capitalism, or some form of it, has existed long before industrialization across different cultures and governments. This very concept can be traced centuries back to renaissance. There it existed on a small scale, in the form of merchants, and lending and renting activities. Capitalism can also be compared to Feudalism, a system based on ownership of lands.

Class structure of a monarchical/feudal society that is close to industrial capitalism
Class structure of a monarchical/feudal society that is close to industrial capitalism

FEATURES OF A MODERN CAPITALIST SOCIETY

Capitalism exists in most countries across the world. In order the understand the functioning and features of a modern capitalist society, we shall take a glimpse at U.K., taking into account its class structure and extent of inequality/equality.

THE POSITIVES

  • In recent times, a middle class has emerged, which consists of professionals, managers, teachers, social workers, and journalists, to name a few. This middle class grew after the first World War, due to the influx of more jobs, as well as advancements in technology and compulsory education. This class is not exploited by the bourgeoisie, and enjoys a better lifestyle than the working class. Hence, society is not divided into two sections of conflict, as in the past and predicted by Marx.
  • Many working class children are now able to achieve upward social mobility. social mobility in any society refers to one's movement between the tiers of the social hierarchy or stratification system. Hence, upward social mobility refers to one's movement from a lower class (working class), to a higher one (lower middle class). The emergence of tertiary sector has expanded the extent of non manual middle class occupations, leaving vacancy for lower class children in middle class jobs, while compulsory education too has increased their chances of employment in such occupations.
  • Embourgeoisiement in recent years has led the working class (especially upper working class - skilled manual workers) to become more affluent. This means that there are now little to no differences between the upper working class and the lower middle class, in terms of lifestyle/living standards, working conditions, income, etc. Thus, they enjoy a far privileged lifestyle than expected by Marx.
  • The welfare state in the U.K. provides cradle to grave security for all, in terms of health, finance, shelter, etc. Moreover, the obligation of a substantial minimum wage provides subsistence living for all, and prevents exploitation of the working class.

THE NEGATIVES

  • Despite the presence of a middle class, and the absence of the revolution predicted by Marx, there is still evidence of class conflict in today's capitalist society. Strikes and industrial layoffs are examples of that.
  • Even today, despite job opportunities, the means of production are concentrated in very few hands (upper class). Despite social mobility, the propertied upper class remains closed to the the working and middle class children because private property and lands are mostly inherited and passed down generations. Hence inequality in wealth and income ensues.
  • Despite having freedom to work and earn according to one's will, a person's chances of advancement in his own career (skilled manual job-working class, to non manual job-lower middle class) are slim, due to biases in recruitment. In this way, higher class occupations are directly filled by university graduates from elite colleges and schools. Such recruits in turn come from wealthy families, a privilege that keeps them in the upper classes throughout their lives. On the other hand, working class children are unable to continue education after school, or attend elite colleges. Thus, the cycle continues, leaving the privileged and the poor ultimately in the same classes as they were born in.
  • Workplace conditions in working class jobs are often poor. Unclean and unhygienic environment, hazardous conditions (such as in construction jobs), and various types of pollution (such as in factories), lead to a detrimental effect on the workers' health. Apart from that, they often have to work for longer hours with no extra pay.

Various aspects of U.K's society over the years have tried to bring about more fluidity and flexibility, in the hierarchic system, while giving rise to just and transparent opportunities for all to lead fulfilling lives. However, these changes/attempts have failed by the very system of social stratification, for the class one is born into often determines the extent of flexibility, transparency, and fairness in life opportunities.


10% of people in U.K owned 72% of its wealth

22% of the people in U.K lived in poverty

(2001-2002)

Redistributing Wealth and Income

Due to high wealth and income inequality (as seen in the earlier statistic) attempts have been made over the years to redistribute it, so as to improve living conditions of the absolute poor, and prevent the rich form accumulating even more wealth. These attempts were introduced in the form of certain taxes, explained in the table below.


(click column header to sort results)
   
   
INHERITANCE TAX
tax levied when people acquire gifts of large amounts of wealth from their kin at the said kin's time of death. This is done to prevent large amounts of wealth remaining concentrated with few people through inheritance.
CAPITAL TAX
levied on profits and transactions made by companies, business deals, investments etc. (thus, preventing the bourgeoisie from extorting large amounts of wealth)
INCOME TAX
levied on earned (Wages, salary) and unearned (profit from shares, investments, business transactions) income
VARIOUS SOCIAL AND WELFARE BENEFITS
these include measures such as income support, and relief checks for the unemployed,among other benefits.
These measures aim to redistribute wealth and income from the rich to the poor and overcome the large divide inherent to a Capitalist socioeconomic order.

Despite these efforts, a wide gap in wealth and income still remains, as shown by the following pie charts, portraying the distribution of wealth and income in 2012.

Distribution of Income in the U.K.
Distribution of Income in the U.K.

The richest 5th percentile owned 40% of the total income. Moreover, the richest 0.1% of the society had an average income of 941,5823 pounds.

Distribution of Wealth in the U.K.
Distribution of Wealth in the U.K.

The richest 10th percentile of all households owned 45% of the country's wealth. By contrast, the poorest 50% of the households owned just 8% of the wealth.

More Statistics


  • Today the richest 1,000 people have more wealth than the poorest 40% of the households. The former group saw their increase by Pounds 82.5 billions last year, equivalent of Pounds 2, 615 a second. (Wealth Tracker 2017, The Equality Trust, May 7, 2017)
  • In 2013/14, before taxes and benefits, the richest fifth of the households had an average income of Pounds 80,800, 15 times greater than the poorest fifth who had an average income of Pounds 5,500 (Social Inequality in the United Kingdom, Bitesize, BBC)
  • In 2015, an EU report found that the U.K. had the post unequal wages in Europe. (Social Inequality in the United Kingdom, Bitesize, BBC)

All this implies that despite the changes in U.K. society (growth of middle class, limited social mobility, embourgeoisiement etc,) which have led to fringe benefits, a large divide still remains in multiple facets of life, due to consistent inequality in wealth and income. A consequence the Communist ideology aimed to counter through a their economic/political set up.

Which is Better?

After taking into account all that is stated above, we can conclude that ultimately, neither communism, nor capitalism is on a higher par than the other. However, some form of capitalism was adopted by most states/empires in the past, and is widespread in the world today too. On the other hand, Communism was only rampant in two notable countries in the past; Soviet Union and China and unfavorable to both (the former disintegrated while in the latter communism deviated from its true purpose and values and gradually failed). This automatic preference for Capitalism, putting aside all the benefits and drawbacks of both systems can be brought down to one simple notion. That is the compliance with the basic human right of freedom which is restrained in a Communist society, as greatly implied by China's history. Hence, the basic freedom in work, employment, business, and ultimately, lifestyle, is what makes Capitalism favorable.

Bibliography

  • Browne, Ken. An Introduction to Sociology, 4th Edition. Polity Press, 2011
  • https://en.wikepedia.org
  • Wealth Tracker 2017, The Equality Trust, May 7, 2017 (https://www.equalitytrust.org.uk)
  • Social Inequality in the United Kingdom, Bitesize, BBC. (https://www.bbc.co.uk)
  • Holmes, Frank. How China went from communist to capitalist. Business Insider, Oct. 10, 2015. (www.businessinsider.com)
  • China's Capitalist Revolutions, first published in Proletarian Revolution No. 53 (Winter 1997). (lrp-cofi.org/PR/ChinaPR53-html)

© 2017 Fatema

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