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Capitalism vs Communism Explained

Updated on May 26, 2014

Thriving on Chaos or Control?

(c) 2011 by Tom King

So, you ask, "What's the difference between capitalism and communism. I suspect that whoever asked this question is writing a paper for a poli-sci class and is already half in the bucket for Karl Marx. But I shall indulge the questioner's desire to find source material the good professor can't trace back to Wikipedia.

Simple enough to explain:


  • Capitalism posits that people should be rewarded for their hard work according to how much others are willing to pay for the product created by that work - that the desire for gain will drive the economy. There are no guarantees under capitalism. You must support yourself, therefore you must produce quality products or services if you want to make a good living and get the goodies.
  • Communism posits that all people should be rewarded roughly the same and that if people have no worries about housing, food or medical care, their natural altruism will drive them to do their share to produce quality products, to work hard and to do their best for the greater good.
  • Capitalism leaves the economy to market forces, believing that the rewards and risks inherent in business activity are sufficient to create a healthy economy and that a rising tide lifts all boats while downturns are to be expected and provide a control mechanism to eliminate bad businesses and punish bad business practices.
  • Communist economies are planned by central planners. The goal of the planned economy is a steady productivity without any downturns, layoffs or business closures. It is always bad for businesses to fail, for if business fails, the planners, by inference have failed.


  • Capitalism allows the market to determine prices. Things that are in high demand or are expensive to make command higher prices.
  • Communism artificially sets prices regardless of demand and fluctuations in the cost of production.


  • Capitalists believe that less government interference and low taxes are best and that the free market is the best way to distribute wealth.
  • Communists believe that more government is necessary and that wealth MUST be redistributed through higher taxes on those whose activities produce more income to those whose activities produce less income so that everyone makes roughly the same thing - physicians and butchers, industrialists and janitors. Politicians, however, do always seem to have their privileges for some reason not fully explained by Karl Marx.


  • Capitalists believe in voluntary charity.
  • Communists believe in entitlements.


  • Capitalists own or rent their homes.
  • Communists are assigned housing by the state.
  • Capitalists shop at discount houses like Wal-Mart, stores, on-line websites and shopping malls that compete to deliver goods people want at the lowest prices. The people purchase those goods each according to their income and select from a wide range of products.
  • Communists stand in line at small shops where supplies are rationed and selection is limited. The government tells you how much you can have. You may have to present proof that you have been authorized to buy certain goods and services.
  • In pure capitalist countries medical care is expensive and widely available on demand if you can afford it. If you're broke, you just go to the ER and wait in line like they do in communist countries.
  • In pure communist countries medical care is free and you must wait your turn to receive it. Often government officials decide whether or not you can receive treatment for any given condition. You may die before you get it, but it's free.
  • In capitalist countries, you decide what career you will follow, what business you will take up or how much education you will receive. This results in a diverse workforce of skilled and unskilled labor, professionals, technicians and actors who work part time delivering pizzas or waiting tables.
  • In communist countries, the state tests you and decides what sort of work you will do for the state. This prevents too many people from becoming actors and insures low staff turnover in the food services industry.


  • Communists have freedom of speech.
  • Capitalists have freedom after speech.
  • Capitalist media are owned by businessmen who can say almost anything they want so long as it's not libelous. If they commit libel someone sues them.
  • Communists media are owned by the government and can say anything the government tells them to. If they say something they are not authorized to say, they get an expense-paid lengthy vacation in the gulags.
  • Capitalist media consider it their duty to catch capitalist politicians in wrong-doing.
  • Communist media consider it their duty to catch capitalist politicians in wrong-doing.


  • Capitalists adore actors, radio talk show hosts and musicians.
  • Communists adore politicians, dead Communist Dictators and, well.......more politicians.


  • Capitalists believe that everybody should clean up their own messes.
  • Communists believe that everybody else should clean up their messes.
  • Capitalists don't think bankrupting the world will save it from global-warming which may or may not be man-made.
  • Communists don't think bankrupting the world will save it from global warming either, but it's the best way they can think of to bankrupt the capitalists first.


  • Capitalists go to movies, sports events and NASCAR.
  • Communists go to parades of tanks and missiles, rallies,speeches and those weird deals where three thousand little girls in tights dance around waving crepe paper streamers on the ends of sticks and singing about the "Dear Leader".


  • Capitalists become ballerinas because their mothers made them take dance lessons when they are too young to know better and they found they liked the attention and dressing up in Tu-tus and tights and hope to make lots of money as prima-ballerinas for a New York dance company..
  • Communists become ballerinas because they get to leave the country and with luck they can defect and make lots of money as prima-ballerinas for a New York dance company.

Same for the circus.....

I'm just sayin'

Tom King - Puyallup, WA


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    • Average American profile image

      Average American 

      5 years ago from Las Vegas, Nevada

      I see this has been up for a bit... Wow, great opener, "In the bucket for Karl Marx", that made me laugh. I think you did an excellent job here.

    • twayneking profile imageAUTHOR


      6 years ago from Puyallup, WA

      God? Boy howdy do you have a healthy ego on you there sir (or madam). Let me remind you then of some things you've evidently forgot since creating man in the first place.

      1. There is no such thing as a "neutral perspective". It's impossible to study or observe anything and not form some sort of bias one way or another.

      2. You make the observation that I "haven't seen things for myself" and that I "claim I am an expert when I am not." You are truly omniscient if you drew that from reading an article in which I never claim to be an expert nor stated one way or another whether or no I have "seen things". You imply that you have. I will have to defer to you since you claim to be God.

      3. You must be God since you know two things not covered in the article. The first that I "don't even know what's going on" and by extension that you, in fact, do.

      From your comment then, one can infer one of two things.

      1. If you are God, then all these things are unchallengeable truth.

      2. If you are not God, then all of this is just unsupported opinion and probably the type of reasoning that is the product of a liberal education.

      I leave it to the reader to decide which.

      Tongue firmly in cheek,

      Tom King

    • profile image


      6 years ago


      Your article claims to 'explain' things, but it is evident you are strongly biased towards Capitalism. It is important to view this topic in a neutral perspective.

      I find your sense of humour, ignorant and irritating. Evidently, you are 'the frog in the well' and you make ridiculous assumptions when you haven't seen things for yourself and claim you are an expert when you are not.

      Towards the end of your article, you drift towards the idea that 'Capitalism is better'. Put your opinion on a debate site or such, and don't try to explain things when you don't even know what's going on.

    • Tom Koecke profile image

      Tom Koecke 

      6 years ago from Tacoma, Washington

      Hi Tom!

      I love the humor you interjected in this hub!

      The reason Marx is considered a great philosopher does not lie in his fantasy economy, but in his prediction on how it would come to pass. Unfortunately, as accurate as his prediction was, his fantasy was equally inaccurate. Therein lies the difference between Marxism and communism. Marxism occurs where there is revolution. Simple communism does not require such an occurance.

      Can they work together? They did for generations, if one will look at it for what it is. Families, especially before the social nets were constructed, often operated on the principles of communism. Each member contributed to his or her capability, and drew what he or she needed. Grandparents would tend the house while dad and mom tended the farm, and kids went to school after the morning chores and before the evening chores.

      The problem with capatilism in its pure form is that it requires denial of democracy, the same as communism in its purest form. It is not a far stretch to think that the best way to require regulation is to do away with it. Unfortunately, the pendulum swings too far the other way. Then the best way to need less regulation is to have too much of it.

      You mentioned medical care costing a lot in capitalism. It really didn't. It was often traded for chickens, or was sold as snake oil from the back of a covered wagon. It was when medical care was regulated that it became expensive. One of the best examples I was given on this was how expensive auto insurance might be if it included oil changes and worn brake and tire replacement.

      As for the requirement for people to be altruistic, that is the common denominator for the failure of any philosophy that ends in utopia. Whether it was Socrates, Jesus Christ, Mohatma Gandhi, Martin Luther King Jr., or Benazir Bhutto, it was not whether their visions were beautiful, but the requirement that human nature change from us living on a conscious level to living on a conscience level.

      Maybe we will pass to it, but I suspect greed, lust, gluttony, vanity, sloth, vengeance, and envy will continue to usurp utopia for the foreseeable future.

      Again, though, I truly enjoyed your hub!

      Another Tom from Washington

    • twayneking profile imageAUTHOR


      7 years ago from Puyallup, WA

      And yet free market capitalism allows any group of "workers" to organize themselves to take over the means of production. It can be done if you get the right leaders. The reason I object to big government meddling in the economy is that it's wildly corrupt and inefficient.

      It works much better for a group of people who work at a place to become owners and decision makers. I bet there's a leader in the bunch, however, and I bet he or she makes the most money. I agree. Pitch the greedy bosses. Refuse to work with them. That's the free market holding the bastards accountable. The closer to the scene of the action you keep the leadership, the more likely they will be to manage things well. The more centralized the control, the less efficiently it's run.

      The typical liberal/progressive mistakes free market capitalism for some kind of pro-greed, pro executive corruption philosophy and it's not. Conservatives are against protecting these guys. We were against bailing out corporations our government said were too big to fail. Screw 'em. Let 'em fail and make the guys who looted the company lose their shirts to their creditors.

      Note that with your own example in Argentina - the companies became unprofitable (likely due to corruption in the leadership) and they failed. The workers restarted the enterprise and are making it work. Company failures and restarts are the regulatory mechanism in free market capitalism. In a free market, anybody, no matter how small may rise in business based on his own hard work and talent and the hard work and talent of the people he chooses as part of his enterprise. You should not need the permission of government to start a business, to hire workers or take over the markets of bloated failed corporation. It's better for consumers and workers if 10 small companies rise up to make widgets after the fall of some super-sized corporate widget maker. The economy becomes more resilient because instead of one giant company that is too big to fail, you get 10 risk taking companies that can fail and their business absorbed by the others. There's competition, consumer prices get lower, more stuff gets made so more workers go to work.

      The system you see in America that has crept in over the years under a string of Democrats and "moderate" Republicans is a managed economy scheme in which controls are put in place to allow government types to "tweak" the economy in an effort to protect the corporations that contribute all that campaign money to politicians. Democrats are among the worst offenders. Progressive socialism is already halfway here and instead of protecting workers it protects corporations and their fat CEOs and boards from the consequences of their actions using taxpayer dollars.

      You put a true capitalist administration and congress in place and you'll see the economy take off like a rocket. Even under Reagan with a Democrat senate and house, the limited amount he was able to accomplish led to the longest sustained growth in US history. As soon as Captain Hope n' Change came along, he took a recession and through government meddling, turned it into the worst unemployment since the aftermath of the Carter administration. At least Clinton had to slow down the social engineering when the Republicans took the House.

      I'm with you on the executive greed. You want to cure that problem, let capitalism work its magic.


    • Josak profile image


      7 years ago from variable

      yeah I agree with a lot of what you are saying, I think there is a balance ot be struck... In my country of birth Argentina since 2001 tens of thousands of employees have seized the factories abandoned in an economic collapse and now run them themselves, without bosses with equal pay etc. and it's working, not only is it working but wages are up 80% without having to pay for all the useless executives owners etc. and productivity is up about 45%... So there is a balance to be struck... not all people are selfless, in fact most are not, the trick is to make selflessness profitable for the individual...

      I don't in any way believe that capitalism is the best we can do with all our human ingenuity and intelligence but there are certainly some kinks to work out in any alternatives.

    • twayneking profile imageAUTHOR


      7 years ago from Puyallup, WA

      Karl Marx looked to create a heaven on Earth. It was an admirable dream, but it does not work here. Marx got involved with communism because he hoped to work out his worker's paradise for real.

      The truth is, the ideals behind collectivism only works if all the people in it are good and altruistic people. There is no such group of people. The progressive movement still believes there is despite abundant evidence to the contrary.

      I'm pro capitalist because it seems the most effective way to create a healthy economy in a world where the baseline is greed and self-interest. With capitalism, if you over-extend and get piggish, you fail unless some government decides you're too big to fail and protects your depredations upon the system by bailing you out with tax dollars.

      Our problem here is that we are trying to blend two system - one that believes that, if you meet a baseline of needs, people will be basically good and another that believes people are basically bad. As a Christian, for instance, I believe the latter. I also believe that our experiences here and with the help of God, a goodly number of us will one day achieve that altruistic goodness that Marx mistakenly thought he could bring out in people by sharing the wealth around.

      What Marx did not understand was that free will is a wonderful, but double-edged sword. The communists hoped to somehow control free will and negate its effects. At first they tried through providing everybody's baseline needs as equitably as possible. When that didn't work, they created the KGB and attempted to create altruism through fear and the gulags - Communisms own brand of hell.

      It is tempting to intellectuals to believe that smart leaders can somehow create a centrally planned society where everyone is content if not truly happy. Even Einstein, as smart as he was, wondered why we couldn't manage it.

      The problem is in man's nature. He does have free will (despite BF Skinner's assurances to the contrary). He is born with two contrary natures. The newborn child knows how to love without reservation - he loves himself. Sadly, many children never get far beyond that. It is the work of a lifetime to become a selfless person - the kind of people you absolutely must have in order to maintain Marx's leaderless collective.

      To base a political and economic system on the hope that somehow you can somehow create rules or provide sufficient bread and circuses to cause people to spontaneously become self-less is an exercise in wishful thinking.

      Marx had an admirable goal. It's just not achievable without two things.

      1. People who want to be good above all things.

      2. An all-knowing, all-caring leader to manage the details.

      #1 is, I think, what will occur at the Second Coming.

      #2 I believe, requires the existence of God.

      If neither of those elements happen; if God does not exist, then we're well and truly hopeless because we're trying to make flocks of sheep that include hungry wolves. Inevitably, this takes a terrible toll on the poor sheep.

      Just one man's opinion,

      Tom King

    • Josak profile image


      7 years ago from variable

      I am an economist, the reason we differentiate between Marxism and communism is because they are spectacularly different, Marx envisaged a nation with no leaders, no government, let a lone a massive government like the Soviet Union Marx was not actually what we would call a communist indeed he isn't even a socialist, more like a syndicalist things like loss of liberty that Reagan spent so much time on would not have occurred at all (I am not saying Marx was realistic) .

      I am not one of those people who admires anti intellectualism, getting things across to people without expert knowledge is great but you have to know your stuff first. Reagan was a very smart man and he quickly picked up on several economic principles and used them to great advantage (like the value of deficit spending in economic recovery) but in the area of communism he was pretty clueless and that's sad to me... one should at least know their enemy.

    • twayneking profile imageAUTHOR


      7 years ago from Puyallup, WA

      One need not memorize Das Kapital to understand it's full of really bad ideas. A single perusal is all that's necessary. And as to Marxism being nothing like communism, it's hard to see how that can be. Marx wrote the Communist Manifesto. And yes, I know Engaes drafted it but Engels wrote this after Marx's death, "I cannot deny that both before and during my forty years' collaboration with Marx I had a certain independent share in laying the foundations of the theory, but the greater part of its leading basic principles belongs to Marx....Marx was a genius; we others were at best talented. Without him the theory would not be by far what it is today. It therefore rightly bears his name."

      What I liked about Reagan was his refusal to play tag your're it with pseudo-intellectual snobs trying to one up him. He had a gift for making things clear to ordinary folk. He never wasted time tossing out obscure factoids and playing "gotcha" simply to prove what a smart person he was in front of some cadre of elitist cronies waiting in the wings for the cue to snicker in chorus.

      Clueless? Hardly. Reagan knew what he was doing. No one is clueless who becomes president. You don't gain that office without knowing exactly what you're doing. In fact, the thing that frightens me about President Obama is not that he's clueless. It's that he knows EXACTLY what he's doing.

    • Josak profile image


      7 years ago from variable

      I always thought that understanding Marx and Lenin comment was hilarious because a journalist asked him some very basic questions about Marx's Das Kapital and he was totally clueless. Also because Marxism is nothing like communism and because he forgot Engels who was just as if not more important.

      I am not a communist but the comment was more than a little bull.

    • rfmoran profile image

      Russ Moran - The Write Stuff 

      7 years ago from Long Island, New York

      Old Soviet humor: "We pretend to work; they pretend to pay us."

    • twayneking profile imageAUTHOR


      7 years ago from Puyallup, WA

      The Russians had a saying under the Old Soviet Union.

      "If you want milk, take your pail to the radio."

    • rfmoran profile image

      Russ Moran - The Write Stuff 

      7 years ago from Long Island, New York

      Great hub and very funny. As Ronal Reagan put it so well: “How do you tell a Communist?…someone who reads Marx and Lenin…an anti-Communist? … someone who understands Marx and Lenin.”

    • profile image


      7 years ago

      Freedom of speech and freedom after speech, that's nice. :D

      Thanks for sharing this, it's cool.

    • profile image 

      7 years ago from upstate, NY

      "Capitalists believe in voluntary charity,

      Communists believe in entitlements."

      That's a good way to put it!

      "Communists stand in line at small shops where supplies are rationed and selection is limited. The government tells you how much you can have. You may have to present proof that you have been authorized to buy certain goods and services".

      This is so true and it should be a sobering reminder of what it means to have the government run your life! Instead of being a self governing person as our constitution dictates, you'll be dictated to by the state! Its to bad so many people fall for idea that the government knows what's best for them.

    • Ghozt profile image


      7 years ago from Nowhere

      Well said twayne.

    • twayneking profile imageAUTHOR


      7 years ago from Puyallup, WA

      The great problem with ideologies like communism is that they totally ignore human nature. They assume an altruism in people that does not exist for the majority of people. As I learned in grad school psychology, most folk are motivated by both reward and consequences. Pure capitalism controls for the greed factor by allowing those who overreach to fail. The idea that some businesses are too big to fail is not a capitalist idea.

      Ideologies like communism and the more virulent forms of socialism do not recognize failure as an option. For a business or industry to fail, would mean the central planning had failed and in an ideology convinced of its own infallibility, all such failures must be the result of treachery. That's why the gulags. It's where failures are tucked away and hidden from sight - evidence that there is a problem with the no-fail, intellectual run ideology. Evidence of failure must be expunged. That's why communist worker's paradises inevitably become such dismal places. Freedom breeds risk-taking, risk-taking breeds great failure and great success. Both extremes in the communist doctrine are bad and must be expunged through redistribution of wealth or death camps - either works.

      Capitalism gives you freedom but no guarantees.

      Communism gives you guarantees, but no freedom.

    • gmwilliams profile image

      Grace Marguerite Williams 

      7 years ago from the Greatest City In The World-New York City, New York

      To twayneking: Excellent hub. I have another analogy regarding the difference between capitalism and communism. Capitalism is akin to the system of using A-F regarding grades. If you study extremely hard and are diligent, you earn an A; however, if you choose just to merely glance at a book and study when only necessary, you earn a C. Communism is now akin the new grading system of PASS/FAIL. Regarding the issue of passing, no matter how hard or how little you study, you just pass if it is satisfactory and above. Enough said. Capitalism vs. communism- capitalism wins and communism is KNOCKED OUT for the punch!

    • twayneking profile imageAUTHOR


      7 years ago from Puyallup, WA

      Just having fun, Max. Jokes seldom include all of the details. And I think it's more like Russians that enjoy museums, theaters and movies - more so than Communists. Registered party members have a notorious lack of a sense of humor and a limited appreciation for art.

      And how about putting up a picture? The silhouette looks sinister.

    • gjfalcone profile image


      7 years ago from Gilbert, Arizona

      I wouldn't go that far...

      Brothers from another mother? Talk about your Bad Romance...

    • Ghozt profile image


      7 years ago from Nowhere

      Are you saying that capitalism and communism are siblings?

    • gjfalcone profile image


      7 years ago from Gilbert, Arizona

      Hang on ghozt...Hubpages is truly the gift that keeps on giving. Look at it as a parent,a referee, as to how it relates in... say...sibling rivalry.

    • Ghozt profile image


      7 years ago from Nowhere

      That was awesome!! Two thumbs up!!!

    • maxoxam41 profile image


      7 years ago from USA

      Produce quality products not forcibly.

      You forgot to underline that without insurance in a capitalistic environment, the Hippocrate's oath has no value and therefore the sick ones are kicked out and die too.

      In a capitalist country, you don't decide which university you want to go to. Money does.

      Both capitalist and communist media don't care about wrongdoings.

      I would dare say that communists adore their intellectuals, who never read Tolstoi, Tchekov, Marx...

      Capitalists never clean their mess if not sanctioned by the highest authority. Communists can't afford messing.

      Capitalists and communists couldn't care less of the future of the earth.

      Capitalist France participates every year to its 14th of July military parade. And I assure you that communists have movie theaters, museums, theaters...

      In both economies capitalist or communist dancers are venal.

    • gjfalcone profile image


      7 years ago from Gilbert, Arizona

      Although a little late, Thank you Santa...


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