Communism vs. Capitalism: What's the Difference?
Edited by Aimie Carlson || By Harlon Moss || Updated on October 18, 2023
Communism emphasizes collective ownership of means of production; capitalism prioritizes individual and corporate ownership.
Key Differences
Communism is a socio-economic system in which there's collective ownership of the means of production. Within this system, property and resources are owned communally, and the goods produced are distributed based on need. Capitalism, on the other hand, is characterized by private ownership of the means of production. In this system, goods and services are produced for profit, and individuals and businesses operate in a competitive market environment.
In communism, the goal is to achieve a classless society where everyone has equal access to resources and opportunities. The distribution of wealth and resources is determined by communal decisions, often guided by the principle “from each according to his ability, to each according to his need”. Capitalism, in contrast, operates on the principle of individual initiative and reward. Success and wealth in capitalism are often linked to individual effort, innovation, and the mechanisms of supply and demand.
Under communism, central planning by the state or community often determines production decisions and resource allocation. This central planning is aimed at meeting the needs of the populace rather than maximizing profit. In capitalism, decision-making is decentralized, and businesses and individuals make choices based on their own interests, with market forces guiding resource allocation.
Communism often posits that it counters the exploitative nature of capitalism, where the labor of many benefits the few. In its ideal form, it seeks to eliminate socioeconomic disparity. Capitalism, while it can lead to economic disparities, is often defended on the grounds of fostering innovation, efficiency, and individual freedom, allowing for upward mobility based on merit.
While communism seeks to establish a common ownership and egalitarian society, capitalism thrives on competition and the pursuit of individual or corporate interests. Both systems have their strengths and weaknesses, and their successes and challenges often depend on their implementation in specific contexts.
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Comparison Chart
Ownership
Collective ownership of means of production
Private or corporate ownership
Economic Driver
Need-based distribution
Profit motive
Decision Making
Centralized planning
Decentralized, market-driven
Wealth Distribution
Egalitarian, based on need
Based on individual/corporate success
Incentive
Collective welfare
Individual profit and achievement
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Communism and Capitalism Definitions
Communism
A system where property is publicly owned and goods are distributed based on need.
In communism, factories are owned by the community rather than private individuals.
Capitalism
An economic system characterized by private ownership of the means of production.
Under capitalism, businesses aim to maximize profit.
Communism
A political movement seeking to establish a society based on communal ownership.
Communism gained traction in the 20th century, influencing several nations.
Capitalism
An ideology emphasizing individual initiative and market competition.
Capitalism allows entrepreneurs to innovate and compete.
Communism
A doctrine advocating for the abolition of private property.
Communism opposes the capitalist notion of private property rights.
Capitalism
A socio-economic model where success is often based on merit and market performance.
In capitalism, hard work and innovation can lead to increased wealth.
Communism
A socio-economic model emphasizing state control over resources and industries.
Under communism, major industries are often nationalized.
Capitalism
A system where production and distribution are driven by supply and demand.
Capitalism thrives on the principles of a free market.
Communism
An ideology promoting a classless society with collective ownership of production means.
Communism aims to eliminate the division between the rich and the poor.
Capitalism
A doctrine advocating for the rights of private property and free enterprise.
Capitalism encourages private investment and business ventures.
Communism
A theoretical economic system characterized by the collective ownership of property and by the organization of labor for the common advantage of all members.
Capitalism
An economic system in which the means of production and distribution are privately or corporately owned and development occurs through the accumulation and reinvestment of profits gained in a free market.
Communism
A system of government in which the state plans and controls the economy and a single, often authoritarian party holds power, claiming to make progress toward a higher social order in which all goods are equally shared by the people.
Capitalism
(politics) A socio-economic system based on private ownership of resources or capital.
FAQs
What's the primary focus of communism?
Communism emphasizes collective ownership and the equitable distribution of resources.
What drives production in capitalism?
Profit and market demand primarily drive production in capitalism.
Are there classes in communism?
Communism aims to achieve a classless society.
How does capitalism approach ownership?
Capitalism prioritizes private or corporate ownership of means of production.
Are resources nationalized under communism?
In many communist systems, major resources and industries are nationalized.
What role does the state play in communism regarding the economy?
In communism, the state often has a central role in planning and controlling the economy.
What's the role of the market in capitalism?
In capitalism, the market guides resource allocation and production based on supply and demand.
Can communism exist without state intervention?
While communism aims for a stateless society, in practice, many communist states have had strong state intervention.
What's the incentive for businesses in capitalism?
The primary incentive for businesses in capitalism is profit.
How is wealth distribution handled in communism?
Wealth and resources are distributed based on communal decisions and needs.
How does capitalism foster innovation?
Capitalism provides incentives for individuals and businesses to innovate for profit.
Is private property allowed in communism?
Communism generally opposes the notion of private property, advocating for communal ownership.
How do communists view capitalists?
Communists often view capitalists as exploiting workers for profit.
How does capitalism reward individuals?
Capitalism rewards individuals based on effort, innovation, and market success.
Can capitalism lead to economic disparities?
Yes, capitalism can lead to economic disparities based on individual or corporate success.
How does capitalism view individual rights?
Capitalism often emphasizes individual rights, especially concerning property and enterprise.
Why do some advocate for communism?
Some advocate for communism as a solution to socioeconomic disparities and exploitation.
Is competition encouraged in capitalism?
Yes, capitalism thrives on competition and individual initiative.
About Author
Written by
Harlon MossHarlon is a seasoned quality moderator and accomplished content writer for Difference Wiki. An alumnus of the prestigious University of California, he earned his degree in Computer Science. Leveraging his academic background, Harlon brings a meticulous and informed perspective to his work, ensuring content accuracy and excellence.
Edited by
Aimie CarlsonAimie Carlson, holding a master's degree in English literature, is a fervent English language enthusiast. She lends her writing talents to Difference Wiki, a prominent website that specializes in comparisons, offering readers insightful analyses that both captivate and inform.
