Capitalism vs Communism: Understanding the Key Differences

Capitalism and Communism – since the dawn of civilization & the establishment of a socio-economic system, humanity has, both advertently and inadvertently, been affected by these two phenomena. Wars have raged, governments have risen and fallen, millions have suffered & thousands have died of the thoughts & actions of the followers of these two ideologies. The conflict between these two ideas has been near-eternal ever since people began fathoming, understanding (and misunderstanding!), and implementing the ideas of Communism and Capitalism.

So, what is Capitalism, and how does it differ from Communism? Why can't Capitalists and Communists stand one another? What are the socio-political and socio-economic aspects of these two ideologies?

This article presents a critical, comparative analysis to answer "Capitalism vs. Communism: What is the Difference?" To do that, we first need to define these ideologies!

A Brief Overview of The Two Politico-Economic Ideologies

Capitalism has existed incipiently since the birth of an agrarian, trade- & labor- based civilization. People with wealth & power used them to a market for their services. However, it was only with the rise of modern nation-states that modern Capitalism truly came into being

The current global economic system is capitalist, as all major & minor economies of today are capitalistic in nature. Capitalist policies influence trade and industries across the globe, and modern Capitalism has evolved from a political thought process to the politico-economic system of today.

The key ideas behind Capitalism are free markets, where private actors control means of production & industries, make their goods & services available to the market & set prices, thereby creating the phenomenon of supply and demand. Profit-making is the key driver; anyone with enough capital can participate in the market economy.

The concepts that keep the capitalist machine running are à

Free Market Mechanism
Profit Making
Private Enterprise & Ownership
Free-for-all Competition
Limited Role of the State

Communism began as a left-wing politico-economic idea and a foil to the rampant corruption & inequality in erstwhile capitalist systems. Purported by German philosophers & economists Karl Marx & Friedrich Engels in 1848 in the Communist Manifesto, Communism sought to abolish social classes and bring about equal distribution of wealth & opportunities.

The key ideas powering Communism were an idealistic society where every member of the community is equal and works for the betterment of the society. Communism takes away all the wealth from the hands of a few and distributes it among the masses. And the very idea of the state becomes redundant as the community is expected to regulate the economy. Political and economic analysts worldwide often label Communism as a "dictatorship of the proletariat."

Karl Marx and other proponents of Communism highlight the following ten tenets as the central features of Communism à

Complete abolition of private property & social classes
Heavy & Progressive Taxation of Income
No Right to Inheritance
Confiscation of all properties of rebels, emigrants, etc.
Communication and Transportation in State Control
Extension of Factories & Industries Owned by the State
Liability of all to labor (everybody works the same and gets paid the same amount)
Rise of agribusinesses through the merging of agriculture & Industries
Free education for all children, abolishment of child labor, and merging education with industrial production to produce an educated labor force.

Unfortunately, despite its emphasis on equality, every communist state has failed and either devolved into totalitarian states or was compelled to follow the capitalist world order.

The differences and conflicts between Communism & Capitalism stem from their contrasting ideologies and Communism's distorted & controversial ideas of equality and individuality.

Capitalism vs. Communism: A Comparative Analysis

So, Capitalism vs. Communism: What IS the Difference?

Well, I hope you are ready as understanding the differences will take some time & explanation!

Capitalism and Communism lie at the opposite extremities of the socio-political spectrum. They are intrinsically opposing theories and thinking, one focusing on profit-making, the other focusing on the development of society at the cost of individual development.

Let's compare these ideologies across multiple social, political, and economic dimensions.

Ownership of the Means of Production

One of the primary points of contention between Communism and Capitalism is the ownership of the means of production and resources.

Communism despises the concentration of wealth and resources in the hands of a few. No individual ownership of any property, land, or resources can exist, as everything belongs to the greater community.

All kinds of resources are owned by one and all. Everyone will share everything, and the community decides the nature & behavior of the market.

Capitalism is essentially individualistic, with a specific focus on profit-making. In contrast, Communism puts society above everything else; thus, everybody gets equal pay! Engineers, scientists, and doctors are paid the same as manual laborers.

Capitalism is a firm believer in individualism, private ownership & enterprise. No two people are born equal in the eyes of a capitalist society, and every man must prove their worth.

Regarding income and profit-sharing, business owners get the maximum profit share because of their ownership privileges. Workers, who keep things operational, receive smaller portions of the profit.

People are compensated as per their merit and abilities & there are no pre-existent notions of equality.

Accumulation of wealth in the hands of a few and concentration of power in the hands of business owners is a major bone of contention between capitalists and communists.

Communism's degradation of individuality is considered an anathema to individual enterprise. Almost every scientific and technological innovation has been the result of individual enterprise. And while communities in a communist society can work towards innovation, the selfishness of basic human nature will always be an impediment.

On the other hand, the concentration of wealth and power in the hands of a few acts as seeds of exploitation and corruption.

Individual Freedom

Communism and Capitalism have opposite views on individual freedom.

As the name suggests, society over self is the ultimate motto of Communism. On the other hand, Capitalism is all about personal and individual development.
This striking polarity can allow us to denote Capitalism vs. Communism as Individualism vs. Social Welfare.

Capitalism encourages individual aspirations, ambitions, and the pursuit of happiness. It appeals to the intrinsic self-serving nature of human beings, which itself stems from life’s inclination towards self-preservation.

On the other side of the coin, Communism is unrealistically and ideological. People in a communist state always have to put the community before themselves. Such generous and saintly nature is not rare to find among the masses. Still, given the inequality and corruption prevalent in our society, we cannot expect such noble behavior from one & all.

The stark contrasts between Capitalism and Communism, regarding individual liberties, social equity & responsibility, are quite evident from the above points. Capitalism paved the way for amazing scientific & technological developments, which paved the way for a post-industrialist and technological age. All such developments and innovations were the result of individual creativity & private enterprise.

In a communist society, where everybody is equal irrespective of their qualifications, skills & experience, will a prodigious inventor or creative thinker be ready to indulge in his creativity? Will they be selfless enough to make their creation available to one & all and allow others to infringe upon their ideas & concepts?

No two humans are created the same, and nobody develops their skills, ideas, & perspectives similarly. This is why the idea of absolute social equity, as purported by Communism, is so unbelievable.

But, as is evident from world events, the concentration of wealth and power in a capitalist society has led to widespread inequality, deprivation, poverty, and rampant corruption. The wealthy and powerful exert an unhealthy amount of influence in politics, economics, and, consequentially, the progress of society.

The Inevitable Downsides (9GAG.com)

The Progress of Society

Communism talks of a society free of any inequality, discrimination, or segregation. Marx and Engel's ideal society is classless, where a teacher is considered equal to a toilet cleaner or sewer worker and gets paid the same.

Communism aims to do away with divisiveness & differences based on race, caste, creed, religion, background, or nationality. The objective is to create a world without borders, segregation, and division.

Such a romantic idea may sound great on paper, but implementing them & then maintaining such a society is another thing.

Everybody is special and different in their ways and pave their journeys. And no two persons possess the same cognitive capabilities. For a communist to think that a skilled engineer can work successfully with any inadequately-qualified individual is simply preposterous.

Capitalism espouses class distinction. Everybody has the fundamental right to educate & enhance themselves to a level that distinguishes them from the rest.

However, social strata and the ever-increasing gap between the rich & poor are clear examples of how inequality is an inevitable & utterly destructive side-effect of a capitalist society. The rich become richer while the poor remain embroiled in an unending loop of poverty & deprivation.

As business owners, political leaders, and the rich elite amass more wealth & power, they influence markets and administrative systems to ensure that their money, power, and status remain intact.

The Anatomy & Distribution of Power

The distribution and delegation of power are strikingly different in Capitalism and Communism. Capitalism promotes the concentration of power and selfishness, while Communism aims to create an altruistic society.

Capitalism makes it possible for more & more wealth, power, and influence to find their way into the hands of dominant businesses, administrators, and the people who control the manufacturing, production, & banking sectors.

Eventually, these rich elites control major resources such as food, energy, water, and other essentials and become critical influencers of society.

In a communist state, everybody is saintly, benevolent, caring, selfless, and altruistic. Equal distribution of power prevents inequality and dominance of one above another. Coupled with social equity, Communism democratizes the dissemination of power and wealth across a society – no inequality, no unjust influence whatsoever.

Unfortunately, selfishness is intrinsic in human nature. Organisms are wired for self-preservation and propagation of their own. And, such is the nature of power & authority that it would tempt any average human being and eventually corrupts them.

We wrap up this write-up by looking at why no communist state has been able to uphold Communism in any form.

Why Doesn't Communism Work In Reality?

USSR, the flag-bearer of Communism, collapsed and turned into the Russian Federation, which did away with Communism and, today, boasts of some of the world's wealthiest private businesses. At its height, the USSR was one of the most oppressive states in the world.
Communist East Germany collapsed right around the time when the USSR fell. Germany, the home of the founders of Communism, now has private corporations in nearly every sector that have become prominent across the globe.
China, another country where a communist revolution ousted the imperials, is now a mixed market socialist economy with the state combining authoritarianism with Capitalism to define a new iteration of Communism. This new Chinese Communism (that has nothing to do with Marxist Communism) propelled China to new heights.
North Korea is a travesty where the country's leader imposes suffocating totalitarianism, dissidents are unlawfully executed, social development is non-existent, and the common person struggles under appalling social conditions.

All of the above states were/are communists, and then disposed of it, keeping only the label of Communism as a façade for the world to see. The reasons behind the failure of Communism in all such cases can be listed as follows à

Distorted and impractical concepts of altruism & social equity
Oppression by authorities
Raw materials, resources, labor, tools, and other means of production are under government control, preventing any trading or proper pricing.
Misallocation and wastage of resources
No competition or profit-making, and thus, no incentive for development

Despite being touted as the ultimate politico-economic ideology, Communism is fundamentally flawed and incredibly romantic. And, in a society of inherent equality, impulsiveness, and controlled chaos, such systems DO NOT work.

That's why Capitalism, despite all the corruption and divisiveness, is the only one that works in this dog-gone world.

And that wraps up this difference. I hope all the info within answered that ever-popular question, "Capitalism vs. Communism: What is the Difference?”

All the best!