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There are different operations, strategy, beliefs, and principles that guide every economic structure. The principles and ideas that are dominating in such territories determine the type of system in operation. Capitalism vs. communism are two contrasting economic systems which are applicable in different places. Majorly, the difference between communism and capitalism is that the formal support equality in society by making economic services owned and controlled by the community, whereas the latter seeks to privatize production activities.
Definition of Communism
Communism is a socio-economic structure that supports equality in the society. In order words, everyone has a balanced and equivalent level of right to every productive activity and decision. In such communities, properties and production activities are equally owned by every member of the society. Irrespective of individual contributions, the profit or returns are usually shared equally. It could also be referred to as the state-controlled or government economy. However, if it will be described in its real sense, any form of governance wouldnt exist; no superiority or controlling power is involved. Everyone simply has common ability and power to make decisions and take similar rewards. The primary aim is for sustainability and survival, and every member of the society simply co-operate to ensure the continuity of society. So, no form of privatization is found in communism.
Definition of Capitalism
Capitalism is the type of socio-economic system whereby economic activities and ownership are majorly owned and controlled privately. In other words, there is no governance or state ownership; certain individuals control production activities for the purpose of making profit. Also, this could be described as a system that is characterized by a free market operation, and the only contribution of the government is to ensure appropriate checks and rules to regulate the system. Usually, there is always a very high market competition in such systems that are accompanied by social disparities in terms of product and prices. Majorly, the aim of any capitalist system is to make profit. This will ensure efficiency in production since every producer will be willing to have the best rate of demand for its product.
Main Differences Between Communism and Capitalism
- Communism is a socio-economic structure that supports equality in the society, while capitalism is the type of socio-economic structure whereby economic activities and ownership are majorly owned and controlled privately.
- The purpose of communism is social satisfaction, while that of capitalism is profit-making.
- There is no free market under communism, but under capitalism it is.
- The goods or profits under communism are shared equally regardless of contributed effort, but under capitalism this is largely a matter of individual choice.
- The main agent of change in communism is the governing body, not market interaction. The effect of such changes may be slow. Under capitalism, the market forces of supply and demand determine the level of change in price and quantity. And the changes take effect quickly.
- Under communism, production is determined by social needs and what is available, while under capitalism it is based on supply and demand.
- The political system under communism is controlled directly by the people on an equal footing, but with an elected body to govern and regulate the system. In capitalism, this can be done in anarchism, direct democracy, or a dictatorial system of politics.
- Under communism, financial and monetary decisions are based on societal needs, while under capitalism decisions are made by the forces of supply and demand and in part by regulations and policies imposed by a governing body.
Conclusion
In summary, communism and capitalism has clear disparities which are based on societal nature and demands. Basically, communism believes all production services to be owned by the community, whereas capitalism privatizes all production services in the economy. These systems also allow governance except in a clear or strictly communized economy. Without looking at other variations, this forms the major difference between capitalism and communism. Since market and production services are privately owned in a capitalist system, then it is expected that everyone works independently. On the other hand, wealth is expected to be shared based on the needs of society and available resources.
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