What is Capitalism?
Capitalism deals with an economic system in which private businessmen have ownership of the country’s trade and industry. These private owners hire workers who are given wages.
In capitalistic countries, people are not satisfied with the companies because they always run after profit. They do not care about people’s needs.
In Capitalism, a free market economy is necessary to achieve success. It delivers goods and services as stated by the law of supply and demand.
Means of production does not own by labourers, they only use them as the representation of owners of trade and industry.
The whole of Capitalism moves around the game of profit. The supply owners compete against each other to earn as much profit as possible.
Owners are the ones who buy shares. The more shares he/she buys, their level of control way up. Then, from these shareholders, the leading head is hired to manage the company.
Due to this hierarchy, the production is increased by owners to increase their profit. The prices get lower when supply increases in a capitalistic system.
What is Communism?
Communism is a political and economic society that wishes to create a classless society that is based on the socioeconomic order of common ownership.
It is a centrally planned economy that has only a single authority, the government. It takes all responsibility regarding the production and supply of goods.
In these countries, everything is managed by the government, and its goal is to give to “each according to his need”.
These types of states are in favour of people. They have free health care, education, and other services. This system also seeks to improve the nation’s economic growth.
Private property is replaced by public property. All means of production-buildings, machinery, tools, and labour are communally owned instead of by individuals.
In a purely Communist society, only the things which are necessary for life are given to individual citizens. There is no difference between rich and poor.
The main examples of Communism are the Soviet Union, China, and Yugoslavia. They developed their ideas of Communism, which vary from each other over time.
Difference Between Capitalism and Communism
- Communism refers to the equal sharing of work according to the individual’s necessities. In Capitalism, the individual is responsible for his work, and if he wants to be rich, he has to work hard.
- In Capitalism, the factors of production are owned by private individuals to make a profit. Whereas in Communism, the ownership is in the hands of the government, and each individual gets a share according to his ability and needs.
- In a capitalistic system, the profit generated belongs to the owner only, while in Communism, it is equally shared by all individuals.
- A capitalistic economy is in favour of class difference, unlike Communism, which works for a classless society.
- In Capitalism, aggressive competition exists between companies. While in Communism, there is no such competition.
Comparison Between Capitalism and Communism
| Parameters of Comparison | Capitalism | Communism |
| Labour | People are free to choose a job and position | People’s jobs and positions are determined by state |
| Business | People have the right to have their own business | All businesses are controlled by the state |
| Wealth | Everyone has to work for himself to make wealth | Wealth is distributed among individuals as per their needs and ability |
| Competition | Aggressive competition between companies | No competition |
| Ownership | Factors of production are owned by private individuals | Factors of production are owned by the government |