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Capitalism Vs. Communism
Amazingly, the creation of nations owes respect to an 18th Century political economist and
philosopher by the name Adam Smith. Arguably, the discipline of political economics relies
heavily on his distinct publication, ‘Wealth of Nation.’ From his ideas, his successor in economics,
Karl Marx, sought to correct economic inequalities through the principle of communism. Many
nations chose to follow capitalist ideology as advocated by Adam Smith. Capitalism, also known
as neoliberalism is defined as a policy model where the individual citizens control the economy
whereas communism is social political and economic structure where the governments exert
control over country’s trade and industry. Even though almost all nations prefer capitalism to
communism, some states still advocate for communism. A significant difference between
capitalism and communism is evident on social, political and economic principles of these nations,
under the capitalist system, individual citizens make significant decisions regarding production
and distribution of goods while under communism the government exercises control over
production and consequentially distribution of wealth. The diverse nature of these two economic
principles has drawn controversy in the world’s economic interrelations and industrialization.
According to Mark Obrinsky, individualism motivates entrepreneurs to make more profits
in the short run. The resultant effect of their motive is a multiplication of economic resources in
the long-run. (Orbrinsky 52-56) The author offers succinct responses on the elusive principle of
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profit maximization and the role this facet has had on capitalism. Mark defines capitalism as a
positive self-individualism that builds the economy. Adam Smith built the theory on three pillars,
private ownership, free markets and forces of supply and demand.
In a capitalist economy, individuals own the production resources. The fundamental
element in this economy is that citizens have the freedom to acquire wealth and use the amassed
resources to invest in production opportunities (David 145). Notably, each has the right to take
actions that he or she desires. Individuals own factories and business ventures. In return, the owners
of these ventures decide on the price to charge on the products produced.
The principle of free competition is widely referred to as the laissez-faire’. The proponents
of this principle advocate for self- independence in the markets. The government does not
influence the decisions of buyers and sellers in the market. However, this principle does not ignore
the services of government in totality. The radical proposal in these markets is that the role of
government is to offer services that are not related to economic decisions such as security and
other public utilities.
The forces of demand and supply play a vital role in the capitalist economy. The principle
articulates that the forces of demand and supply must override the market per se. Essentially, the
government is kept a bay in this market, and individual players make decisions that influence the
performance of the economy. Technically, the general principle of economics is that when the
supply of products increases, the price falls
In his book on History of Communism, Smith, and Stephen expounds on realms of
communism. The broad aspect of this economic artifact proposes that government should control
the economy (Stephen 57). Notably, Karl Marx advocated this principle. The philosopher argued
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that capitalism cause inequalities in the distribution of wealth. According to him, individualism
breeds nepotism and social vices that do not guarantee equality in the distribution of economic
resources. In his view, adoption of capitalism led to exploitation of workers. Communal ownership
of property is the basic principle that holds this principle distinct from capitalism.
Properties under communism have owned the state. It is easier to influence the allocation
of resources once centralized government imparts policies that positively influence economic
growth. Notably, nations that advocate the adoption of Karl Marx’s principle are few, the Republic
of Cuba, Peoples Republic of China and the Democratic People’s Republic of Korea are the perfect
examples of very few nations in the World that adopt communism. Theorists who support this
theory argue that resources ought to be shared between individuals evenly. Arguably, this theory
was formulated to counter problems that resulted from capitalism.
Ownership of means of production is the primary distinction between capitalism and
communism. Communism evades individual responsibility for or any key assets. Instead, every
one of the ‘methods for creation’ like land and different assets belongs to the state (Martin 204).
The government possesses all land and assets which empower the creation of products and
ventures. Additionally, decisions as to the division of resources are made by the government. The
principle advocates for equal salaries and wages.
On the contrary, capitalism trusts in private responsibility for and methods of production
in the generation of wealth. The general requirement is that everyone ought to take care of his or
her means of production. Specific individuals own These resources in the society, and the
government has little influence. The person who owns the means of production earns a lot in this
system. The workers earn for their work, and the government cannot influence the pay. Notably,
this is the main reason why Karl Marx advocated for another theory to counter capitalism. He
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regarded this principle as the reason for existence of rich and poor. The poor people work for the
rich since they do not have factors of production. The major bone of contention between capitalism
and communism is ownership of means of production.
The two theories offer a contrasting view on freedom and general society. While
communism advocate for communal ownership of resources in the society, capitalism propagates
for individual ownership. The two extremes have benefits and come at a social cost. Firstly, a
capitalist society alienates individuals from the society. The primary aim of the capitalist is to
amass wealth by generating wealth from factors of production employed. On the other hand,
communism results in communal burden. Individuals who are endowed with resources and
personal capabilities cannot enjoy advantage property they own. In this ideology, all resources
belong to the state. Therefore, one cannot develop himself or herself since the society comes first.
Secondly, these two ideologies differ on advantages resulting from the adoption of each
theory. In a capitalist society, individuals work hard to earn and maintain resources that belong to
them in the long run (Steven 173). The policy ensures that the individuals are hardworking. The
main aim is to realize the long-term economic growth is realized for the nation. In individual
investment has a ripple effect on the entire economy. On the contrast, communism economy
promotes a symbiosis relationship between societal laws and the economic development. The
society sets policies that affect the nation’s economy in the long-run. The principle encourages
sharing of production resources under government control.
The proponents of Communism ideology appeal for altruism. On the other hand, capitalism
promotes individuals. Arguably, individualism breeds selfishness. Evidently, few people who own
factors of production in capitalist nations the economy. The resultant effect is the existence of few
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wealthy elite who control the economy in totality. Communism is the ideal ideology of humanity
since it promotes equality.
The existence of two economic ideologies that contrast sharply is an evidence of how
economic development is subjected to varied opportunities. From previous researches, either of
the two economic proponents can lead a nation into a thriving state. The extreme of either theory
is negatively detrimental to a country. An example of how extreme communism can fail is Russia
under Stalin. Both ideologies require balanced approach for proper societal inclusivity and national
economic development.
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Works Cited
Dauvé, Gilles, and François Martin. Eclipse and Re-Emeregence of the Communist
Movement. Oakland, CA: PM Press, 2015. Internet resource.
Obrinsky, Mark. Profit Theory and Capitalism. Philadelphia: University of Pennsylvania Press,
2015. Internet resource.
Saxonberg, Steven. Transitions and Non-Transitions from Communism: Regime Survival
in China, Cuba, North Korea, and Vietnam. Cambridge: Cambridge University Press,
2013. Internet resource.
Smith, Stephen A. The Oxford Handbook of the History of Communism. Oxford: Oxford
University Press, 2017. Print.
Steele, David R. From Marx to Mises: Post Capitalist Society and the Challenge of Economic
Calculation. New York: Open Court, 2013. Internet resource.
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