Capitalism vs Socialism vs Communism
An essay on capitalism and socialism in an exam that I appeared prompted me to write on this topic. Normally Socialism and Communism are considered to be the same. However, there’s a very thin line of difference between the two in turn confusing most of the people. Here are the definitions of these 3 in layman’s language:
Capitalism - An economic system based on the “Survival of the fittest”.
Socialism – An economic system based on “You get your share no matter what your contribution is”.
Communism – An economic system based on “You put in your fair share, you get your fair share”.
What each of these terms mean to an economy can be described as follows:
This term was first coined by Karl Marx to describe a system in which small group of people own large amount of money, land, resources. It puts all the economy is the hands of wealthy business people with the only aim of maximizing profits. Such economies remain free of government intervention with all the policies being determined by private individuals. The result is monopoly, and a huge gap in the earnings among the employer class and the worker class. Though its very good for trades and industries to flourish, it can lead to worker exploitation and unethical business pratices. “Laissez-Faire” capitalism which means pure capitalism with no government intervention is said to have never existed in practice.
It is considered to be the transitional phase between the capitalism and communism. Thus, you would find all communists advocating for socialism because it lays the foundations for communism. It advocates an egalitarian society where everyone shares equal wealth and power. There is a considerable disagreement over how the distribution should take place. Hence, socialism can be said to be between extreme capitalism and extreme communism with it being nearer to communism.
Socialism is liberal. More people have say in how the economy works.
According to Karl Marx, this is the final stage towards development of egalitarian society. Here all the resources are state-owned and it determines its distribution based on the needs in an effort to bring about equality.
Communism is conservative. Fewer and fewer people have any say in how the economy works. By using state coercion to fulfill unmet demands, it restricts individual freedom. Communism necessarily takes the form of totalitarianism, or the tyranny of all over one since its upto the state to decide who gets what. Historically, communist societies have been characterized by the absolute rule of a revolutionary party leader, beneath whom everyone is equally subservient.
It becomes very difficult for such an economy to survive in a large population when it becomes difficult for equal distribution of resources.
One can safely say that its the mixed economy (a bit of all the forms of economies) that in today’s age serve most of the countries well (US minus recession being a prime example). China also with its centrally planned economy is moving towards market-oriented economy thus becoming a mixed economy.