Capitalism and Communism: An ideological Schism

The Cold War was a period of geopolitical tension between the United States and the
Soviet Union and their respective allies that developed after World War II. Waged on a political
and economic front, the main aspect of contrast between the capitalist United States and the
communist Soviet Union, was the incompatibility between these two ideologies. Within this
framework, the purpose of this essay is to identify the basis of each system and analyze it.

Primarily, capitalism is a political and economic theory characterized by private or corporate

ownership of capital goods, by investments that are determined by private decision, and by
prices, production, and the distribution of goods that are determined mainly by competition in
a free market. In its roots, this system is based in classical liberal philosophy and its conception
of the rational, freethinking, autonomous individual. Diversely, communism is based on the
idea of shared ownership. The theory was mainly sparked by the German philosophers Karl
Marx and Friedrich Engels. The principle thesis derives from Karl Marx, which advocates for a
war of social classes that ultimately would lead to a society in which all property is publicly
owned, and each person works and is paid according to their abilities and needs. In this sense,
it aims to replace private property and a profit-based economy with public ownership and
communal control of the major means of production and the natural resources of a society.

Also, while the profit of any enterprise is equally shared by all the people in
communism, the profit in a capitalist structure belongs to the private owner only. This is
because while the private party controls the resources in capitalism, it is the society that
controls the whole means of production in communism. As well, for communists the society is
above individuals. But for capitalists, individual freedom is above the state or society. Another
important characteristic is that, while capitalism is a self-regulated economic system,
communism is a government run economy. In addition, in capitalism the individual has full
control over production and decides on the price structure. Contrary to this, it is the society or
the government that determines the price structure in communism. Ultimately, communism
stands for equal sharing of work, according to the benefits and ability. But in capitalism, an
individual is responsible for his works and if he wants to raise the ladder, he must work hard.

It is important to note that both competing economic systems focus on how best to
allocate goods and services to the population, both regarding men as economic units.
However, the main difference consists in the means used for this common goal: capitalism
uses democracy and “free markets” to efficiently allocate capital to its most efficient use with
little regard to economic equality. By contrast, communism focuses instead on massive state
run “planned” economies allocating resources equally with little regard to personal ambition
or incentive. Finally, nowadays it may seem like capitalist ideas defeated the communist
ideology, but it is important to acknowledge that in modern world like ours, there is no
country in the world that has a pure capitalist or pure communist socioeconomic system, but a
mixture of both.
 Communism

Advantages

- No worker would have financial nor economic needs.

- Resources would be more efficiently managed with a social perspective seeking
everyone’s wellbeing.
- A planned economy that guarantees that no resources are wasted because the
government designates the specific amount of production.
- From a social perspective, the society promotes important values as comradeship
and fellowship because you don’t work to satisfy your own needs, but you work to
satisfy the needs of everyone.
- From a political view, there is only one party which has centralized ideas and
assures the people that the government’s plan from one term will be followed in
the next one.

Disadvantages

- There is no private property which affects personal aspirations because it doesn’t

matter how hard you work everything will be distributed according to the needs of
the people.
- If there are equal gains for everyone despite their efforts, as a result, everyone will
be conformist with what they have because there will not be a motivation por
incentive to stand out or work harder.
- There is no self-determination or free entrepreneurship because the
entrepreneurs are constrained to produce what the government determines based
on the needs.
- The government sets the prices, so sellers lose the valuable feedback the prices
provide about what the people want.
- There is often a surplus of one thing and shortages of others. To compensate,
citizens create a black market to trade the things the planners don't provide.

Capitalism

Advantages

- The constant incentive of production to gain money encourages innovation which

brings development to the country.
- Consumers have the choice to buy what they desire as well as having all the
products offered and not the ones that are needed as in communism.
- The private autonomy goes hand in hand with democracy where everybody is free
within the framework of the law.
- Capitalism motivates a competition between brands creating great economic
conditions and opportunities in the market so eventually more job opportunities
are created.
- It incentives people to always be better and to strive for more because the market
provides the opportunities for it.
Disadvantages

- As you are always striving for better things, it promotes selfishness.

- Firms can gain monopoly which hurts the market´s competition.
- Externalities and the constant production and industrialization hurts the
environment.
- Capitalism tends to create a large breach between social classes in benefit of the
higher classes.
- Promotes that certain developed economies with economic and political ambitions
want to interfere in the local affairs of third world countries because (economic
interests).