Capitalism vs Socialism/Communism
In 1750, much of the western world followed an economic course
where individuals owned private property, businesses, and the
profits that resulted from wise investments. Capitalism is based on
private ownership of the factors of production and individual
economic freedom. Most of the factors of production, such as
factories and raw materials, are owned by private individuals and
not by the government. Capitalists make decisions about what and
when to produce and how much products should cost. Other
characteristics of capitalism include the following:
• COMPETITION: The basic rule of capitalism is Laissez
Faire, the idea that people should compete freely
without interference from government or any other
outside force. Capitalism assumes that the most
deserving person will usually win. The smartest
merchants, entrepreneurs, and inventors will become
wealthy. In theory, prices will be kept as low as possible
because consumers will seek the best product for the
least amount of money.
• FREE MARKET: In a capitalist system, prices are
determined by how many products there are and how
many people want them. A capitalist can determine how
much of a product is made and what the product’s price.
However, the consumer has the freedom to purchase any
product, usually looking for the lowest price but with the
best quality. Ultimately, if the consumers demand a
product, capitalists will supply that product in order to
gain more profit.
• EXPLOITATION: Essential to a capitalist economy is the
exploitation of resources, markets and labor. Industrial
mass production leads to the exploitation of natural
resources that are need to produce goods for profit.
Profit is increased when workers are paid the least
amount for their labor. Lack of government regulation
allows employer to overwork and underpay the working
class.
Karl Marx, the 19th century father of communism, was outraged by
the growing gap between rich and poor. He saw capitalism as an
outdated economic system where the Bourgeoisie (ruling classes)
exploited the Proletariat (working classes). As a result of this
exploitation, the Proletariat would eventually rise against the
Bourgeoisie in violent revolution. Marx thought that it was
inevitable that communism would replace capitalism. Communism
is based on principles meant to correct the problems caused by
capitalism. Communusm also includes the following characteristics:
● COOPERATION: The most important principle of
Communism is that no private ownership of property
should be allowed. Marx believed that private ownership
encouraged greed and motivated people to knock out the
competition, no matter what the consequences. Property
should be shared, and the people should ultimately
control the economy. The government should
collectivize or control the economy in the name of the
people.
● REDISTRIBUTION OF WEALTH: Marx called for putting
the major factors of production in the hands of the
people, either directly or through the government. The
goals are to eliminate the gap between the rich and poor
and bring about economic equality by redistributing
wealth from the Bourgeoisie to the Proletariat. This phase
of Marx's Proletarian Revolution--where a Proletariat led
government forcefully redistributes the wealth--is often
referred to as Socialism.
● COMMUNISM: Once all wealth has been redistributed by
the proletariat people will slowly recognize that they are
better off cooperating rather than competing. Without
competition for resources and wealth, war will disappear,
and government will dissolve. People will produce what
they can and consume what they need. Communism,
according to Marx, is a global utopia.
There is no purely capitalist or communist economy in the world today. The capitalist United States has business regulations like minimum wage and safety
requirements to protect the working class. Communist China now allows its citizens to keep some of the profits they earn. These categories are models
designed to shed greater light on different ways to organize and influence national economies as well as global trade.

Adam Smith, The Wealth of Nations
Wherever there is great property, there is great inequality... for
one very rich man, there must be at least five hundred poor.
Individual Ambition Serves the Common Good.
It is not from the benevolence of the butcher, the brewer, or the
baker that we expect our dinner, but from their regard to their
own interest.
Our elites complain much of the bad effects of high wages in
raising the price and lessening the sale of goods. They say
nothing concerning the bad effects of high profits. They are silent
with regard to the wicked effects of their own gains.
Karl Marx, The Communist Manifesto
The theory of Communism may be summed up in one sentence:
Abolish all private property.
From each according to his abilities, to each according to his
need.
Let the ruling classes tremble at a Communistic revolution. The
proletarians have nothing to lose but their chains. They have a
world to win. Workingmen of all countries unite!
The last capitalist to hang will be the one who sold us the rope.