Difference between Capitalism and Communism

Updated on February 24, 2018

With the current political systems having failed so many people, the whole world is wondering whether what the others are doing is the right thing. People in capitalist countries feel that they have been put aside in favor of the interests of big corporations, while people in communist countries feel second to the interests of the state. Everybody wants to switch boats. But do they know what they are getting themselves into?



Capitalism is an economic system built on the concepts of private ownership, free market and laissez-faire politics. In this system, companies and businesses are encouraged to grow and individuals are encouraged to earn more. The free market is a highly competitive market which turns the state imposed social policies and concepts of public ownership into obstacles for the economic growth of society. As an economic system, capitalism goes well with various systems of government in the liberal and democratic spheres, though some countries, such as China, have managed to make the free market work well even in a communist society.

This is the system built on the desire and possibility for all to accumulate capital and to prosper. The state’s interventions in regulating the free market are limited and the politics are meant to support economic growth. The individual has the possibility to make his own fortune by making use of the means he has. This creates a big gap between those who have means and those who don’t. This is a society divided in terms of income classes, and those who start off well, with sufficient means, have a better chance of getting ahead than those whose only means are their own ability to work for the above-mentioned.

Communism is a political system based on common ownership of the means of production and on the equal distribution of resources and goods. In theory, it sought to create the perfect world, where everyone has the basics to survive: food and shelter. The state’s power in such a society is very great as it is the one deciding what people’s needs are, and the one controlling all resources. Although the system is intended to eliminate all classes and income gaps between people, it in fact creates a gap between the ruling party which has enormous power over all of the resources, and the people who are merely on the receiving end.

It started as a need to abolish the private ownership of all of the means of production by some and to move it in the hands of the state where every citizen would get his fair share and would have the chance to make a living. However, communism is the extreme materialization of the concepts of socialism preached by Lenin, where society as a whole was supposed to be the ruler with a lighter approach to common property. In practice, in communism the power is placed in the hands of the Communist Party and all opposition is consistently eliminated.

Comparison Chart

An economic systemA political system
Individuals are encouraged to collect capitalIndividuals have their place in society and do and receive what is decided for them
Society divided by incomeClassless society
Private propertyCommon ownership
Making use of your own means to make capitalMaking use of the state means to produce for the state
A free, competitive marketState controlled market
Minimum state interventionOverall state involvement
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