Difference Between Capitalism and Communism

Infouniversitas.com - Hello everyone! The topic about the difference between communist and capitalist economic systems has been the subject of various research in the past. However, most of these studies only focus on one aspect, either politics or economics, and rarely combine the two.

Beyond that, in-depth explanations of how these two systems influence individuals and society are often lacking. Recognizing the significance of this issue, more comprehensive research that encompasses various dimensions of these two systems is greatly needed.

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    I created this article with the aim of providing a deeper and broader view of communism and capitalism, not only from economic and political perspectives; but also other social aspects.

    Here, we will discuss what is meant by communism and capitalism, and how these two systems affect individuals and society. I will also identify and discuss some key differences between the two systems, and also consider the impacts that each system can generate.

    I hope this article will help you distinguish between communism and capitalism, and provide a deeper understanding of how these two systems affect individuals and society.

    Definition of Communism

    Capitalism and Communism
    Difference Between Capitalism and Communism

    Communism is a system where means of production, resources, and property are equally and evenly controlled by the government. This ideology is based on the principle of collective ownership.

    Communist theory is primarily inspired by German philosophers and sociologists, Karl Marx and Friedrich Engels. The main principle of communism is the contribution and share of each person based on their abilities and needs.

    In this political system, the government owns and controls everything and all individuals work for a common goal.

    Therefore, in communism there is no class distinction, because everyone is considered equal. Communism aims to eliminate the gap between rich and poor and create equality in the economy.

    Definition of Capitalism

    Capitalism refers to the economic system that supports private ownership of the means of production, distribution, and exchange, to achieve profit. In this system, the production and pricing of goods and services are determined by the market.

    This means, the forces of demand and supply play a pivotal role, not government intervention. Characteristics of capitalism include individual rights, private ownership, accumulation of wealth, market economy, free and competitive markets.

    In a capitalist economy, owners make decisions and invest, and control the means of production. Effective competition with minimal intervention will then determine the price and distribution of goods and services in the economy.

    Difference Between Capitalism and Communism

    Here are the differences between communism and capitalism, which will discuss the pros and cons of these two ideologies.

    1. Ownership of the Means of Production

    The main point of difference between capitalism and communism lies in the ownership of the 'means of production' or resources in general. Communism prohibits individual/private ownership of land or crucial resources.

    They argue that all 'means of production' such as land and resources should be owned by society. In this context, society can be translated as the entire community or members of the community. This means that all lands and resources enabling the production of goods and services should be collectively owned.

    The results of all production will also be shared collectively. All decisions about production will be made by the entire society democratically. Communism adopts the principle of equal wages for everyone, with all decisions being made for the common interest.

    In contrast, capitalism believes in private ownership of land and means of production. Most of the business profits will be owned by the person who owns the means of production, while the workers responsible for running the business get a smaller share. Each worker gets his wages based on performance and decisions of the owner of the means of production.

    From the perspective of owning the means of production, it's stark between these two ideologies. Communism requires that all resources should be collectively owned, which drives most of the technological innovations we see today, while capitalism has the potential for exploitation, where wealth and power are concentrated in the hands of a few people.

    2. Individual Freedom

    Communism requires a person to place society above the individual, while capitalism places individual freedom above society. The difference between these two ideologies is often simplified with the term 'Individualism vs Social Welfare'.

    Capitalism places more emphasis on individual aspirations, while communism asks individuals to put group interests above their personal interests. These two extreme views have their own merits and demerits.

    Some of the greatest advances in human history occurred because of individual ambition. Meanwhile, more cooperative and egalitarian communities provide benefits in terms of broader social welfare. In this context, ideas that combine the goodness of both systems, such as 'community-oriented capitalism' or 'communism with individual freedom', might provide a more balanced solution.

    3. Role of Government

    The role of government in the economy varies greatly among these two systems. In communism, the government plays a dominant role in determining what should be produced, how much should be produced, and setting the prices of these goods.

    This is done with the aim of achieving social and economic objectives collectively formulated by society.

    Meanwhile, in capitalism, the government plays a minimal role in economic intervention. The government usually only acts as a regulator ensuring that markets work efficiently and fairly, as well as preventing monopolies and unethical business practices.

    However, in practice, many modern economies actually use a mixed model where the government has a role in regulation and sometimes also has a part in the production and distribution of goods and services.

    4. Distribution of Profits and Wealth

    Another major difference is how profits and wealth are distributed in society. In a capitalist system, wealth and profits are usually distributed based on the investment and risk taken by individuals or companies.

    This can result in uneven wealth distribution, which is often criticized as an unfair and unequal system. Conversely, in a communist system, wealth and profits are distributed equally among all members of society.

    This is done with the aim of creating a more fair and equal society. However, criticisms of this system are that it can hinder individual initiative and healthy competition, which can drive economic growth.


    Communism and capitalism are two political and economic ideologies that reflect two different perspectives on how social organization should be run. Even though the main goal is to create a fair and prosperous society, the approach used to achieve this goal is different between the two.

    Communism emphasizes the principle of equality and collective ownership of the means of production, while capitalism prioritizes private ownership and free-market economics. Communism and capitalism each have their advantages and disadvantages.

    Communism aims at the abolition of economic disparities and social stratification, but often leads to a decrease in individual motivation and abuses of power. Meanwhile, capitalism provides incentives for innovation and economic growth; but often results in significant economic inequalities.

    In essence, no system is ideal; each system has its strengths and weaknesses, and each society needs to find their own approach to balance social justice and economic efficiency. When assessing communism and capitalism.

    It is crucial to consider various elements - including history, culture, and the economic conditions of the country. Some countries may benefit more from one system over the other, but most importantly, every system should be evaluated in the context of the country and the people who will be affected by it.

    Frequently Asked Questions

    1. What is meant by Communism?

    Communism is a political and social system that emphasizes collective ownership of all property and resources by all members of society. The basic principle of communism is that each individual contributes and gets a share according to their capacity and needs.

    2. What is meant by Capitalism?

    Capitalism is an economic system oriented towards private ownership of property and the ability to earn profit from work or investment. The determination of the production and price of goods and services is determined by the market, where the laws of demand and supply play a significant role.

    3. How does the Economic System of Communism and Capitalism differ in the context of ownership of the means of production?

    Communism prohibits individual or private ownership of land or vital resources, arguing that all 'means of production' should belong to the state or the community at large. Conversely, capitalism supports the idea of private ownership of land and means of production.

    4. What is the difference between Communism and Capitalism in terms of individual freedom?

    Communism encourages an individual to put the interests of the community above the individual, while capitalism places more emphasis on individual freedom than the interests of the community. Capitalism pays more attention to individual aspirations, while communism encourages individuals to prioritize the interests of others over personal interests.

    5. How do Communism and Capitalism differ in terms of social structure?

    Communism seeks to support an egalitarian society without class stratification, where all individuals have the same position. Conversely, capitalism tends to create class differences between the rich and the poor.

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