Capitalism vs Communism | Daily Writeup | Opinions
The following article, “Capitalism vs Communism”, is written by Khalid Nazir, a student of Sir Syed Kazim Ali. Moreover, the article is written on the same pattern, taught by Sir to his students, scoring the highest marks in compulsory subjects for years. Sir Kazim has uploaded his students’ solved past paper questions so other thousands of aspirants can understand how to crack a topic or question, how to write relevantly, what coherence is, and how to include and connect ideas, opinions, and suggestions to score the maximum.
Outline
1-Introduction
2-Exploring the essence of capitalism and its features
3-A bird’s eye view of communism and its features
4-Tracing the historical roots of capitalism
5-Taking a glance at communism through the lens of history
6-How capitalism and communism differ from each other?
- ✓Differences in the ownership of the means of production of both systems.
- Evidence: According to the University of Idaho, “In a capitalist system, all means of production are privately owned and operated while communism refers to community ownership of the means of production.”
- ✓Distinctiveness in the organisation of economic activities in capitalism and communism.
- Evidence: According to rumie.org, “Capitalism lets market forces dictate production and pricing decisions while communism promotes intensive state control of trade and industry.”
- ✓Differences in the distribution of wealth in capitalism and communism.
- Evidence: According to the Paradigm shift, “Capitalism perpetuates social inequality by concentrating the wealth in the hands of the few while communism advocates for equal distribution of wealth and opportunities.”
- ✓Dissimilarities between incentives provided in both systems.
- Evidence: According to Wallstreetmojo, “Capitalism motivates entities to work hard and innovate by providing the incentive of making a profit, while communism does not emphasise or focus on providing an incentive to trigger hard work.”
- ✓Divergence in the role government plays in capitalism and communism.
- Evidence: According to Investopedia, “Capitalism encourages little to no government intervention in economic affairs while communism promotes central planning by government in managing economy.”
- ✓Differences in the social structure of both systems.
- Evidence: According to the paradigm shift, “Capitalism divides society in minority elite class and majority lower class while communism strives for the creation of a classless society in which people are equal regardless of their financial and educational differences.”
- ✓Contrast in innovation and creativity between capitalism and communism.
- Evidence: According to the Maritime Fairtrade, “In communism, people work only for the collective good, which results in a lack of drive towards innovation and creativity, while on the other hand, Capitalism fuels innovation and creativity by cutthroat competition and rewarding one for going beyond the minimum requirements.”
- ✓Variation in the level of personal freedom in capitalism and communism.
- Evidence: According to the Institute of Labor Economics, “Communism oppresses personal freedom by stifling freedom of speech and freedom of religion while capitalism encourages complete personal freedom.”
- ✓Conflicts in property rights of both systems.
- Evidence: According to Stanford University, “Communism has no concept of private property as it supports collective ownership while capitalism recognises a person’s right to own property.”
7- What are the similarities between capitalism and communism?
- ✓Both capitalism and communism assume nature’s resources are infinite and place value on extracting resources faster.
- Evidence: In two centuries, the global population increased by seven hundred per cent, turning the seemingly infinite resources into visibly finite ones.
- ✓The desire to improve living standards and promote societal progress is inherent in both systems despite differences in approach.
- Evidence: According to Films for Action, “Both capitalism and communism are striving for the same end goal of achieving a higher standard of living for every person.”
- ✓Both systems emphasise the importance of a productive and efficient economic system.
- Evidence: According to this Matter, “Productivity and efficiency are important in capitalism and communism as they help improve resource allocation and production of goods and services.”
- ✓Capitalism and communism both use an incredible amount of violence to destroy their opposition and enforce their system.
- Evidence: According to the Ohio State University, “20 million people died in a cold war that was fought between Capitalism and Communism.”
- ✓Both capitalism and communism are forms of social organisations related to industry, trade, and the economy.
- Evidence: Rumie states, “Capitalism and communism are economic ideologies that structure how an economy should be run.”
- ✓Both systems recognise the need for economic planning, whether through market forces or central planning, to some extent.
- Evidence: According to Wikipedia, “Capitalism and communism both use economic planning to some extent.”
- ✓In the contemporary context, capitalism and communism are part of a global interconnected system where trade, investment, and cultural exchange transcend national boundaries.
- Evidence: Bartleby states, “Both capitalism and communism participate in global markets.”
8-Critical analysis
9-Conclusion
The dichotomy between capitalism and communism has been a cornerstone of economic and political discourse for centuries, shaping the trajectories of nations and influencing the lives of billions. The brutalities of the feudal system have given rise to capitalism, where every individual enjoys the right to own land and means of production. The bourgeoisie class replaced the land aristocracy of feudalism in the social hierarchy. Albeit in a slightly different and less rigid manner, capitalism also divided people into bourgeoisie and proletariat classes, similar to the lords and serfs classes of feudalism. Adam Smith, known as the founder of modern capitalism, has argued in his phenomenal book, “An Inquiry into the Nature and Causes of the Wealth of Nations”, that individual need to fulfil self-interest results in societal benefits. This rationale has resulted in the concentration of wealth in the hands of the few, massively increasing global inequality. To counter this inequality, Karl Marx and Friedrich Engels introduced the concept of communism. Communism was designed to counter inherent exploitations and cutthroat competition and introduced the idea of a classless society where everyone was equal, and resources were distributed equitably. Moreover, in communism, property and the means of production are collectively owned by the community instead of having any individual. Furthermore, communism dictates that the state is responsible for providing sustenance for its citizens by providing them with work. In conclusion, both capitalism and communism are socioeconomic systems designed to regulate the economy. Capitalism dictates individual ownership of the means of production, competition, and free-market mechanism, resulting in serving society through fulfilling individual needs. On the other hand, communism advocates for a classless society and collective ownership of the means of production where resources are distributed based on equity, and the state drives the economy through central planning.
To begin with, it is pertinent to understand the gist of capitalism and its features. Capitalism is an economic system that promotes a free enterprise system, the individual ownership of the means of production, and lets market forces decide the direction of the state’s economy. In this system, Companies that individuals own decide what to produce when to produce, and how much to produce based on the demands of the market to earn profit. Moreover, capitalism promotes competition between individuals over market share, which fuels innovation and increased productivity. Furthermore, capitalism argues that people who pursue their self-interests serve society by fulfilling their interests. Hence, capitalism seeks to reduce poverty and raise living standards by realising individual profit-seeking behaviour.
Moreover, comprehending communism and exploring its features is important for understanding the broader picture. Communism emerged as a countering force to the exploitation and inequality perpetrated by capitalism. Karl Marx, the founder of communism, argues that the capitalist system forces everyone to put economic interest at the heart of their lives. Moreover, communism is characterised by collective ownership of the means of production, where the state decides the economy’s direction through central planning. In addition, communism advocates for a classless society where resources are distributed based on equity. Furthermore, communism reduces inequality among the masses to a minimal level. However, since it does not provide incentives such as profits, individuals lack the drive to pursue increased efficiency and productivity, bringing the innovation drive of the state to a screeching halt. Thus, communism seeks to eliminate inequality and class differences through the equitable distribution of resources and promote moral and social values in society.
Historically, the genesis of capitalism can be traced back to the dawn of the Industrial Revolution, a revolutionary era characterised by technological innovation, urbanisation, and the emergence of capitalist modes of production. Adam Smith, the founding father of capitalism, argued that humans are self-serving by nature; however, as long as every individual seeks the fulfilment of their self-interest, the material needs of the whole society would be met, generating economic flourishment and granting equality to society as a whole. Rejuvenated by the promise of prosperity and liberty, the masses eagerly embraced capitalism to get rid of slavery and exploitation perpetrated by the feudal system. However, to their dismay, the bourgeoisie class replaced the land aristocracy on the social ladder and started exploiting the masses for profit maximisation.
Additionally, communism’s historical roots stretch back to Karl Marx and Friedrich Engels, the founder and the co-founder of communism. As a socioeconomic ideology, communism emerged as a counterweight to the inequalities and injustices perpetuated by capitalism. From the Bolshevik Revolution in Russia to the Cultural Revolution in China, the tumultuous currents of the 20th century bore witness to the rise and fall of the communist regime. Despite various manifestations, the expedition for a classless society remains a rallying cry for communist movements worldwide where there would be no capitalists to inflict misery upon the masses.
Furthermore, both capitalism and communism are socioeconomic systems that stand in stark opposition to each other. They are utterly different from each other, and some of the key differences are explored below. First, there is a key difference in the ownership of the means of production in both systems. Capitalism advocates for private ownership of the means of production where any individual can acquire the ownership of the means of production, which are the physical elements used to create goods and services, such as factories, land, capital, and natural resources. On the other hand, communism promotes collective ownership of the means of production, which no individual can possess. The state is responsible for turning the means of production into goods and services and distributing resources among the masses equitably to minimise class differences and inequality. According to the University of Idaho, “In a capitalist system, all means of production are privately owned and operated while communism refers to community ownership of the means of production.” Hence, the ownership of the means of production is vastly different in capitalism and communism.
In addition, both systems differ in the organisation of economic activities. Capitalism allows the invisible hand of market forces to decide what to produce and the price of goods and services while limiting government intervention in economic affairs to a minimum. At the same time, Communism advocates for full governmental control of what to produce and the price of goods. In communism, the direction and organisation of economic activities is decided through central planning. According to rumie.org, “Capitalism lets market forces dictate production and pricing decisions while communism promotes intensive state control of trade and industry.” Therefore, capitalism and communism are immensely different in deciding the organisation and direction of economic affairs.
Moreover, the distribution of wealth in capitalism and communism are vastly different. Capitalism provides a conducive environment for the concentration of wealth in the hands of the few. This concentration of wealth breeds inequality in the distribution of wealth in a capitalist society. Meanwhile, communism encourages equality in the distribution of resources as it pursues the goal of a classless society. Paradigm Shift states, “Capitalism perpetuates social inequality by concentrating the wealth in the hands of the few while communism advocates for equal wealth and opportunities.” Thus, capitalism and communism differ in their approach to the distribution of resources.
Apart from the above arguments highlighting the differences between the two socioeconomic systems, the approach towards handing out incentives is another point where both systems clash. In a capitalist society, individuals work hard to further their businesses to earn profit. Capitalism rewards the efforts of the masses in the form of profit. On the other hand, communism does not provide any concrete benefit for working hard and relies on the feelings of comradery and brotherhood to motivate individuals. Wall Street Mojo states, “Capitalism motivates entities to work hard and innovate by providing the incentive of making a profit, while communism does not emphasise or focus on providing an incentive to trigger hard work.” Therefore, both systems differ in providing incentives for individuals to work hard.
Besides that, divergence in the role played by government in both systems is also a conflicting point. Capitalism demands no intervention from the government in financial affairs, such as setting the price and controlling what to produce and how much to produce. Market forces regulate prices and decide matters regarding the production of goods and services. Meanwhile, communism relies on central planning, where the state regulates market prices and controls the production of goods and services. There is no concept of market forces having a say regarding these matters. Investopedia says, “Capitalism encourages little to no government intervention in economic affairs while communism promotes central planning by government in managing economy.” Hence, capitalism and communism differ in the extent of government intervention in economic affairs.
In addition to the above arguments, both socioeconomic systems conflict with the difference in social structure. In a capitalist society, the masses are divided into the privileged minority and the exploited majority. The key reason for this social divide is the concentration of wealth in the hands of the few perpetuated by capitalism. At the same time, communism promotes a classless society where individuals enjoy equal status regardless of their financial status. According to the paradigm shift, “Capitalism divides society in minority elite class and majority lower class while communism strives for the creation of a classless society in which people are equal regardless of their financial and educational differences.” Thus, capitalist and communist social structures are completely different from each other.
Moreover, capitalism and communism are starkly different in fueling innovation and creativity. Capitalism promotes creativity and innovation through competition and rewarding individuals for their hard work by enabling them to earn profit. Communism, on the other hand, provides no concrete incentive to compel an individual to work hard. It merely relies on the sentiments of collective good and comradery, which are often not enough when inherent selfishness in human nature is considered. According to the Maritime Fairtrade, “In communism, people work only for the collective good, which results in a lack of drive towards innovation and creativity, while on the other hand, Capitalism fuels innovation and creativity by cutthroat competition and rewarding one for going beyond the minimum requirements.” Hence, both socioeconomic systems are starkly different in promoting innovation and creativity in society.
Furthermore, the level of personal freedom varies in both capitalism and communism. Capitalism offers complete personal freedom where an individual can own the means of production while enjoying freedom of speech, religion, and culture. Whereas in a communist regime, the masses are deprived of the liberty of religion and speech. According to the Institute of Labor Economics, “Communism oppresses personal freedom by stifling freedom of speech and freedom of religion while capitalism encourages complete personal freedom.” In a nutshell, both economic systems provide different levels of personal freedom and liberty to the masses.
Last but not least, both socioeconomic systems have conflicting stances on the right to own private property. Capitalism supports the claim of an individual’s right to own private property. The individual is free to use, sell, or lease the property. On the other hand, communism advocates for collective ownership of the means of production and has no concept of an individual’s right to own private property. According to Stanford University, “Communism has no concept of private property as it supports collective ownership while capitalism recognises a person’s right to own property.” Therefore, capitalism and communism have conflicting opinions on the right to own private property.
In addition, the above arguments have highlighted the stark differences between capitalism and communism, proving that both socioeconomic systems are completely in opposition. However, surprisingly, capitalism and communism are similar in several ways. First, both capitalism and communism assume nature’s resources to be infinite and place value on extracting resources at faster rates. Both capitalism and communism came into being when the world’s population was several times less than what it is today. Consequently, the idea that resources will end one day if not used sustainably seemed absurd and far-fetched to the founders of both socioeconomic systems. However, Planet Blue is home to over seven billion individuals today, putting severe strain on the planet’s limited and finite resources. In two centuries, the global population has increased by seven hundred per cent, turning the seemingly infinite resources to visibly finite. Hence, both systems falsely assume the planet’s resources to be inexhaustible.
Moreover, the desire to improve living standards and promote societal progress is inherent in both systems despite differences in approach. Indeed, the end goal of both systems is to promote a better quality of life and push society on the path of development. Capitalists benefit society through the fulfilment of their own desires, while communists enhance societal progress by minimising class differences and inequality. According to Films for Action, “Both capitalism and communism are striving for the same end goal of achieving a higher standard of living for every person.” Hence, the end goal of both capitalism and communism is to benefit society and elevate living standards.
Furthermore, both capitalism and communism emphasise the importance of a productive and efficient economic system. The favoured economic model in a capitalist society is where individuals own the means of production and produce goods and services to earn a profit. Capitalists do their best to increase efficiency and productivity to increase their profits. Meanwhile, communism propagates central planning in economic affairs, which is a highly efficient economic model. According to this matter, “Productivity and efficiency are important in capitalism and communism as they help improve the allocation of resources and production of goods and services.” Hence, both systems favour efficient and productive economic models.
Apart from the above arguments, capitalism and communism both use an incredible amount of violence and brutality to destroy their opposition and enforce their system. Cold War was the most brutal war that was fought between the proponents of capitalism and communism. This proxy war was fought all over the world, from Korea to Vietnam and from Cuba to Afghanistan, inflicting untold misery on the dwellers of the world. According to the Ohio State University, “20 million people died in a cold war that was fought between Capitalism and Communism.” Hence, both capitalism and communism use violent and bloody means to propagate their ideology.
In addition, capitalism and communism are forms of socioeconomic organisations that revolve around economy, industry, and trade. In a capitalist society, capitalists bolster the economy by trading goods and services produced by the factories in their possession, and the state plays a minimal role in this system. While communism advocates for complete state control of all economic affairs, from production to selling and trade, everything is centrally planned. Hence, capitalism and communism are all about industry, trade, and the economy, and the way they carry out the process is different. According to Rumie, “Capitalism and communism are economic ideologies that provide a structure of how an economy should be run.” Therefore, both socioeconomic systems are related to economy, industry, and trade.
Besides that, both capitalism and communism recognise the need for economic planning to some extent, whether through market forces or central planning. Capitalists’ economic planning depends on the market. Market conditions decide what to produce, how to produce, and when to produce. At the same time, communists turn to the state for their economic planning. The state decides production matters in a communist society. According to Wikipedia, “Capitalism and communism both use economic planning to some extent.” Thus, both capitalism and communism carry out economic planning.
Last but not least, in the contemporary era, both capitalism and communism are part of a global interconnected system where trade, investment, and cultural exchange transcend national boundaries. Goods and services are produced in both socioeconomic systems mostly to be sold in the international market. Moreover, investment and cultural exchange is also an integral part of both systems. According to the Bartleby, “Both capitalism and communism participate in global markets.” Hence, both capitalism and communism dabble in cross-border trade, investment, and cultural exchange.
Critically, amidst the rhetoric and ideological fervour surrounding capitalism and communism, a sobering and pragmatic analysis reveals the fact that both of them are unable to navigate the complexities and challenges of the 21st century. Both systems originated in an era when the global population was tens of times lower than it is now, and the resources of Planet Blue seemed inexhaustible. However, the situation today is completely different as the population has increased boundlessly, and resources are being depleted at an alarming level. The sword of Damocles of climate change hanging over the head of the entire human race gives legitimacy to the fact that capitalism and communism are not equipped enough to fight this menace. Hence, it is the need of the hour to adopt a more pragmatic and judicious socioeconomic system that can not only cater to contemporary challenges but also be free of inherent flaws of both capitalism and communism.
In a nutshell, nations struggle to find a balance between the virtues of individual liberty and the imperatives of social equity. The divergence between capitalism and communism reflects deeper ideological differences regarding the role of the individual, the state, and the market in organising economic activity. While capitalism promotes private ownership as a driver of innovation and prosperity, communism advocates for collective ownership in pursuit of social equity and justice. Ultimately, the discourse between these two socio-political systems continues to shape the economic and political landscape of the modern world.
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