Socialism Vs Communism Differences and Similarities

The socialism vs communism essay is aimed at making comparisons and contrasts on the two economic systems. In this article, we will explain in detail the similarities and differences that exist between socialism and communism. For a better understanding of socialism vs communism, we will explain the two economic systems (socialism and communism) as well as their advantages and disadvantages.

Socialism 

What is socialism?

Socialism is an economic system in which the government is in full ownership and control of trade and industry. In essence, it is the government that owns and controls all means of production. The economic system is after basic societal needs, it is not based on self-interest. Competition does not have a place in this system due to the focus on basic societal needs. So in essence, this system is for the good of society, everyone. A major characteristic is that the government has full control over the economy. Another name for socialism is a centrally planned economy.

Theoretically, the socialist economy is classless. Most economies are neither pure capitalists nor pure socialists. The classless economic feature of socialism is not totally fulfilled.

Who is a socialist?

A socialist is someone who advocates for or supports the idea of socialism. Socialists believe that in society, everything comes about through the cooperative efforts of the state through the help of citizens and the people of the economy.

In essence, a pure socialist economy permits no private ownership and control of legal production. The government is in charge of all legal productions and distribution. That means the government makes all economic decisions. Even if socialism permits private ownership, individuals may possess just little property. By implication, no individual has the right to own large means of production such as companies and factories. This feature of the direct opposite of capitalism.

Socialism is a centrally planned economy, it is the government that provides answers to the basic economic problems in society. They make decisions pertaining to the prices of goods and services which they should charge.

The rule of engagement here is that all individuals receive an in their efforts or contributions according to their ability. For this reason, individuals in this economy work very hard. As the description of this economic system works for the good of everyone, the implication is that the government takes care of those that do not have the ability to contribute to economic development. This category of people includes the aged, children, disabled, less privileged, etc.

Socialist countries

Examples of socialist countries include;

• Soviet Union
• Cuba
• China
• Venezuela
• Vietnam
• Syria
• Venezuela
• Zambia
• Belarus
• Turkmenistan
• Laos

Socialism pros and cons

1. Advantages of socialism

Absence of exploitation

This economic system does not give any room for exploitation. That means the government makes sure that nobody exploits another. So each individual will receive and contribute according to their potentials/abilities. The government guarantees access to everyone’s basic needs. Those that cannot contribute especially the disabled have the privilege to enjoy this access. The good thing about it is that it is a mechanism for reducing the poverty level in an economy. Everyone enjoys equal rights to health facilities and other social welfare.

Minimize poverty

As a result of the fact that people who cannot contribute also enjoy certain access to basic needs helps to minimize poverty. In essence, minimizing poverty comes as a result of the fact that everyone is equal. So everyone has equal rights to social welfare.

Rejection of discrimination

Because everyone has equal rights, this system does not approve of any form of discrimination. Everyone can do what they are best at with higher pay for those jobs that no one is available to do but yet needs to be done.

Encourages selflessness and social welfare

This economic system is not based on selfish interest, the focus is on the needs of society. Capitalism bases on consumers’ purchasing power which makes the poor to be worse off. Socialism on the other hand works towards preventing such things from happening. Socialism tends to be selfless, carrying out products based on the people’s basic needs and necessities. In essence, the system places more priority on the people’s needs. The citizens have no cause to worry about what happens tomorrow. This factor tends to lead to an increase in productivity.

In this system, the government makes provision for a conducive working environment. This aims at reducing the risks that are peculiar to the jobs, and this also provides a comfortable working condition for them. That is, the government is responsible for any accident that occurs in the course of a job operation.

Reduced hidden taxes

Hidden taxes are those taxes on consumer goods that describes the incidence of taxation. This is a case in which firms transfer their taxes to consumers without their knowledge. More weight of the tax burden rests on the final consumer. So, a real socialist economy does not have taxes. This is because the government is in possession of everything and pays allowances to the people.

Social justice

There are lots of benefits and advantages attached to social justice. This is because the system reduces inequalities thereby easing equitable distribution of national income. Everyone has the right to enjoy their own share of the national wealth and equal opportunities. This facilitates the elimination of consumer exploitation. In simple terms, equal distribution of wealth and income is present.

Rapid and balanced economic development

The centrally planned nature of this economic system makes the state make prompt plans and decisions with regard to the allocation of resources. So, the plan tends to foster efficient use and utilization of resources which helps to minimize wastage. his leads to rapid economic growth. The development of the USSR in the early years is a typical example.

We can say that the system eases balanced economic growth and development. It also means that an imbalance in focusing on development is minimal. That is, the central planners will not focus on some aspects of development while leaving others behind. So, economic growth and development in various areas are commensurate.

Minimal exploitation and class conflict

One of the major aims of socialism is to create a classless society that fosters equality for every individual. A situation in which the rich will exploit the poor does not exist in this case. No discrimination and no favoritism but this can only happen if the government is transparent. Everyone is equal in the economy. This, in turn, helps to eliminate any form of class struggles that is common in the capitalist economic system.

2. Disadvantages of socialism

Over-dependence

When people are over-dependent on corporate pooling for things to be done is a big disadvantage. Such an economy expects everyone to be cooperating constantly without any form of competition. In this system, competitive individuals are seen as the cause of social catastrophe for their self-interests.

It kills innovation

Because competition is absent here, people do not have the incentives to be innovative. Competitors and business ventures do not have any reward for competing. This tends to amount to the production of sub-standard products.

No choices and freedom

Socialism makes no provision choices to the people in terms of the products to purchase as well as the brands like capitalism do. Due to the monopolistic nature of this system, people face coercion to buy a particular product at a particular price. Also, the system takes away people’s freedom of enterprise and free choice of occupation. The central planning committee assigns jobs to workers. With this, no worker has the right to change his job without the government’s consent.

Lack of incentives

A typical socialist economy should not have taxes levied on people. But here, higher progressive taxation tends to cause disincentives to work harder or set up businesses. In such cases, entrepreneurs have this feeling that the government is taking a high proportion of their profits. As a result of this, some people avoid risks and migrate to other countries instead. Extra efforts will not constitute an added advantage as the system kicks against individual wealth accumulation. This negatively affects the incentive to hard work and innovation.

Government failure

Though the idea is that the government will succeed in regulating all sectors of the economy. Government intervention may be prone to government failure and inefficient resource allocation. For instance, the regulation of the labor market such as minimizing or maximizing the working period can lead to unemployment. This can amount to a lack of flexibility. Also, a corrupt government will only jeopardize the economy. Due to the high rate of government regulation on firms, it discourages investment and this lowers economic growth and development.

No suitable basis for calculating cost

Under capitalism, market forces (demand and supply) determine the cost of production as well as the subsequent prices of commodities. Under socialism, this is not the case. The government owns and controls everything, that is the role of an entrepreneur. This means that the means of production do not have a market price. So because of this, there is no suitable basis for calculating the cost of production as well as the price of goods and services.

Most times, people use socialism and communism interchangeably but they do not mean the same thing. The two terms are distinct from each other, not the same philosophy. The reason for this confusion is that both socialism and communism seek to establish a classless society where everyone has equal opportunities. Also, both systems have to do with the public ownership of capital or productive resources as well as the contribution based on one’s ability. These features mentioned above made the two terms look like the same thing.

Communism

Communism refers to a social and economic system in which the community owns and controls the trade and industry of a country. Each individual’s share greatly depends on their ability and needs. In essence, the state owns and controls all means of production and distribution as well as properties. Everyone contributes or produces according to his ability and resource allocation is according to their needs. Like socialism, communism is a classless economic system where everyone is regarded as equal. The entire community owns and controls all means of production and properties. In essence, it is all about communal ownership and control of factors of production rather than individual ownership.

Who is a communist?

A communist is someone who believes that the challenges of an economy are not a result of capitalism, not the individuals’ faults. It can also mean a person who believes that the solutions to economic depressions, inflation, poverty, etc. lie in the establishment of socialism. A communist is someone who believes in total equality, that is people having equal rights and opportunities regardless of tribe, religion, nationality, or race. A communist also means a person who believes in, advocates for, or supports communism.

Communist countries

Communist countries that exist in the world include;

• China
• Cuba
• Laos
• Vietnam (Socialist Republic of Vietnam)
• North Korea (Democratic People’s Republic of Korea)

Communism pros and cons

1) Advantages of communism

Equality

Communism helps to cover up the gap that exists between the rich and the poor. This is a result of the fact that the system creates a classless society and economy. Most countries of the world have a very wide gap between the rich and the poor. This makes it so obvious that only a minority group of people are able to gather almost all the wealth while the general public or the masses possess little and almost nothing. It makes the whole thing look unfair and this calls for bridging this wide gap.

One of the possible ways to narrow this gap is to introduce the idea of communism. In this economy, individuals can own almost nothing. This implies that the wealthy will have to lose their wealth while the masses will enjoy the benefits of wealth distribution.

Food and medical supply assured

The system guarantees food supply, medical facilities, and other infrastructure to the masses. In an event of a health emergency, there is no cause to worry about because medical facilities are assured. Also, there is no cause to worry about the issue of hunger because the system has assured food supply. This happens so because the state is totally in charge of all production processes. With this, the system helps to protect the local population against health challenges and hunger. This tends to enable the government to expand its production which eases optimal distribution of food supply and health facilities. With this, the masses will be able to survive.

Enhancement of the education infrastructure

Here, the government is in total control of all education facilities. They are responsible for funding educational institutions which assures a high level of education. As a result of this, people who have low-income opportunities will also have the privilege to access adequate education. So, a higher level of educational equality is possible through communism.

Investments in infrastructure

Because the ownership of private property is almost non-existent, the government is responsible for maintaining and expanding infrastructural facilities within the locality. Of course, this greatly benefits the general public. In this case, the government places more consideration on important projects that they should achieve within a short period of time. It is true that most infrastructural facilities gear towards benefiting the majority of the local population, that is the masses instead of just small interest groups.

Greater priority on social goals

This economic system prioritizes more on social goals than that of few people. The system places more importance on social benefits and welfare than on personal interests. There is absolutely nothing like lobbying when it comes to the issue of political decisions for the benefit of just a few people. Under this economy, the government makes sure that general public benefits are in place. That is, communism tends to be a great means of presenting the needs of the masses and avoiding lobbying in political decisions.

Lower unemployment rates

Every individual is meant to contribute their own share to the benefit of the masses. So this implies that no single individual is unemployed. So this means that virtually everyone has the ability to contribute positively in their own unique ways. With this, everyone remains busy and contributes immensely towards improving the overall standard of living within a country.

Overall safety level improvement

As the state has full control over production and employment, it also has the power to improve the overall level of safety and security in a country. For example, the government may decide to waive certain benefits for an individual who goes against the laws. It can as well engage such a person in jobs that do not have a conducive and favorable atmosphere. This strategy helps to discourage violations of the law.

Avoidance of corporate monopolies

Higher tendencies of corporate monopolies exist in the free-market economy. This is a result of the low level of regulations on the economy and politics. These monopolies are usually harmful to an economy and the general public due to the high prices of goods and services. This monopoly also means losing social welfare. Communism is an important tool for preventing this unfavorable circumstance. This, in turn, helps to increase social welfare by lowering the prices of products and services.

Minimal discrimination

Communism is basically characterized by a classless society where every single person enjoys equal opportunities. This helps in minimizing the problem of discrimination against some groups of persons. The impact of this is that it helps ease the opportunity to succeed and have access to proper education. In turn, the system increases the chances of minority groups in different areas of life.

In other words, every single person has similar opportunities to achieve success in life. That is, even those with disabilities and handicaps will not lag behind because communism helps to provide more opportunities for a better and comfortable life for them.

2) Disadvantages of communism

Free market malfunctioning

One disadvantage of the communist economy is that the free market can no longer function properly. In the free-market economy, the forces of supply and demand are the major determinants of prices. The reverse is the case in the communist economy. The government is in full control of prices as well as determines the price to charge for a product and service.

Though communism pursues general/social welfare, when the forces of the free market stop working, it can lead to a serious economic welfare loss. This is an effect that usually happens in the long run and this lowers the efficiency of a country’s production processes.

Inefficient spending

In this system, the government tends to be inefficient in spending funds. That is, the government will always spend in a wasteful manner. In this case, they spend money on unnecessary projects. In actual terms, government projects are usually more expensive compared to private companies. This means that the government has a higher chance of spending the money of taxpayers in an inefficient manner.

Sovereign default

The emergence of communism can amount to sovereign defaults. This is absolutely not sustainable in the long run. Too many frictions will result in this case. Inefficient government spending will cause the state to run into bankruptcy in the future.

Currency problems

Economies that operate under communism usually have currencies that are weak and unstable. This makes institutional investors lose their trust in such currencies. Instead of buying these currencies, they sell them. Also, the local population also loses trust in their own currency. Such economies have problems with their currencies which make them try exchanging these currencies. They do this in order to protect themselves against currency depreciation.

Communism may deter international investors

It is very difficult for institutional investors to invest in communist economies because private individuals own almost nothing. Most times, private corporations, sole proprietorships, partnerships, and private limited liability companies do not exist. So, there is almost no place for foreign investors to invest. These investors are scared of the deprivation of their private assets for public use. This usually amounts to a low rate of the overall private investment. Of course, no one wants to lose his wealth. As a result of this, serious problems arise. It may be impossible for the government to run important projects due to poor financial opportunities.

Difficulties in wealth accumulation

People under this economy find it almost impossible to accumulate wealth as the system does not permit private ownership of assets. Even working for longer hours does not make them better off. This makes people pay less attention to saving since they cannot acquire wealth. This will result in biased consumption decisions. In turn, it will hurt the overall welfare of a country in the long run.

Lack of incentives

The system makes people get demotivated to work hard. This is due to the fact that the system does not provide a forum for individual wealth accumulation. People do not put in their best. The effect of this, in the long run, is a massive loss of working power. Of course, no one wants to use his full potential to hard work as there is no reward for putting in the extra effort.

Confinement of overall freedom

Communism is a system that greatly confines individual freedom. Generally, there is no freedom to choose an occupation. The state determines job vacancies for people. This means that the system forces people to work in certain places in a lifetime. Individuals must work in those areas even if they are not interested in such jobs. Another area in which the system confines freedom is the freedom of speech. The government may imprison people for airing out their opinion especially when it goes contrary to the decisions of the government.

Self-fulfillment difficulty

Self-fulfillment is very difficult for people under the communist economy. This is so because one can rarely do the things he desires to do. The rule under this system is that one should only do those things that will benefit the community as well as the government. The point here clarifies that pursuing individual interests contradicts the goals of the community. People under this economy face so many deprivations of their self-interests.

A narrow view of the world

Under this economy, people usually have a narrow perspective about life and the world. The current political regime forces people to behave in a specific manner. There is no room for people to question things. Children grow in that doctrine and this causes them to reject other lifestyles. So, this builds a myopic thought in the minds of individuals.

Poor international trade relationships

The nature of communism tends to make other countries lose interest in trading with communist countries. This happens as a result of the conflicts in values as well as lack of trust in such administration. in turn, communist countries suffer as a result of a lack of international trade thereby reducing a country’s economic power.

Migration

As a result of many restrictions, many individuals thrive to migrate to other countries. This migration leads to a significant decrease in such countries. This will also lead to a corresponding decrease in the country’s overall GDP and other economic problems.

Information handicap

There is usually a restriction on information flows because the government controls virtually all media channels. As a result of this, people only receive information that is only sustainable to the current government administration. This means that information that is harmful to the political leaders is usually not available to the general public. The effect of withholding information is that people will not have a clear understanding of what life generally is. This polarizes the perspective people have about the world.

General public manipulation

When the flow of information is biased, it becomes easier for the government to manipulate the people. Through the mass media, the government suggests certain actions to individuals. One thing is that these actions do not favor the masses, it only favors the government. The motive behind which the government manipulates people is to sustain the current regime.

Dictatorship

Government control over everything in a communist economy amounts to excessive levels of power. This leads to dictatorship because they can do anything they wish. Too much power has so many negative impacts on an economy. Those in authority can do whatever they feel like doing because they feel they have the right to do anything. This excessive level of power can amount to unfair political outcomes in the long run.

Slow technological progress

Communism has the negative effect of slowing down technological progress. Usually, private investment is absent in communist economies and there is no room for expansion. The overall technology experiences limitations because the financial capacity is low. Countries operating under this system will actually lose their competitive edge over capitalist countries. This, in turn, weakens the country’s economic position.

Socialism vs communism

Socialism vs communism similarities

• Central planning
• Collective ownership/Control and ownership
• Classless society
• Social welfare
• Non-exploitation
• Concentration of power
• No profit motive

Central planning

Both socialism and communism possess a notable feature of central planning. In both economic systems, all economic activities are centrally planned. It is the central planners that make decisions with regard to what to produce, at what quantity, for whom to produce, when to produce, and efficiency in the use of resources. So central planning is a common similarity between socialism vs communism. That is, the two economies are both centrally planned.

Collective ownership/Ownership and control

Another feature that makes the two economic systems look similar is collective ownership. That is all productive assets, factories, heavy machinery, public transportation facilities, etc are owned collectively. The only area of difference between socialism and communism is that in socialism, the state owns and controls all these means of production while in the case of communism, it is the entire community that owns them.

Meanwhile, both systems do not approve of private ownership and control of the means of production. The government is in full control here.

Classless society

The two economic systems have a classless society. Everyone is equal, classes do not exist. Because of this, class conflicts and struggles are absent. Both socialism and communism aim at bridging the gap that exists between the rich and the poor. Also, they aim at curtailing discrimination. In other words, both socialism and communism are equalitarian societies.

Social welfare

Both economic systems are not based on selfish interests but focus on the needs of society. They try to carry out production processes based on the basic needs and necessities of the people. So, their priority is on the needs of the people such as social security and social justice. By doing this, the systems help in reducing inequalities among different categories of people.

Non-exploitation

The government employs all citizens so there is no permission for private ownership of factories as well as other factors of production. Because of this, no one will be able to exploit another as it is possible in the capitalist economy. The abuse of monopoly power is absent under socialism and communism.

Concentration of power

All economic and political power is concentrated in the hands of a single authority, that is one existing political party. Leaders under such economies tend to be very powerful. In other words, the concentration of power in a single authority amounts to a very strong political power or excess power.

No profit motive

The profit motive is absent under socialism and communism. As a result of this, workers tend to lose their personal motivation. Wealth accumulation is almost absent as the government controls everything. Also, putting in extra effort to work harder yields no reward. This in turn causes people under these systems to lose incentives to be more creative and innovative.

Differences between socialism and communism

Socialism vs communism chart

The socialism vs communism comparison chart summarizes the differences between the two economic systems.

Authority

Under socialism, the central authority is in total control of the economy, it is a liberal system. The central authority is elected by the people and that gives the people a say in running the economy. On the other hand, communism is more authoritative in nature. This means that the people have no say when it comes to the running of the economy.

Political system

Can coexist alongside various political systems. In most cases, most socialists agitate for participatory democracy/social democracy/parliamentary democracy. On the other hand, communism is a stateless and classless society. The people directly govern the economy. Well, practically, this achievement has never been successful. The system is totalitarian in nature and it possesses a central party governing society. In simple terms, socialism is more flexible than communism. This also means that communism is more authoritative and dictatorial in nature.

Ideas

Under socialism, every individual should be able to access basic articles of consumption as well as public goods to provide room for self-actualization. Large-scale industries are collective efforts and their returns must be of benefit to society as well. On the other hand, communism suggests that everyone is equal which makes classes become senseless. Government has to own all means of production. everyone has to work for the government and let the distribution of this collective output be equal.

Social structure

Socialism diminishes class distinctions but does not totally eliminate them. The system achieves the derivation of more status from political distinctions rather than class distinctions with some mobility. Communism on the other hand eliminates all forms of class distinctions. Everyone owns all means of production, they also own their employees. The basic structure of communism is communal ownership of factors of production and other assets such as housing.

Religion

Socialism facilitates the freedom of religion though it usually promotes secularism. Communism on the other hand abolishes religion, that is, the system rejects all religion and metaphysics. Communists agreed that religion was a drug and spiritual booze. They proposed that religion should be combated. Also, they suggested the practice of atheism and forcefully overthrow every social condition that exists. This is not the case in socialism.

Philosophy

The philosophy of socialism is that everyone is to contribute according to his ability and each individual is to receive according to his contribution. Under communism, everyone is to contribute according to his ability but receive according to his needs.

Economic coordination

Planned socialism is principally dependent on planning to determine production and investment decisions. Market socialism is dependent on markets for the allocation of capital to different socially-owned enterprises. On the other hand, planning takes place in terms of physical units rather than money under communism. Economic planning coordinates every decision with regard to production, investment, and resource allocation.

Private property

The approach of property ownership also makes the two systems differ. Though under socialism, the government/state owns and controls all means of production, the system still allows individuals to enjoy ownership of personal properties. For example, an individual can own furniture but cannot own a furniture-producing factory.  Communism, on the other hand, everything is publicly owned but individuals only have the right to use these properties. The state still owns every property, this implies that there is no right to private ownership of property whether capital resources or not. This system looks like when one is living in a military barracks.

This implies that the state can assign a house for you to live in and a motor vehicle to use, but you do not personally own these properties. Going back to the example of a military barrack, when you leave these properties, the military will still be in control of the properties and assign them to another military personnel.

Discrimination

Socialism considers everyone equal and enacts necessary laws to protect people from all forms of discrimination. Also, there is tight control of immigration. Under communism, It is theoretical that every member is equal to one another.

Means of control

Under socialism, the means of control is through the usage of a government. Theoretically, in communist economies, there is no state control.

Economic system

Under socialism, public enterprises/cooperatives own means of production. The system compensates individuals based on individual contributions. Coordination of production can take place either through economic planning or markets. Under communism, it is the community that holds all means of production in common. This negates the concept of ownership of capital goods. The system organizes production such that it meets human needs without making use of money. The prediction of communism is based on the condition of material abundance.

Wealth distribution

Socialism gears towards the distribution of the wealth which the economy produced according to the productivity of each individual. The workers earn their wages and they have the right to spend on anything they want thereby encouraging them to work harder. Communism on the other hand distributes wealth to the people based on the assessment of the needs of individuals by the government. There is little or no incentive to be innovative as well as to achieve more. Because of this, communism usually possesses the attribute of low productivity, no advancement (or limited), and massive poverty.

Frequently asked questions

How is socialism different from communism?

One major difference between socialism and communism is that communism is more authoritative in nature than socialism. While communism totally abolishes religion, socialism does not. Under socialism, the distribution of wealth is based on the people’s ability and contribution while under communism, it is based on ability and needs. Socialism diminishes class distinction while communism eliminates it completely. While the ownership and control of means of production are government-based, under communism, it is communal ownership and control. A Socialist economy is a classless society while a communist economy is both stateless and classless. In essence, communism is an extreme form of socialism.

Which countries are socialists?

The following countries are socialist;

Soviet Union, Cuba, China, Venezuela, Vietnam, Syria, Venezuela, Zambia, Belarus, Turkmenistan, Laos, etc.

What’s bad about socialism?

Socialism is good because it reduces class distinctions and bridges the gap that exists between the rich and the poor. Out of many advantages, there are disadvantages attached to the economic system.

Competition is absent in this system. As a result of this, there is no incentive to be more creative and innovative. The system does not provide for choices to the people especially with regard to the purchase of commodities and their prices. There is no choice of occupation and there is no free enterprise. The government may fail especially in the aspect of resource allocation and regulation.

What is the difference between socialism and communism and capitalism?

While socialism and communism are centrally planned economies, capitalism is a free market economy. Socialism and communism are characterized by collective ownership of property. Capitalism on the other hand is characterized by private ownership of property, that is individuals possessing assets. Capitalist economies have class distinctions, no equality. Socialist and communist economies are classless societies. While socialism and communism gear towards social welfare, capitalists are after self-interest. There is no profit motive under the socialist and communist economies as the case is in the capitalist economies. Unlike capitalism, exploitation of consumers is absent under socialism and communism.