Difference between Capitalism and Communism
Basis |
Capitalism |
Communism |
---|---|---|
Ideology |
It is an economic system that promotes a free market along with private ownership of factors of production. | It opposes capitalism, and the decision-making authority is held by a central unit which represents society. Under communism, wage labour, commodity production, and the market are all abandoned. |
Propounded by |
Capitalism was coined by Adam Smith. | Communism was propounded by Karl Marx. |
Ownership of Resources |
Private ownership of economic resources and no government intervention. | All economic resources are held publicly and controlled by the government. Individuals are not encouraged to hold personal property or assets. |
Planning Unit |
The economy is planned as per the functioning of the free markets and there is no involvement of government bodies. | The economic decisions are taken by a central unit which represents society at large and takes decisions that promote social welfare. |
Goal |
The concept of the free market economy was coined for profit maximisation. | The goal is to create social welfare and profit is not the guiding principle. |
Government Intervention |
Limited government intervention, is limited to protect society from fraud and crime. | The government is the decision-making authority and without government intervention, the economy won’t function. |
Competition |
Foster free and competitive markets that foster innovation and economic development which provides better offerings to society. | State-controlled markets lack this competition that spurs innovation and could hinder the future success of their nation. |
Example |
Hong-Kong | China |
Difference between Capitalism and Communism
Decision-making regarding production, trade, and industry lies in different hands under different conditions. There are generally two basic theories, namely Capitalism and Communism. Under Capitalism, decisions lie in the hands of private individuals with a motive of profit maximisation. Whereas under Communism, such decisions lie in the hands of central authority/government bodies, with a motive of social welfare.
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