Communism, Socialism and Capitalism

 

Welcome to class! 

In today’s class, we will be talking about communism, socialism and capitalism. Enjoy the class!

Communism, Socialism and Capitalism

Communism, Socialism and Capitalism classnotes.ng

Communism

Communism may be defined as a political and economic system in which the community through the common ownership collectively controls all the means of production of goods and services, exchange and distribution.

Karl Marx [1818 – 1883], a German philosopher and economist, writes that communism can be achieved if the state’s services and instruments of coercion and repression cease to exist.  The slogan of communism is from “each according to his ability and to each according to his needs”.

Examples of countries that practice Communism are North Korea, China, and Cuba.

Characteristics of communism
  1. The state applies the use of force to achieve goals.
  2. Most communist states are one-party states.
  3. Economic planning is highly centralized.
  4. The community through common ownership controls all the means of production.
  5. Production activities are meant for common purposes
  6. Class distinction in the system is discouraged.
  7. There is an equal distribution of the nation’s wealth among citizens.
  8. Communism arose as an attack on the evils of industrialization.
  9. Most communist leaders are dictators

Above were not just characteristics but a few advantages and disadvantages spelt out.  Some others could include

  1. The vision of a leader is easily and quickly materialized.
  2. It provides additional educational opportunities to the general public.
  3. It creates stronger social communities.
Demerits
  1. The government owns everything including property, businesses and production means.
  2. There is no freedom of speech.
  3. Central planning is difficult to achieve in this type of government.
  4. Efficiency and productivity are usually low since there is little or no motivation for workers.
  5. The needs of consumers are not important in a communism government.
  6. There are strict rules in place that govern the structure of a classless society.
  7. It is a government structure that comes with high handedness.

Socialism

It is a system where the production and distribution of goods and services are a shared responsibility of a group of people.  It is based on open political/economic theories that advocate collectivism.  In such states where this is practised, there is no privately owned property.  Examples of countries that practice socialism include Tanzania, India and Algeria.

Characteristics of socialism
  1. Public ownership: the means of production and distribution are owned, controlled and regulated by the public either through the states or cooperatives.
  2. Economic planning: unlike in a capitalist economy, the socialist economy is not driven by demand and supply.
  3. Egalitarian society: socialism rose to solve the problems of inequality.
  4. Provision of basic needs: in socialist economies, basic human needs like food, shelter, employment are provided by the government without any discrimination.
  5. No competition: the state focuses on only necessities thus, reducing the choices for the individuals in the society.
  6. Price control: because all means of production are controlled by the government, no competition as well, the government simply gives prices especially to consumer good
  7. Social welfare: socialism seeks to shield the working class from any form of exploitation.
Advantages
  1. Production in this economy is based on needs thereby reducing waste.
  2. It does not allow inequality.
  3. Decision making is fast since resources and planning are centralized.
  4. Socialist states exhibit stable economies.
  5. Minimal exploitation and class struggles.
Disadvantages
  1. No suitable basis of cost calculation: while in a capitalist society pricing is determined by market forces, socialist societies on the other hand market forces are not at play since the means of production are owned by the government who are also the owner of the business.
  2. Lack of incentives: socialism is really against amassing wealth for yourself, there is a tendency for individuals to feel less motivated since no incentives can be given.
  3. Lack of economic freedom: while a capitalist economy gives room for choices in both products and prices, a socialist economy doesn’t it is a take-it or leave-it situation in a socialist society.
Differences between communism and socialism

 

S/No Communism Socialism
1 From each according to his ability, to each according to his needs. From each according to his ability to each according to his contribution.
2 All economic resources are publicly owned and controlled by the government. Individuals hold no  personal property or assets Individuals own personal property but all industrial and production capacity is communally owned and managed by a democratically elected government
3 Production is intended to meet all basic human needs and is distributed to the people at no charge. Production is intended to meet individual and societal needs and distributed according to individual ability and contribution
4 Class does not exist Classes exist
5 Religion is not supported Freedom of religion is allowed

Capitalism

An economic and political system where a country’s trade and industries are controlled by private owners for profit instead of by the state. Characteristics central to capitalism include private property, capital accumulation, wage labour, voluntary exchange, a price system and a competitive market.  It must also be noted that the production of goods and services in this system of government always bow to the forces of demand and supply.  Examples of countries that practice capitalism include Canada, Switzerland, Singapore and the United States of America.

Advantages of capitalism
  1. Consumer choice: means that individuals choose what to consume and these choices lead to more competition and better products and services.
  2. The efficiency of economics: good and services produced based on demand and such help to cut cost and avoid waste.
  3. Economic growth and expansion: this increases the gross national products and leads to improved living standards.
Disadvantages of capitalism
  1. The chance of monopoly of power: when one person has the powers to produce a certain product, there is the possibility of abusing the powers by pricing such products beyond the reach of ordinary individuals.
  2. Inequality and social division: because wealth in this system allows just particular persons to own it, wealth can not be spread and class is grossly allowed.
  3. Recession and unemployment: an economy based on a market of consumers and producers is invariably going to experience growth and decline.
Evaluation

For the following countries, match from the 3 economic and political theories discussed this week the one which fits.

  1. Nigeria
  2. The United Kingdom
  3. Germany
  4. France and
  5. South Africa.

 

In our next class, we will be talking about the Types and Characteristics of Government.  We hope you enjoyed the class.

Should you any further question, feel free to ask in the comment section below and trust us to respond as soon as possible.

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