Before noting down the difference between communism, socialism, and capitalism one must be aware of the ideology each term represents. Understanding the point of view each term holds will become a part of their difference. Communism represents the social claim that aims to replace private property and a profit-based economy with public ownership and communal control of at least the major means of production. The main proponents of this theory were Karl Marx and Fredreich Engels. This theory represents equality and tends to balance the economic ladder.

The ideology holds criticisms as well as the praise of various scholars. For some, it is the ideal social order, while for others it represents anarchy and chaos. The opponents of this theory focus on the collapse of the Soviet Union, who tried their best to construct their economic and social order on the basis of communism.

However, the counterargument holds its basis on the fact that scholars and proponents of this theory believe that the Soviet Union did not implement the theory in proper and justified manner, turning the entire bureaucratic system increasingly authoritarian. Let’s turn to socialism. Socialism represents the utopian claim (because in my personal opinion socialism is impossible to achieve and there can never be an objective article) that the means of production including the machinery, tools and factories used to produce goods that aim to directly satisfy human needs.

In a purely socialist system, all production and distribution decisions are made by the collective, directed by a central planner or government body. Worker cooperatives, however, are also a form of socialized production. Socialist systems tend to have robust welfare systems and social safety nets so that individuals rely on the state. However, the resources are neither owned nor controlled by the state, rather all economic resources are equally shared by all the citizens as allocated by a democratically elected government.

To trace the origin of socialism one must look to the earliest human civilization, where tribal or clan-based societies would often work for the common good and work together to produce enough food and supplies for the entire population. However, this practice stopped with the establishment of the feudal society (a specific socio-economic condition that arose in Europe in the aftermath of the Roman Empire, where society was divided among three classes placed hierarchically- clergy, nobility and peasants).

However, the development of feudal society was not equal in every subcontinent. In India, there have been many debates whether the early medieval Indian society was a feudal society. Extensive work on this segment was done by notable scholars such as R.S.Sharma, Herman Kulke, Harbans Mukhia, etc. Socialism’s intellectual roots date back to Plato’s “Republic”, in which he described a collective society. Centuries later, Thomas More’s “Utopia” echoed similar ideas. But socialism was a direct response to the Industrial Revolution, filling the society with increasing poverty and alternatively making the industrialists grow wealthy.

Thus in this chaotic situation socialism emerged as an alternative, one that could improve life for the working class (proletariat). The most famous early socialist thinkers were Robert Owen and Henri de Saint-Simon, and later Karl Marx and Vladimir Lenin. It was primarily Lenin who expounded on the ideas of early socialists and helped bring socialist planning to the national level after the 1917 Bolshevik Revolution in Russia.

The Communist Manifesto of Karl Marx and Fredreich Engels; specified a “dictatorship of the proletariat”, a transitional stage Marx called socialism; represented communism as the final stage in which not only class division but even the organized state would be transcended. All this emerged in opposition to capitalism. Capitalism represents the economic system in which private individuals or businesses own capital goods. In this system the working class does not own the means of production but only uses them on behalf of the owners of capital.

The fluid working of a capitalist society depends on the supply and demand of the general market. The purest form of capitalism is free market or Laissez-faire capitalism. Here, private individuals are unrestrained. Investors are free from government intervention and they themselves determine where to invest, what to produce or sell, and at which prices to exchange goods and services. The Laissez-faire marketplace operates without checks and balances.  Scholars believe capitalism to be the cause of wealth disparities and social inequalities creating a struggle between the working class and the capitalist class. Unemployment is another issue that finds its roots in capitalism, because of unequal working conditions.

 First and foremost one must understand that communism socialism aims for equality and does away with the unequal social hierarchy. Thus in this sense these two terms can be used interchangeably. However the economic and political theories of these ideologies are not the same. The primary difference lies in the definition of what each ideology represents: in communism resources are owned and controlled by the state, while in socialism resources are equally shared by every citizen as allocated by a democratically elected government.

The key difference is: Under communism, the people are compensated or provided for based on their needs. In a pure communist society (it refers to an economic, political and social system in which most or all property and resources are collectively owned by a class-free society rather than by individual citizens), the government provides most or all food, clothing, housing and other necessities based on what it considers to be the needs of the people. Rather socialism is based on the premise that the people will be compensated based on their level of individual contribution to the economy; effort and innovation are thus rewarded under this form of ideology. Under communism production is intended to meet all basic human needs and is distributed to the people at no charge. Whereas, under socialism production is intended to meet individual and societal needs and distributed according to individual ability and contribution. These are the important differences which are visible between communism and socialism.

Communism and capitalism are two extreme socioeconomic theories representing two inherently opposing ways of thinking. The primary difference is regarding the ownership of means of production. Communism as previously described shuns private ownership, whereas capitalism believes in private ownership. It creates a situation where every individual will have to earn his/her worth. The major share of the profits earned from a business will go to the person who owns the means of production, while the workers who are responsible for running the business will get a small share.

In terms of individual freedom communism asks the individual to the society before themselves, while capitalism asks for the opposite. So, the polarity between two ideologies is ‘Individualism vs Social welfare’. Capitalism gives more importance to individual aspirations and appeals to the inherent selfish nature, which is inherent in all human beings. 

Socialism and capitalism similar to communism and capitalism represent two extreme and different socio-economic theories. It differs by their logical underpinnings of the structures of ownership and production. The key notable difference is that in socialism there are regulations to ensure maximum satisfaction of each individual, while capitalism wants to give more importance to initiatives which ensure maximum production.

Thus these are the differences between communism, socialism and capitalism. Each theory represents an extreme form of social order which finally led to the emergence of mixed economy.

For more information about the course please feel free to reach out Vishnu IAS Academy or Contact at 9000400939 / 8977500939 mail us at : contact@vishnuias.com