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Professor Ng Kenneth
Econ 160
04-18-2011
Capitalism verses Communism
There are many advantages and disadvantages to a communist or capitalistic society.
According to the American Heritage Dictionary, Capitalism is an economic system characterized
by freedom of the market with increasing concentration of the private and corporate ownership
of production and distribution means. Capitalism is an internally stable economic system, in that
it is consistent with human behavior. People understand that there is no such thing as a free
lunch. You have to work to survive and only the lucky who manage to prosper within the system
make it to the top. Capitalism is also externally stable, in that survival in a capitalistic system
requires innovation and flexibility to keep up with the changes in supply and demand.
Competition within the system also provides for many advantages. But sometimes under a
capitalistic system, those in power tend to construct rules that limit diversity and competition,
thereby weakening the flexibility and strength of the system as a whole. There are also many
imbalances in opportunity, which may disrupt the proper flow of the system.
Yet Communism is a system, which allows for everyone to be equal. Those that participate
benefit and those that don’t are left behind, creating an incentive to participate. Communism
requires common goals and agreed upon rules to allocate proper responsibilities and resources.
This usually leads to sharing, which builds stronger social communities, creating a stable
economy. But there are also many problems with this system. Communistic systems tend to
block out external cultures and exclude outside competition, weakening the system's ability to
learn from, or compete with external economies. Also large or geographically broad populations
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tend to be diverse, making it difficult to maintain a common goal or set of rules for shared effort
and resources.
By definition, Capitalism is an economic system controlled mainly by individuals and
private companies instead of by the government. In this system, individuals and companies own
and direct most of the resources used to produce goods and services, including land and other
natural resources labor, and “capital”. “Capital” includes factories and equipment and sometimes
the money used in businesses (Friedman, 5). Capitalism stresses private economic decisions.
People are free to decide how they will earn and spend their income. Companies may choose
which goods and services to produce and how much to charge for them. They also compete with
one another to sell products. Nations whose economies are based on capitalism include the
United States, Germany, Canada, and Japan. Although a private individual or group of
individuals may control their income and a large section of an economy, the government can
control some aspects of the economy in every nation. Capitalism is sometimes called Free
enterprise, despite its limits established by the government. Many organizations and businesses
flourish from the existence of capitalism. Non-profit organizations prosper from capitalism such
as: The Roman Catholic Church. Capitalism is a definite social justice issue. One reason why
people do not necessarily feel obligated to help others less fortunate than him or her is because
the economy focuses on individualism, which leads to greed and hoarding. Another reason why
capitalism is a social justice issue is that it deprives certain people of their human rights as well
as the dignity and respect that all humans deserve. As a result, we can ask ourselves, “are we
truly free?”
On Independence Day we commemorate the birth of America as a free nation. But even
more than that, we commemorate the birth of Americans as free men. At a single stroke, the
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Declaration of Independence and its ideas set America free from England, and set Americans
free from their own government. The Founding Fathers instituted America's government to
protect the freedom of its citizens, and to secure their rights to "Life, Liberty and the Pursuit of
Happiness." These rights were created to secure freedom of thought and action for all
Americans. Freedom of thought is the freedom of an individual to use his mind: to educate and
inform himself; to make his own judgments; to reach his own conclusions; to set his decisions; to
hold his beliefs; to choose the whole course of his life. Freedom of action is the freedom of an
individual to act on his own judgment: to pursue his/her values; to strive for his/her goals; to
work and to keep the product of his/her work; to associate and trade with others; to act for the
attainment of his/her inner happiness.
Many argue that Capitalism has many bad sides, for example unemployment. Under
welfare capitalism, a reserve pool of people is kept undereducated, under-skilled and
unemployed, largely along racial and gender lines, to exert pressure on those who are employed
and on organized labor. The employed pay for this knife that capitalism holds to their throats by
being taxed to fund welfare programs to maintain the unemployed and their children. In this way
the working class is divided against itself; those with jobs and those without are separated by
resentment and fear.
Today people understand that communism is another way of running a country. The true
theory behind Marxism is that everyone is equal; everyone would be fed, they would have health
care and every other necessity for a good, healthy life would be fulfilled. So, what is the
problem? Why are people so up in arms when the word “communism” is mentioned? A lot of the
tension has to do with the question of freedom and equality and their relation to one another.
Most right-wing philosophers believe that freedom and equality are not the same ideals – in fact,
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they suggest that they are conflicting. If you have freedom, you cannot have equality, and if you
have equality, you cannot have freedom. They also believe that “when freedom and equality
conflict, freedom should be preferred and equality should be rejected” (Cohen 1989). Leftists
wouldn’t agree with this statement. They would say that there isn’t conflict between the two –
freedom and equality – when they are conceived in a correct way. “Freedom should give way to
equality, since justice demands equality, and justice comes before all other political views”
(Cohen 1989).
In a communist society, while everyone may have equality in terms of living conditions,
the government plays more of a role in the decisions of the people. In a capitalist society, which
is characterized by freedom of the market, there is freedom and less interference from the
government. In a perfect world, a communist society would be a great place to live because one
would never have to fear for their jobs or where their next plate of food is coming from.
Everyone is paid the same and therefore nobody could feel superior to another human being;
however, many believe that communism comes at the expense of basic human rights.
Communism was ideal to many including to Karl Marx who was a German philosopher,
sociologist, historian, political economist, political theorist and revolutionary socialist. Many
found it ideal because it is “the genuine resolution of the conflict between man and man – the
true resolution of the strife between existence and essence…between freedom and necessity”
(Marx) Many people, even in capitalist societies, view communism as a noble idea or concept,
but they don’t believe that it can be carried out. For that to happen, there would have to be a
great change in the way people think – on a subconscious level, which many believe could never
happen. The idea of communism and the idea that it can really work would depend on human
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nature being completely altruistic; that is, our greatest concern would have to be with others, not
ourselves.
We live in a society where we put ourselves first and we strive to have more than others;
this is how we value our lives. Karl Marx had warned that this would soon happen. His idea was
we could eliminate the class system by giving everyone equal advantages. He was a person who
foresaw the future and he was a radical and this is what scares many capitalists so much. If we
give up all of our wealth how do we put value on our lives? While it would be ideal to live in a
society where people cared for one another, it would not be ideal to lose basic rights like freedom
of speech and freedom to choose political sides. So for now I would defiantly say that capitalism
is winning the battle between the two.
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Works Cited
Elster, Jon, and Karl Ove. Moene. Alternatives to Capitalism. Cambridge: Cambridge UP, 1989.
Print.
Freeman, James. "Why Communism Is Bad." News, Travel, Weather, Entertainment, Sports,
Technology, U.S. & World - USATODAY.com. 27 Apr. 2000. Web. 18 Apr. 2011.
<http://www.usatoday.com/news/opinion/columnists/freeman/ncjf71.htm>.
Friedman, Milton, and Rose D. Friedman. Capitalism and Freedom. Chicago: University of
Chicago, 2002. Print.
Marx, Karl, Friedrich Engels, Jones Gareth. Stedman, and Karl Marx. The Communist Manifesto.
New York: Penguin, 2006. Print.
Cohen, G.A. “Are freedom and equality compatible?” Alternatives to Capitalism (Studies in
Marxism and Social Theory). 1989.