Capitalism vs Communism

CAPITALISM VS COMMUNISM

Contents
1.Capitalism
a. What is capitalism? b. Historical development of capitalism c. Features of capitalism d. Merits of capitalism e. Demerits of capitalism
2.Communism
a. What is communism? b. Historical background of communism c. Principels of communism d. Advantages of communism e. Disadvantages of communism
3.Comparision of capitalism and communism
4.Conclusion

CAPITALISM

a. What is capitalism?

Capitalism is now quite commonly used to describe the social system in which we live. It is also often assumed that it has exited, if not forever then for most of the human history. In fact capitalism is relatively new social system. We defined it as an economic system in which the means of production and distribution are privately owned and development is proportionate to the accumulation and reinvestment of profit gained in a free market. It is the system which how exists in all countries of the world. There is no consensus about the definition of capitalism among the economists, political economists, and historians the definition which I find from the business dictionary.com is that “economic system based (to a varying degree) on private ownership of the factors of production (capital, land, and labor) employed in generation of profits. It is synonymous with free market system”. According to Minsky capitalism is not just the market economy, but it is also a financial economy. Minsky states that there are two sets of prices, first is the prices of current output, and second consist of the prices of assets. Capitalism is different from many other economic ideas by the fact that capitalism gives individuals freedoms with minimal government interference. Economists usually put emphasis on the degree that government does not have control over markets (laissez faire) and on property rights while most political economists emphasize private property, power relations, wage labor and class. There is a general that capitalism entomic growth. The extent, to which different markets are “free” as well as the rules determining what may and may not be private property, is a matter of politics and policy and many states have what are termed “mixed economies”.

b. Historical Development of capitalism Capitalism is a difficult, problematic term; it applies to a diversity of phenomenon spread across disparate historical cultures with substantially variable world views. However, the term is an Enlightenment European term used to describe European practices; so the term “capitalism” means more than just a body of social practices; easily applied across geopolitical and historical distances, it is also a “ way of thinking does not necessarily apply to earlier European origins of capitalism or to capitalism as practiced in other cultures. The earliest form of capitalism is “mercantilism” which originated in Rome, the early middle Ages. Mercantilism is the period between sixteenth and eighteenth centuries. We defined it as the distribution of Goods in order to realize a profit. Goods are bought at one site for a certain price and moved to another site and sold at a higher price. It is basically a system for profit. Some scholars see mercantilism as the earliest stage of modern capitalism; others argue that modern capitalism did not emerge until later. For example Karl Polanyi, noted that Mercantilism, with its entire tendency toward commercialization, never attacked the safeguards which protected two basic elements of production labor and land from becoming the elements of commerce; thus mercantilist attitudes towards economic regulation were closer to feudalist attitudes “they disagree only on the methods of regulations”. As I already write this that mercantilism originated from Rome. It expanded throughout the Europe with the expansion of Roman Empire, most of the European economy became controlled by local feudal powers, and mercantilism collapsed there. It means after the collage of mercantilism the European Economies tend to localize. Arabic Cultures, on the other hand, had a long history of mercantilism, as they did on the trade routes between three great empires: Egypt, Persia, and later Byzantium. As lslam from the seventh century A.D. onwards spread like wildfire across Northern Africa, Spain, the Middle East and Asia, Arabic mercantilism assumed an unprecedented global character. The medieval Europeans essentially learned mercantilism from their Islamic neighbors, evidenced in large part by the number of economic terms in European languages that are derived from Arabic, such as tariff and traffic. From the 1300’s, Europeans would expanding their mercantile practices, resulting in a social mobility hitherto unseen in Europeans as it did the Muslims, to explore distant parts of globe. The voyages if discovery were entirely driven by mercantile ambitions. At the period from eighteenth century, the commercial statage of capitalism originated from the start of the British East India Company and the Dutch East India Company. These companies characterized by their colonial and expansionary powers given to them by nation states. During this era, merchants, who had traded under the previous stage of mercantilism, invested capital in the East India companies and other colonies seeking a return on investment. In this History of Economic Analysis. Austrian economist Joseph Schumpeter reduced mercantilism proposition to three main concerns: exchange controls, exports, monopolize and balance of trade. It was Adam smith who noticed that mercantilism was not a force of development and change, but a regressive system that was keeping the world from advancing. These ideas for a free market opened the world to capitalism. Smith idea was well timed for the world as the industrial revolution was just starting to cause tremors that world soon shake the world. It was becoming apparent that colonialism was not the gold mine that the European powers thought it would be. Fortunately a new gold mine was found in the mechanization of industry. As technology leaped ahead and the factories no longer had to built near waterways to function, industrialists began building in the cites where there were now thousands of people to supply ready labor. Industrial tycoons were the first people to amass their wealth in their lifetimes, out stripping both the landed hobbles and many of the money lending families. For the first time in history, common people could have hopes of becoming wealthy without being born it. The new money crowed was as rich as the old money crowd, but they had no interest in the status quo. They built more factories that required more labor while also producing more goods for people to purchase. In 1950, capitalism entered a new phase. Until then, poverty was a widely shared experience. People wanted more goods than the economy could provide Demand in other words, exceeded supply and we lived in what might be called shortage capitalism. We could also call it capitalism 1.0. In the period following WW ll. We shitted into surplus capitalism, or what I call capitalism 2.0.In this version, there’s no limit to what corporations can produce; their problem is finding buyers. A Sizeable make people want this unneeded output. And credit is lavishly extended so they can buy it. This historic shift can be described another way. A century ago, our chief scarcity was goods. It thus made since to sacrifice other things was masterful a at doing this.

Feature of capitalism:

Private Property:
i. In capitalism, people have the full right of their private property and this right is protected by the governments. They can use the means of production in any manner.
Price Mechanism: ii. In capitalism price is determined by the forces of demand and supply and it is the guiding principle of capitalism.
Freedom of Enterprise: iii. In capitalism every enterprise free to chose any kind of business. He can take independent decisions with regard to what, where, how and when to produce.
Competition:
iv. In capitalism freedom of enterprises lead to more and more competition, which ultimately results in efficiency of goods at low costs.
Profit Motive:
v. The only aim to start the business is to earn and maximize the profit in capitalism.
Soveraghity of consumer: vi. Under this economic system, consumer is sovereign consumer buys only those things which give maximum sat is fiction to them.
Labor as commodity: vii. In capitalism labor acts as a commodity and can be bought and sold like any other commodity in the labor market . in some cases exploitation of labour also takes place. Merits of capitalism:

1. Rich variety of goods and services
2. Proper use of Resources
3. Inducement to work
4. Efficient production
5. Increase in the standards of living
6. Automatic
7. Growth of Entrepreneurship
8. Economic freedom
Demerits of capitalism:

Unequal division of wealth
Class struggle
Exploitation of labor
Wasteful competition
Business fluctuations and unemployment
Disguard of public wealth
Lack of coordination

COMMUNISM

What is communism? Communist is social structure in which classes are abolished and property is commonly controlled as well as a philosophy and social movement that advocates and aims to create such a society. Karl Marks posited that communism would be the final stage in society, which would be achieved thorough a predation revolution and on only possible after a transitional stage develops the productive forces. Leading to a superabundance o foods and services . Communist can be defined as an economic and political system in which facts of production are collectively owned and directed by the state. In a perfect society, communism world be desired because no one would try to be better than anyone else. In communism everyone has a job and is paid the same unlike capitalism in a communistic society the government makes all the decisions for you. According to Lang the biggest advantage communism has compared to capitalism is job security, no one faces unemployment. Communism and capitalism may be completed opposite, but they both have similar ideas and that is helping their citizens. The definition which I fined from the Dictionary.com is that it is a system of social organization in which all economic and social activities are controlled by a totalitarian state dominated by single and self perpetuating political party. In Karl Mark manifesto, he describes the communist as the party that fights for tee interests of the working class.

Historical Background of communism:

Communism a branch of socialism, is a social system characterized by lack of private property the community as a whole owns the means of production and thus the profit is shared equally with everyone. In theory, labor would be divided up among all citizens according to ability and interest and resources would be distributed according to need there would be also be no rulers, no president, king or dictator. In 1848, the communist manifesto was published by Karl Marks and frank Engels, citing the principles and ideals of communism marks and Engels analyzed modern society especially the capitalist economy. Accordingly capitalism emphasizes the individual and claim to give equal opportunity for every person to succeed in life. Marks and Engels point out however that capitalism creates classes among the citizens and leads to the oppression and exploitation of lower classes. More specifically modern capitalism has created two classes bourgeois the owners of the means o production and the proletariat the labors. The communist supporter believed in declaring an open war to their opposition and this is evident from most popular has lines of the Manifesto. The communists disdain to conceal their views and ends can be attained only by the forcible overthrow o fall existing social conditions, let the ruling revolution. The proletarians’ have nothing to lose but their chains. The have a world to win. The history of communism has been marled by some significant events that have been discussed below.

The Russian Revolution (1917-1921)

The Russian Revolution also called Bolshevik Revolution or the October Revolution can be called as the first out burst of the unrest among the people against the growing economic divide. Basically, there were two revolutions in Russia in 1917. The first was the February Revolution, in which the monarchy of the ended the provisional government rose to power. The second was October revolution was replaced by the Bolshevik, who considered them to be the professional revolutions, led by Vladimir Lenin one of the prominent figures in history is known for his contributions to the history of Marxism-Leninism. Another revolutionary leader who has a crucial place in the history of communism is Joseph staling Stalin as a young revolutionary, supported the acts of Lenin and slowly gained his confidence. As Lenin saw great potential and power in Stalin’s personality, he appointed as head of many important organizations in the party. In October 1922, Lenin was admitted in hospital and slowly was succumbing to death due to poor health, Stalin gained enormous power in the party during this period, finally when Lenin died in 1924, and Joseph Stalin became the USSR leader. During the reign of staling the USSR was more of a dictatorship than communist. His tactics to modernize the country to a socialistic level called Stalinism, strictly suppressed any sign of autonomy, which were his personal ideas and were in no way related to true communism. Between 1645 and 1975 a number of communist nations to power were soon second only to the United States. Other countries followed the soviet path to communism, including Vietnam, North Korea, china and then cube, although china is also more of a dictatorship. The Soviet Union collapsed in 1991, due to the depletion of their economy for military resources during the cold war the soviet Republics broke of into independent notions and fell into a state of anarchy and in a last chance effort, converted to democracy. Boris Yeltsin took over the newly democratic Russia, which failed once again due to overprinting their money and Yeltsin’s dictatorial rule. Several countries are still communist including china and Cuba. Since communism is still in an infantile stage, the problems are still being smoothed out. Only the future will reveal whether communism is an unattainable theory of utopia or whether it is the next step for society.

Principles of communism:-

Here I write down the principles of communism from the communist manifesto of 1948: First: principle of communism from karl marks manifesto is the expropriation of landed property and the use of rent from land to cover state expenditure;
Second: A abolition of the right of inheritance;
Third: A high and progressively graded income tax;
Fourth: The confiscation of the property of all emigrants and rebels;
Fifth: The centralization of credit in the hands of state, by the establishment of a state bank with state capital and an exclusive monopoly;
Sixth: The centralization of transport in the hands of state;
Seventh: An increase in the state ownership of factories and instruments of production, and the redistribution and amelioration of agriculture land on a general plan;
Eighth: universal obli8gation to work and creation of labor armies especially for agriculture;
Ninth: The unification of agriculture with industrial labor and the gradual abolition o the differences between town an country;
Last: the public education of all children. Abolition of factory labor for children in its present form . Unification of education with economic production;

Advantages and disadvantages of communism:-

Advantages

Equality
No homelessness
No unemployment
No debt because of college loans
No greed
No head of state (more specifically in Leninism)
No worrying about starving
Strong since of nationality
Free and fast health care
No living from paycheck to paycheck
Disadvantages

Low liberty
No screwing over people for money
No gaining personal profit on others misfortune
No enjoying prosperity while others are begging on the streets
No owning large over expensive homes while people are jiving in cardboard shacks
No owning 5 cars while people don’t own a pair of shoes
No getting rich in the stock market over night
No eating at over expensive restaurants while others and jigging or financial status
No more gloating about how rich you are
No more buying out small companies and industry
No linger will 5% of the country’s population hold 95% of the wealth

Comparison of capitalism and communism:-

Capitalism and communism are the two main political philosophies to shaped collective life in the past century. Capitalism and communism has its own ideas on hw a government should urn, whether it’s through advancement of people. Capitalism and communism are two entirely divierse economic systems. Capitalism is an economic system characterized by freedom of market. Communism can be defined as an economic and political system in which facts of production are collectively owned and directed by the state. Both viewed as two opposing political and economic system. Now I defined the common differences between both. The first difference between them is related to Human development. Human development under communism was primarily concerned with the political and economic spheres of life under capitalism there is a pluralistic expression of personal freedom within a mass society.
But with no clear conception of potentialities This is the point which in favor of communist. It is the plus point of communism that it is work for the human development not behaves of selfishness like capitalism. Because capitalism internal to the individual freedom or development of a person not work polarity between two ideologies is individual vs. social welfare. 2nd difference between capitalism and communism is the individual freedom or liberty. Individual freedom or liberty under communism was limited by the primacy of the interests of states. Individuals have no right regarding private property in communism . Where in the capitalism it is the major benefit of individual that they have the right of their personal private property , the concept that people have the right and privilege to control their possessions as they wish. The role of government reflects the desires goals of its citizens in capitalism economy. This is the plus point of capitalism that it gave the individual freedom to the people to work for their own benefits. Capitalism also allows people to better themselves and their situation. Capitalism also allows people to ensure a better future for their offspring, should they have any , and to contribute surplus resources to organization that the believe in. To quote the old hack, it may not be ja perfect system, but it is the best one we have.

Another point of difference between capitalism and communism is regarding the ownership of means of production or resources in general.communism shuns individual ownership of land or any vital resources instead all the means of production like land and other resources should owned by the state. By the state here mean the whole community of people. All land and resources which enable the production of gods and services will be equal wages for all. All the decisions are taken will be according to what is good for all.

On the other hand, capitalism believes in private ownership of land and means of production Everyman will have to earn his woth. The major share of the profits earned from a business will go to the person who win the means of production , while the workers who are responsible for running the business will get a small share. This is the major bone of contention between the two ideologies ownership of means of production both are extreme ideas

Fourth difference between communism and capitalism is related to society communism advocates a classless. Egalitarian society, where all men and women are place on same footing. There will be no differences of class, race , religion or even nationality. This way there will be nothing to fight for. This is nice as an idea , but trying to implement this idea is tough and asking people to give up al the things that make them different, is unfair . every person is special and different in his own way. Capitalism promotes class distinction in fact creates the major class distinction of have and have-nots, the rich an the poor get poorer under pure capitalism, the rich class controls the means of production and welds power thereby impossible their own leas distinction and whims on the society. Adan smith and Friedrich Engels are two philosophers how contributed to the fram work for the two opposing economic system that main of a steady job workers seldom face unemployment.

Conclusion:-

For many years the united states as looked upon communism as an evil and must not spread to other countries . The cold war is a perfect example of this: spent 40 years in terror due to this way of thinking : understand that communism is not an evil just another way of organizing a country. Capitalism and communism has its own ideas on how a government should run, whether it’s through advancement of people. But if I see what is the better sys tem in both of them then capitalism is a much better economic system because you do not have the lack of restrictions compared to if you were a communist. There are so many more advantages for being a capitalist including being a communist including better working condition and more freedom, and who does not want more freedom?