SOCIALISM, CAPITALISM AND

COMMUNISM

SUBMITTED TO: MAAM SADIA ZAHEER

SUBMITTED BY: ESHAM BUTT
REG NO.: 160301026

DATE: 14-10-2019
Table of Contents
Introduction ..................................................................................................................................... 2

Socialism ......................................................................................................................................... 2

Communism .................................................................................................................................... 3

Communism in the world................................................................................................................ 4

Capitalism ....................................................................................................................................... 4

Difference Between Capitalism, Communism, and Socialism ....................................................... 4

Conclusion ...................................................................................................................................... 5

References ....................................................................................................................................... 7

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Introduction
The focus of this assignment is on the introduction to different concepts such as socialism,
communism, and capitalism. These concepts are very important in understanding the political and
economic systems in the world. A brief description of these concepts will be provided along with
the differences that they have with each other to easily distinguish between these three important
concepts.

Socialism
An economic system of society in which the factors of production are owned by every person in
the society equally is called Socialism. The acquirement of this ownership is through a government
that is elected through the democratic way. Socialism can be related to the public or cooperative
in which everyone owns a share of their own. There are four factors on which socialism depends
and these are described below.

 Entrepreneurship
 Labor
 Capital goods
 Natural resources

The main focus of using these factors is for the usefulness and betterment of people of that
particular organization. A person who is a socialist considers every aspect related to these factors
such as the needs of people on a greater social scale. The allocation of resources takes place with
the help of central planning as in the command economy. Different social needs are important to
be considered and those include education, defense, transportation, healthcare and most important
of all, preserving the natural resources. From the above discussion, it is quite clear that socialism
is related to equally provide all the social aspects and important social needs to every person of
society and allocating social resources equally as well to the people.

Socialism is an economic and social phenomenon that is related to the public ownership and
control of natural resources and properties. According to the ideas that socialist people follow
individuals work in the form of cooperation and not in isolation. Moreover, according to a socialist
point of view, everything that is produced by the people is in some sense a social product, and
everyone who has contributed to complete that product has a share in that product. So, it is quite

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clear that society, as a whole must control or own the property for the benefit of every member of
society.

The origin of socialism is related to the movement in politics which lies in the revolution of
industry. According to history, the origin of socialism is related to as far as the time of Moses.
Earlier communities of Christians also practiced the sharing of labor and goods which was one of
the simple forms of socialism and was followed by monasticism.

Communism
Communism is related to the economic and political doctrine which is aimed to replace the
property that is privately owned and an economy that is profit-based with public ownership and
control which is communal and major production means such as mills, mines, and factories along
with natural resources of society. Communism is kind of a higher as well as an advanced form of
socialism according to the people who believe in it. There are some differences between
communism and socialism which will be discussed in further sections but it can be said that
communism adheres to the revolutionary concept of socialism introduced by Karl Marx.

Communism, in other words, is a system of politics and economy that focuses on creating a
classless society and in which the big production means such as factories and mines are owned as

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well as controlled by public usually. There is no private currency, property or government and the
wealth that is earned is divided between the citizens equally or according to the needs of the
individual. The major influence on the idea of communism is Karl Marx who wrote a book named
The Communist Manifesto in 1848, moreover, others have also made contributions to this idea
afterward.

Communism in the world

Different countries in the world emphasize communism and populations live under a communist
government. Mostly republics of the Soviet Union focus on the concept of communism and the
countries that are working under the communist government are North Korea, China, Cuba, Laos,
and Vietnam. However, none of the above countries meet the true definition of communism.
However, they can be said to be in a transitional phase between capitalism and communism.

Capitalism
The concept of an economic system in which some private entities own the production factors is
called capitalism. The four factors of capitalism are entrepreneurship, natural resources, labor,
capital goods. Individuals who own the natural resources, entrepreneurship, and capital goods,
control the companies. Labors are owned by that individual. The only exception, in this case, is
the salary, where the labors of a person are owned by someone else. Although it is illegal in most
parts of the world, slavery is still practiced in various parts of the world.

There are two meanings of ownership in capitalism. The first one is that the owner controls the
production factor. Secondly, they derive income from ownership. Due to this, those individuals
can operate and run companies more efficiently. The aspect of capitalism also provides them with
the incentive of maximizing the profit. Due to this incentive, it is said by many capitalists that
greed is good in such cases. Incorporations, which focus on capitalism, owners are the
shareholders. The level of control of a particular individual depends on the shares that they own.
The board of directors is also elected by the shareholders as well.

Difference Between Capitalism, Communism, and Socialism

The difference between the three concepts can be identified by the help of the discussion above,
but to determine the difference, different categories of these concepts are described below.

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 Communism Capitalism Socialism
Ownership of The government owns Business is owned and The government owns
Business most of the business operated by and operates major
individuals industries while the
individual owns a
small business
Competition No competition. The Competition is Restricted in major
government owns and encouraged by market industries and
operates everything forces and government competition is
forces encouraged in small
business
Profit The income which is Individuals are free to Profit earned by small
in excess goes to the keep the profit that business is to be
departments of they earn and use them reinvested in the
government as they wish business
Availability of Limited choice of Consumers have a Consumers have some
product and services and goods for wide choice of choice of services and
price customers and prices services and goods goods
are usually high and the prices are
determined by demand
and supply
Options for Little choice in losing Unlimited choice of Some choice in careers
employment a career, most people careers and people usually
work for government- work in government
owned farms jobs.

Conclusion
From the discussion above, it can be concluded that at some aspects these concepts socialism,
communism, and capitalism, overlap a little, but each of them has a specific identity that must be

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considered to understand basic and advanced concepts of this phenomenon. In communism, there
are narrow opportunities to grow, while it is better in socialism and most of the choices are open
in the case of the capitalism system.

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References

[1] M. Dhar, "What Is Communism?," LiveScience, 2014. [Online]. Available:

https://www.livescience.com/42980-what-is-communism.html. [Accessed 2019].

[2] B. Caplan, "Communism," The Library of Economics and Liberty, 2015. [Online]. Available:
https://www.econlib.org/library/Enc/Communism.html. [Accessed 2019].

[3] R. Heilbroner, "Socialism," The Library of Economics and Liberty, 2016. [Online].
Available: https://www.econlib.org/library/Enc/Socialism.html. [Accessed 2019].

[4] K. Amadeo, "Socialism and Its Characteristics, Pros, Cons, Examples and Types," The
Balance , 2019. [Online]. Available: https://www.thebalance.com/socialism-types-pros-cons-
examples-3305592. [Accessed 2019].

[5] K. Kelly, "What “Capitalism” Is and How It Affects People," Teen Vogue, 2018. [Online].
Available: https://www.teenvogue.com/story/what-capitalism-is. [Accessed 2019].

[6] R. Hassen, "Capitalism," The Library of Economics and Liberty, 2018. [Online]. Available:
https://www.econlib.org/library/Enc/Capitalism.html. [Accessed 2019].

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