CAPITALISM,SOCIALISM &

COMMUNISM

Shahbaz Aslam, Ph.D

 ECONOMIC ORDER
• The economic order is the institutionalized system for producing and distributing goods
and services.
• Economic activity is very important to sustain life. The principal means of production
that a society uses such as hunting,
• Horticulture, agriculture , industrialism strongly influences its culture and social
institutions.
• The most important concept in the economic activity is the ownership of property.

THE CONCEPT OF PROPERTY

• Property exist because sources are scarce.
• If they were all as unlimited and inexhaustible as the air, no body
want to claim ownership.
 COMMUNAL OWNERSHIP
• Property belongs to the community as a whole and maybe used
but not owned by the members.
• Found in pre-industrial societies.

PRIVATE OWNERSHIP
• Property belongs to specific individuals.
• Private property is recognized in all societies.

PUBLIC OWNERSHIP
• Property belongs to the state.
• A good deal of property in industrial societies (high ways,
hospitals, schools, etc.) is in publically ownership

The debate between the advocates of capitalism and socialism centers on the question of
weather the means of production and distribution should be privately or publically owned.
 CAPITALISM
Capitalism is an economic system where private entities own the factors of
production. The four factors are entrepreneurship, capital goods, natural resources,
and labor. The owners of capital goods, natural resources, and entrepreneurship
exercise control through companies. Individuals own their labor (Here capitalism
differs from slavery and feudalism, under which systems some individuals are entitled to
control, whether completely or partially, the labor power of others).

There are two essential ingredients of capitalism:

• The deliberate pursuit of personal profit.

• Free competition among byers and sellers of goods and services.

There is a class division between capitalists and workers, involving specific relations (e.g.,
whether of bargaining, conflict, or subordination) between those classes, and shaping the labor
market, the firm, and the broader political process
Free markets may not be perfect but they are probably the best way to organize an economy
 PILLARS OF CAPITALISM
• Private property, allows people to own tangible and intangible assets such as stocks and bonds;

• Self-interest, through which people act in pursuit of their own good, without regard for

sociopolitical pressure.

• Competition, through firms’ freedom to enter and exit markets, maximizes social welfare, that is,

the joint welfare of both producers and consumers;

• A market mechanism that determines prices in a decentralized manner through interactions

between buyers and sellers

• Freedom to choose with respect to consumption, production, and investment—dissatisfied

customers can buy different products, investors can pursue more lucrative ventures, workers can

leave their jobs for better pay; and

• Limited role of government, to protect the rights of private citizens and maintain an orderly

environment that facilitates proper functioning of markets.

LAISSEZ-FAIRE ECONOMIC
THEORY
 CRITICISM
• Anti-capitalists view capitalism as an inhuman, anti-democratic,
unsustainable, deeply exploitative system that must be dismantled.

• Karl Marx

• With climate crisis posing a grave threat to our collective future, millions
living below the poverty line, the economic and social shocks of the
coronavirus pandemic and unemployment wave still reverberating, and the
richest 1% accumulating ever-more wealth.
 EXAMPLES OF CAPITALISM
• The United States is one example of capitalism, but it doesn't rank among the 10 countries with
the freest markets, according to the Index of Economic Freedom for 2021. It bases its ranking on
nine variables, including​ a lack of corruption, low debt levels, and protection of property rights.

• The top 10 most capitalistic countries are:

• Singapore

• New Zealand

• Australia

• Switzerland

• Ireland

• Taiwan

• United Kingdom

• Estonia

• Canada

• Denmark
•
SOCIALISM
Socialism is best defined in contrast with capitalism, as socialism has arisen both as a critical

challenge to capitalism, and as a proposal for overcoming and replacing it.

• Socialists have deployed ideals and principles of equality, democracy, individual freedom,

self-realization, and community or solidarity.

• Like Marxism, modern socialism arose in the 19th century in response to the Industrial

Revolution

• In socialist economy, all means of production are in public ownership.

• Instead of the individualism encouraged by a capitalist system, it emphasized the "collective

good," or collectivism.

• Production is not for private profit.

• Competition among different firms producing similar products is a waste of resources.

• The means of distribution of wealth are in a public ownership to ensure that goods and

services flow to those who need them rather than only to those who can afford them.
 DEMOCRATIC SOCIALISM
• This system is practiced by nearly all the countries of Asia and Western
Europe.
• Under this system, the stat takes only the strategic industries and services
under the public ownerships.
• (Railways, airlines, mines, banks, electronic media, education, weapon etc.).
• Following Marx and Engels’ articulation of communist principles in 1848, the
socialist movement split into two broad factions. Adherents who still called
themselves socialists maintained their gradualist approach, while communists
urged more aggressive action.
 COMMUNISM
• Marx and Engels traced the inequality of their day to the Industrial Revolution that began in the 18th century,

arguing that the mechanization of production had exacerbated social inequality, dividing society into two classes:

• those who owned the means of production and possessed wealth (the bourgeoisie) and the workers who were at

their economic mercy (the proletariat).

• To address the problem, they prescribed a system in which the workers themselves "take the control of

industry and of all branches of production," along with the abolition of private property and "the

communal ownership of goods.

• Following the Russian revolution of 1917, Vladimir Lenin, leader of the victorious Bolsheviks, expanded on the

principles of Marxism, as did Lenin's eventual successor, Joseph Stalin. Their ideas evolved into Marxism-

Leninism, which rather than seeing the state wither away, called for rule by a single political party. That was the

system that governed the Soviet Union until its collapse in 1991.7

• Today, only five countries—China, Cuba, North Korea, Laos, and Vietnam—have communist governments,

although they may call themselves socialist or have socialist economies.8 Vietnam, for example, is the Socialist

Republic of Vietnam. In addition, a number of other nations have communist parties that participate in the

political process to varying degrees.

 COMMUNISM
• At its most basic, communism is a philosophy based on the equitable distribution of wealth

among a nation's citizens and common ownership of all property.

• In particular, it called for the control of the means of production, such as manufacturing and

agriculture, by the working class, or proletariat. Its ultimate goal was achieving a classless

society.

• As Carl Marx envisaged, the role of the stat would disappear, there would be an abundance

of good and services.

• People would no longer regard property as “private” and wealth and power would be share in

harmony by the community as a whole.

Contemporary communism is an offshoot of socialism and is sometimes called revolutionary

socialism for advocating the takeover of governmental powers by the working class through
revolution rather than incremental reform.
• People are paid according to their work but
under communism the individuals will
contribute according to their abilities and
receive to their needs.
 SOCIALISM VS. COMMUNISM
• Socialism and communism are both economic philosophies that advocate for public
ownership, particularly over the means of production and the distribution and exchange
of goods in a society. Both philosophies run contrary to free market capitalism, which,
they contend, exploits workers and creates a widening gap between rich and poor.

• There are differences between socialism and communism, however. Under communism, all
property is communally owned; private property doesn't exist. Under socialism,
individuals can still own private property. Also, Marx predicted that a violent worker
uprising against the middle and upper classes would bring about the communist state,
whereas socialists tend to seek change and reform without overthrowing the prevailing
social and political structure. And according to communist theory, workers should be
given what they need, while under socialist theory, they are to be compensated for
their level of contribution to the economy.
CAPITALISM, SOCIALISM, COMMUNISM, AND
FASCISM

Attribute Capitalism Socialism Communism Fascism

Factors of
production are Individuals Everyone Everyone Everyone
owned by:
Factors of
Usefulness to Usefulness to
production Profit Nation-building
people people
provide:
Allocation Supply and
Central plan Central plan Central plan
decided by: demand
Each gives
Market Ability Ability Value to the nation
according to:
Each receives
Wealth Contribution Need Value to the nation
according to:
INDUSTRIALISM AND MODERNIZATION
Modernization is the process of economic and social change that is
brought about by the introduction of the industrial mode of production
into a society

Only a few centuries ago, population consisted of a large number of

localized and isolated societies whose members lived on hunting, gathering,
horticulture, or agriculture.
The industrial revolution introduced an entirely new types of society.
Produced tremendous wealth but destroyed the traditional forms of social
organizations and created new ones in their places.
 THE SOCIAL EFFECTS OF MODERNIZATION

Family
The extended family system, found nearly in all traditional societies, is shattered.
The modern industrial society requires geographic and social mobility among its
members.
Education
Educational organizations take over many of the family’s earlier socialization
functions.
Education is extended to the mass because an industrial workforce must be skilled
and literate.
Religion

Traditional religious ties have been loosened and now the people interpret the world
through secular belief systems instead of religious principles.

Science

Technical efficiency becomes a value and people look to technology for the solutions of
their problems.

Politics

A strong centralized state emerges and it regulates more areas of social and economic life,

Urbanization

Cities grow rapidly because of Industry. Educational institutes, hospitals, and other
facilities are concentrated in urban areas and people are attracted by the job opportunities.
Demography

Modern medical facilities extended the population, which has reduced the death rate.

The adoption of family planning practices is low, therefore, demography have been
changed and the children ratio in population increasing day by day.

Social stratification

As industrialization proceeds, the growing wealth of society tends to be more equally

shared.

Personal Values

People became more change-oriented and they look to the future rather than to past.

Culture

Culture is no longer maintained and enacted in the small rural community becomes a
widely shared mass culture, spread from society to society by the mass media and
through travel.
 POWER
According to Max Weber, the ability to control the behavior of
others, even without their consent.

It may be derived many sources like wealth, status, prestige, or

organizational efficiency.
 TYPES OF AUTHORITY
According to Max Weber, there are there types of authority:

Traditional Authority,

Power is legitimated by ancient customs. The rulers exercise unwritten laws.

Chieftainship and Monarchies have always been based on this type of authority.

Claim to this authority is usually based on Birthright.

Legal –Rationale Authority

Power is legitimated by written rules and procedures that define the rights and
obligations of the rulers.

Charismatic Authority

Power is legitimated by the unusual, exceptional, or even supernatural qualities that that
people attribute to particular political, religious, and military leaders.

Hitler, Gandhi, Muhammad Ali Jinnah, Castro, Alexander the great.