Capitalism vs. Communism

Capitalism refers to the private ownership of the means of production, such as factories and businesses that are owned by private individuals and not by the government. These private owners make decisions about what to produce, how to produce and how much a product should coat.

Whereas communism is a type of economic system where there is absolutely no private ownership of production. Communism was started in the 19th century by Karl Marx who was outraged by the growing gap between the rich and the poor. Communism is based on principal meant to correct the problems caused by capitalism.

Marx was of the belief that private ownership encouraged greed and motivated people into competitions were not healthy and led to seriously consequences. The main goal of communism was to eliminate the gap between rich and the poor and bring economic equality.

Even though communism is an ideological concept it almost never works out practically and is criticized. The main reason for this is the full government ownership of factors of production, this eliminates free market. The laws of demand and supply does not set the price of the commodities, the government does. Hence there is a lack of knowledge about what is in demand and leads to either surplus or shortage of certain goods. This is some cases might lead to the formation of black-market trade as people begin to consider the government inefficient.

But then again how effective is capitalism when it leads to such a huge gap between the rich and the poor, when the labourer who help these rich industrialists in the production of goods don’t get enough wage, how effective is capitalism when there are homeless people and starving kids right next to big mansions. It is reasons like these which gives rise to the concept of mixed economy.