Bio: Charles Chung, originally from Hong Kong, is a student at NYU studying Economics, Business and Data Science. He is interested in the financial world and how technology such as blockchain and cryptocurrencies may shape it in the near future.
Much of our twenty-first century world operates under capitalism, an economic system in which private individuals or businesses own capital goods. Products are exchanged over a free market, where firms decide what to produce using the inputs and factors of production they own. Businesses engage in cutthroat competition, driving down prices and producing unique goods to attract customers and generate large profits. However, to optimize profits, some corporations will exploit resources and cheap labour to sell more and reduce costs. This leads society to become excessively money-focused, seeing people as tools and resources to be taken advantage of. Karl Marx, co-author of The Communist Manifesto, supports this, writing: “The bourgeoisie has torn away from the family its sentimental veil, and has reduced the family relation to a mere money relation” (Marx 1848). On top of this, the competition forces companies to hire the best of the best, making the job market feel like a zero-sum game, where individuals must push each other down in order to reach the top and succeed. All of this comes together to form our current toxic individualistic culture, turning people within the same communities against each other rather than respecting one another as members of the human race.
The sense of community and cooperation seen in socialist and communist philosophies are aspects capitalism should learn from. In collectivist systems, ownership of capital goods is placed with the public. The government is in full control of the economy and determines the best way to allocate resources and jobs to the people. In a way, people work using ‘borrowed’ resources from the government to contribute back to society. This fosters a sense of cooperation and community, as everyone’s work is essential to keep the country running efficiently; the efforts of every member are thus valuable at all times. The idea of competition within the community is also nullified because everyone is working toward the common goal of progress and better living standards. Yet in a large country, there is not much preventing individuals from shirking and procrastination. This is where the differences between Marx’s communism and socialism come into play.
Although socialism and communism work similarly in the sense that capital goods are publicly owned, the difference lies in how private property is viewed. During the Enlightenment period, Jean-Jacques Rousseau suggested that private property was derived from one of two sources of inequality. In his Discourse on Inequality, Rousseau writes: “From the time they noticed that it was useful for one man alone to have provisions for two, equality disappeared, property was introduced, work became necessary” (Rousseau 1755). Rousseau is critical of private property because he believes humans are equal by nature and that it is the evil of private property that has revealed the greed within humans. Marx’s communistic theory takes this perspective literally and forbids private property, with a phrase in the Manifesto stating that the “theory of the Communists may be summed up in the single sentence: Abolition of private property” (Marx 1848). On the other hand, socialism allows and encourages property, as “socialism is based on the premise that people will be compensated based on their level of individual contribution to the economy” (Longley 2021). People should be rewarded for their efforts each day; the intangible feeling of societal contribution within a communist system may not feel worthwhile to justify getting up in the morning to carry out one's responsibilities.
While preserving the main characteristics of socialism, such as public ownership of goods and a command economy, an ideal system factors in human needs and happiness. The system should therefore introduce capitalism in the form of private property, providing a constant incentive for improvement as well as the freedom of choice--all the while promoting a sense of community among society.
Marx, Karl and Engels, Frederick. Manifesto of the Community Party. 1848.
Rousseau, Jean-Jacques. Discourse on the Origin and the Foundations of Inequality Among Men. 1754.
Longley, Robert. "The Differences Between Communism and Socialism." ThoughtCo, Feb. 2, 2021, thoughtco.com/difference-between-communism-and-socialism-195448.