Communism Vs. Capitalism: Comparative Analysis

Since the appearance of the human being, society has faced the biggest problem in history: how to satisfy human needs with the available resources. The key to the problem is that the needs are always unlimited because once a good is achieved, the next objective is to obtain another. However, all the population that inhabits the world depends on the resources that can be found on the planet, which are limited. The social science that studies the relationship and distribution between these two sides of the balance it is called economy.

An economic system is a set of economic factors that interact in a certain region. It is the structure resulting from the production, distribution and consumption of services and products. While the economy takes into consideration both needs and resources, the economic system only determines how these limited resources are distributed. Although the economy it was not considered a science until the XVIII century, different economic systems have taken place from the Prehistory era until today.

In the beginning, all economic activity was confined to agriculture, fishing and grazing. There was no money and all economic exchanges were made through barter, so our ancestors ignored what was a mortgage or a temporary employment agency. For centuries, the main roads of communication and trade were the rivers. The exchanges that were made were based on the surplus of the families, handmade products that were leftover. These constituted the main economic nuclei of the subsistence economies.

With the Egyptian, Greek and Roman cultures, in that order, the slave system constituted the basis of the economy. The main wealth came from the work of slaves in agriculture. The war was also considered, according to some Greek philosophers, a source of wealth, due to the supply of slaves and the cheap labor that was obtained after the conquests. During the Roman Empire, there was an increase in commercial activity, although it was not very efficient because all the goods were sent to Rome and, from there, redistributed to the ends of the ‘known world.’

With the collapse of the Roman Empire, there was a great backbone of economic activity. The concept of a protective empire with well-defined borders collapsed and the peasants, the main generators of wealth, moved to the nearest castle to protect themselves from hordes of invaders and looters. Each feudal lord protected a certain number of vassals who worked the lands. In exchange for protection, they gave an annual amount of their harvest to the Lord and the church. This was what was known as a tithe, equivalent to one-tenth of the harvest. During this time, trade was limited to certain annual fairs where artisanal items were bought and sold.

At the end of the feudal period, a new form of wealth production began to emerge, different from everything known until then (agriculture, livestock, fishing and conquest) and based on the contribution of a certainly added value to the goods. It was the guild of craftsmen, precursors of the factories. At this stage, the rich had to purge their privileged status by giving alms (charity) and charging interest was considered blasphemous.

As the times advanced and the invading hordes reduced their flow, the cities began to grow outside the walls, and the circulation of the currency, the bill of exchange and the promissory notes began. With this, being rich was not frowned upon because if work dignifies, wealth, as a product of work, was equally worthy. A new social class arises among the peasants, the nobility and the clergy: the bourgeoisie, assisted by trade. With all these changes, charging interest ceases to be a taboo. It is understood that the borrower runs the risk of not being returned the money so that the interest is understood as compensation to said risk. In addition, the person who lends money cannot use it in anything else either, so the collection of interest is legitimized once more by what is known as ‘loss of earnings’.

In 1776, the economist and philosopher Adam Smith published his book “The Wealth of Nations” where he describes the development of a new economic system: Capitalism. The main idea of this economic system is explained in the beginning of the book where he mentions that the private interest of some men have created a more powerful economy. A part from the private ownership of the means of production, the capitalist system is also characterized by the free market concept where an invisible hand controls the equilibrium between supply and demand, separating the government power of the economy. Since this moment the rich becomes richer and the poor poorer.

All the workers that were employees in factories lived under horrible conditions. The popular movement started to rebel against capitalism and a new economic system called communism was developed by Karl Marx. Marx is to communism what Smith is to capitalism. In his book “Das Kapital, a Critique of Political Economy” criticizes the injustices that the capitalist system have created and argues that the equally spread of wealth through all the citizens of a society is the most fair economic system. Everything was based on centralized planning, the supremacy of the common good and the state over the individual. The theory worked well on paper but failed on one of its basic pillars: the human being and his altruism towards his fellow men. Thus, communism is a utopia and probably, this economic system will disappear soon.

As mentioned in the previous paragraph, the main idea of the communist system is to make all the citizens economically equal. There is no distinction between races or nationalities, each person has a job where he or she gives their earnings to the state which has the duty of spreading the wealth through the society given the same salary to everybody. For instance, a farmer who works sixty hours a day and produces twenty tones will be paid the same quantity as other farmers who works half as him. With this method the class struggle would be dissolved, the main objective of Marx’s theories. But is this completely true?

It is true that the three levels of class division disappear but not all citizens are equal. A new leadership group is created around the head of the communist system. This group will have full privileges and will never suffer economically. Nevertheless, the rest of the population can die of famine or do not have enough money to buy a coat for winter. Important positions inside the communist party, the state police or the family of the government president, are some examples of people who would be included.

The economic system of the communist states has collapsed during history on several occasions but to understand the complicity of the process it is required to analyze the case of the Union of Soviets Socialist Republics which disappeared after sixty-nine years of communist regime. The origin dates back to 1917 when the Bolshevik revolution overthrew Tsar Nicholas II and established a socialist state in territories that had belonged to the Russian Empire. In 1922, after Russia joined the most distant republics, the gigantic USSR was officially formed, whose first leader was the revolutionary Marxist Vladimir Lenin. Of course, governing such a complex and diverse state was extremely difficult. Although in its origins the USSR tried to be a democratic society after leaving behind the era of tsarist autocracy, the bloc ended up choosing the path of authoritarianism, which was consolidated with the coming to power of José Stalin, in the middle of the decade of 1920.

The Soviet constitution adopted in the 1930s and modified in the 1970s established that regions and nationalities would be represented in a sort of parliament known as the Supreme Soviet. But in practice, all the decisions, including the election of the leader of the USSR, were in the hands of the Communist Party and, more precisely as mentioned before, of a small group of powerful leaders, the Plitburó. With Stalin, the State began to control every aspect of political, economic and social life. Those who opposed their measures were arrested and sent to labour camps (the ‘Gulags’) or executed. In everyday life, some 290 million Soviets felt oppressed and oblivious to the decisions that had a strong impact on their existence. After Stalin’s death in 1953, Soviet leaders denounced the brutality of their policies, but the Communist Party continued to dictate the country’s fate.

The authoritarianism and centralization of the Soviet Union led to an endless bureaucracy, which extended its tentacles to all corners of the territory and all aspects of life. Documents, seals, identification procedures and notes for everything were required. Centralization and bureaucracy impacted, in turn, the economic system. At the base of the Soviet Union was Karl Marx’s idea of the socialization of the means of production, distribution and exchange. This meant that the economy of this enormous country was directed by means of the so-called five-year plans, which established goals for each and every one of the productive activities. The labor force, which reached 150 million in the decline of the Soviet Union, was largely devoted to industry and much less to agriculture. Stalin had faced a strong process of industrialization, and the main sectors were oil, steel, chemicals, wood, mining, food processing, automotive, aerospace, electronics, telecommunications and defense. However, the Soviet Union lost the bid for economic hegemony with the United States. The Gross Domestic Product (GDP) of the Communist bloc was US $ 2.6 trillion at the end of the 1980s, barely half of what its Western rival achieved. The democratization and liberalization in the last section of the USSR allowed people to express their frustration assuming the end of the most lasting communist regime in history.