The Differences Between Communism and Socialism

Young millworker in 1908
A young millworker in 1908; exploitative child labor was one of the ills of early capitalism.

Public Domain/Wikipedia Commons

The difference between communism and socialism is not conveniently clear-cut. The two terms are often used interchangeably, but these economic and political theories are not the same. Both communism and socialism arose from protests against the exploitation of the working class during the Industrial Revolution.

While applications of their economic and social policies vary, several modern countries—all ideologically opposed to capitalism—are perceived as either communist or socialist. In order to understand contemporary political debates, it's important to know the similarities and the differences between communism and socialism.

Communism vs. Socialism

In both communism and socialism, the people own the factors of economic production. The main difference is that under communism, most property and economic resources are owned and controlled by the state (rather than individual citizens); by contrast, under socialism, all citizens share equally in all economic resources as allocated by a democratically-elected government. This difference and others are outlined in the table below.

Communism vs. Socialism
Attribute  Communism Socialism
Basic Philosophy From each according to his ability, to each according to his needs. From each according to his ability, to each according to his contribution.
Economy Planned By  Central government Central government
Ownership of Economic Resources All economic resources are publicly owned and controlled by the government. Individuals hold no personal property or assets. Individuals own personal property but all industrial and production capacity is communally owned and managed by a democratically elected government.
Distribution of Economic Production  Production is intended to meet all basic human needs and is distributed to the people at no charge.  Production is intended to meet individual and societal needs and distributed according to individual ability and contribution.
Class Distinction  Class is abolished. The ability to earn more than other workers is almost nonexistent.  Classes exist but differences are diminished. It is possible for some people to earn more than others.
Religion Religion is effectively abolished. Freedom of religion is allowed. 

Key Similarities

Communism and socialism both grew out of grass-roots opposition to the exploitation of workers by wealthy businesses during the Industrial Revolution. Both assume that all goods and services will be produced by government-controlled institutions or collective organizations rather than by privately-owned businesses. In addition, the central government is mainly responsible for all aspects of economic planning, including matters of supply and demand.

Key Differences

Under communism, the people are compensated or provided for based on their needs. In a pure communist society, the government provides most or all food, clothing, housing and other necessities based on what it considers the needs of the people. Socialism is based on the premise the people will be compensated based on the level of their individual contribution to the economy. Effort and innovation are thus rewarded under socialism.

Pure Communism Definition

Pure communism is an economic, political, and social system in which most or all property and resources are collectively owned by a class-free society rather than by individual citizens. According to the theory developed by German philosopher, economist, and political theorist Karl Marx in his classic 1848 book, The Communist Manifesto,” pure communism results in a society in which all people are equal and there is no need for money or the accumulation of individual wealth. There is no private ownership of economic resources, with a central government controlling all facets of production. Economic output is distributed according to the needs of the people. Social friction between white and blue-collar workers and between rural and urban cultures will be eliminated, freeing each person to achieve his or her highest human potential.

Under pure communism, the central government provides the people with all basic necessitates, such as food, housing, education, and medical care, thus allowing the people to share equally from the benefits of collective labor. Free access to these necessities depends on constant advances in technology contributing to ever-greater production.

In 1875, Marx coined the phrase used to summarize communism, “From each according to his ability, to each according to his needs.”

Pure Socialism Definition

Pure socialism is an economic system under which each individual—through a democratically elected government—is given an equal share of the four factors or economic production: labor, entrepreneurship, capital goods, and natural resources. In essence, socialism is based on the assumption that all people naturally want to cooperate, but are restrained from doing so by the competitive nature of capitalism.

Socialism is an economic system where everyone in society equally owns the factors of production. The ownership is acquired through a democratically elected government. It could also be a cooperative or public corporation in which everyone owns shares. Again, the four factors of production under socialism are labor, entrepreneurship, capital goods, and natural resources. As in a command economy, the socialist government employs centralize planning to allocate resources based on both the needs of individuals and society as a whole. Economic output is distributed according to each individual’s ability and level of contribution.

In 1980, American author and sociologist Gregory Paul paid homage to Marx in coining the phrase commonly used to describe socialism, “From each according to his ability, to each according to his contribution.” 

What Is a Socialist Democracy?

Democratic socialism is an economic, social, and political ideology holding that while both the society and economy should be run democratically, they should be dedicated to meeting the needs of the people as a whole, rather than encouraging individual prosperity as in capitalism. Democratic socialists advocate the transition of society from capitalism to socialism through existing participatory democratic processes, rather than revolution as characterized by orthodox Marxism. Universally-used services, such as housing, utilities, mass transit, and health care are distributed by the government, while consumer goods are distributed by a capitalistic free market. 

The latter half of the 20th century saw the emergence of a more moderate version of socialist democracy advocating a mixture of socialist and capitalist control of all means of economic production supplemented by extensive social welfare programs to help provide the basic needs of the people.

What Is Green Socialism?

As a recent outgrowth of the environmental movement and the climate change debate, green socialism or “eco-socialism” places its economic emphasis on the maintenance and utilization of natural resources. This is achieved largely through government ownership of the largest, most resource consumptive corporations. The use of “green” resources, such as renewable energy, public transit, and locally sourced food is emphasized or mandated. Economic production focuses on meeting the basic needs of the people, rather than a wasteful excess of unneeded consumer goods. Green socialism often offers a guaranteed minimum livable income to all citizens regardless of their employment status.

Communist Countries

It is difficult to classify countries as being either communist or socialist. Several countries, while ruled by the Communist Party, declare themselves to be socialist states and employ many aspects of socialist economic and social policy. Three countries typically considered communist states—mainly due to their political structure—are Cuba, China, and North Korea.

China

The Communist Party of China owns and strictly controls all industry, which operates solely to generate profits for the government through its successful and growing export of consumer goods. Health care and primary through higher education are run by the government and provided free of charge to the people. However, housing and property development operate under a highly competitive capitalist system.

Cuba 

The Communist Party of Cuba owns and operates most industries, and most of the people work for the state. Government-controlled health care and primary through higher education are provided free. Housing is either free or heavily subsidized by the government.

North Korea

Ruled by the Communist Party until 1946, North Korea now operates under a “Socialist Constitution of the Democratic People's Republic of Korea.” However, the government owns and controls all farmland, workers, and food distribution channels. Today, the government provides universal health and education for all citizens. Private ownership of property is forbidden. Instead, the government grants people the right to government-owned and assigned homes.

Socialist Countries

Once again, most modern countries that identify themselves to be socialist may not strictly follow the economic or social systems associated with pure socialism. Instead, most countries generally considered socialist actually employ the policies of democratic socialism.

Norway, Sweden, and Denmark all employ similar predominantly socialist systems. The democratically chosen governments of all three countries provide free health care, education, and lifetime retirement income. As a result, however, their citizens pay some of the world’s highest taxes. All three countries also have highly successful capitalist sectors. With most of their needs provided by their governments, the people see little need to accumulate wealth. As a result, about 10% of the people hold more than 65 percent of each nation’s wealth.

Sources and Further Reference

Kallie Szczepanski contributed to this article.