Economic Systems in the

World
Socialism and Communism

http://www.diffen.com/difference/Communism_vs_Socialism#

Summary of Previous Lecture

Economic systems in the world
Capitalism and its different forms
Advantages and disadvantages of capitalism
Comparison of capitalism with Islamic economic

system.

Learning outcomes
After this lecture you should be able to
Understand the characteristics of socialism
and communism
Analyze and evaluate which economic
system is superior among the major
economic systems in the world, i.e.
Capitalism, Socialism, Communism, and
Islamic economic system.

Characteristics of Socialism and

Communism
1.
2.
3.
4.
5.
6.
7.

Definition
Ideas
Philosophy
Religion
Economic Coordination
Economic System
Key Elements

Characteristics of Socialism and

Communism
8. Political Structure
9. Social Structure
10.Free Choices
11.Way of Change
12.Private Property
13.Ownership Structure
14.Discrimination
15.Means of Control

Definition
Communism

Socialism

A theory or system of social

organization based on the
holding of all property in
common, with actual
ownership ascribed to the
community or state.

A theory or system of social

organization based on the
holding of most property in
common, with actual
ownership ascribed to the
workers.

Ideas
Communism

Socialism

Human societies have

always been divided into
warring classes. The
Industrial Revolution has
enriched the wealthy and
impoverished the poor. The
workers must overthrow the
bourgeois.

All people should be given

an equal opportunity to
succeed. Workers should
have most say in their
factory's management. The
free market suffers from
problems like tragedy of the
commons. Government
regulation is necessary.

Philosophy
Communism

Socialism

From each according to his

ability, to each according to
his needs. Free-access to
the articles of consumption
is made possible by
advances in technology that
allow for super-abundance.

From each according to his

ability, to each according to
his contribution. Emphasis
on profit being distributed
among the society or
workforce in addition to
receiving a wage

Religion
Communism

Socialism

Abolished

Freedom of religion

Economic Coordination
Communism

Socialism

Government controls all

business, as well as
business decisions.

Planned-Socialism relies
principally on planning to
determine investment and
production decisions.
Planning may be centralized
or decentralized. Marketsocialism relies on markets
for allocating capital to
different socially-owned
enterprises.

Economic System
Communism

Socialism

Wealth redistributed so that

everyone in society is given
equal shares of the benefits
derived from labor. All
means of production are
controlled by the state.

Wealth redistributed so that

everyone in society is given
somewhat equal shares of
the benefits derived from
labor, but people can earn
more if they work harder.
Means of production are
controlled by the workers
themselves.

Key Elements
Communism

Socialism

An enhanced form of the

principle of Production for
use.

Economic activity and

production especially are
adjusted to meet human
needs and economic
demands. "Production for
use": useful goods and
services are produced
specifically for their
usefulness.

Political System
Communism

Socialism

No leader, directed directly

by the people. This has
never been actually
practiced, and has just used
a one-party system.

Multiple parties, but the

ruling party usually goes by
the name "Socialist.

Social Structure
Communism

Socialism

All class distinctions are

eliminated.

Class distinctions are

diminished

Free Choice
Communism

Socialism

In real communism, where a

leader does not exist,
everything is chosen freely.
In those that have been
practiced though, all
choices, including
education, religion,
employment and marriage,
are controlled by the state.

All choices, including

education, religion,
employment and marriage,
are up to the individual. All
health care and education is
provided fre.e to everybody

Way of Change
Communism

Socialism

Government in a
Communist-state is the
agent of change rather than
any market or desire on the
part of consumers. Change
by government can be swift
or slow, depending on
change in ideology or even
desire.

Workers in a Socialist-state
are the agent of change
rather than any market or
desire on the part of
consumers. Change by the
workers can be swift or
slow, depending on change
in ideology or even whim.

Private Property
Communism

Socialism

Abolished

Two kinds of property,

private property, such as
land, houses, clothing, etc.
owned by the individual.
Public property, factories,
and means of production
owned by the state but with
worker control.

Ownership Structure
Communism

Socialism

The means of production

are commonly-owned,
meaning no entity or
individual owns productive
property. Importance is
ascribed to "usership" over
"ownership".

The means of production

are socially-owned with the
surplus value produced
accruing to either all of
society (in Public-ownership
models) or to all the
employee-members of the
enterprise (in Cooperativeownership models).

Discrimination
Communism

Socialism

In theory, all members of the

state are considered equal.

The people are considered

equal, laws are made when
necessary to protect people
from discrimination.

Means of Control
Communism

Socialism

Proltariat engages in
violent rebellion.

Proletariat engages in
taking charge of the
factories and means of
production.

Estimated number of victims

Since these systems are not compatible with the human
nature so there was a fierce resistance from the public
particularly the capitalists, entrepreneurs, and farmers. In
his book The Black Book of Communism Stphane
Courtois claims that total death toll reaches 94 million during
its implementation. The breakdown of the number of deaths
given by Courtois is as follows:
65 million in the People's Republic of China
20 million in the Soviet Union
2 million in Cambodia
2 million in North Korea
1.7 million in Africa
1.5 million in Afghanistan

Estimated number of victims

1 million in the Communist states of Eastern Europe

1 million in Vietnam
150,000 in Latin America (mainly Cuba)
10,000 deaths "resulting from actions of the international
Communist movement and Communist parties not in
power."
Courtois claims that Communist regimes are responsible
for a greater number of deaths than any other political
ideal or movement, including Nazism. The statistics of
victims includes executions, famine, deaths resulting
from deportations, physical confinement, or
through forced labor.

Major Differences among the Systems

1. Liberty to Earn
Capitalism is a voluntary economic system where people trade in
a free market and earn product of their labor and can trade it
against the product of others labor. Unbridled liberty leads to so
many immoral activities that cause the destruction of the health,
moral values and economic conditions of the nations.
In Communism and socialism (to a large extent) the product of
peoples labor is confiscated by the state to distribute it equally
among the public. People have to lose their earning in a coercive
environment, e.g. many Ukrainian farmers were killed because
they tried to conceal the grains of their sustenance.
Islamic economic system allows individuals to operate in a free
market but all the activities should be Sharia Compliant.

Major Differences among the Systems

2. Liberty to own
Capitalism allows the people to own as much they can and
lust to accumulate more and more wealth leads towards
unfair means of earning and an imbalance is the
distribution of wealth.
Communism and socialism restrict the right of ownership,
in communism no individual has the right to own property.
Islam allows the people to own property as much they want
but with the unique concept that Allah is the owner of
everything; and holds the followers accountable regarding
the legality of property (Sharia compliance and also apply
obligatory taxes like Zakat and encourages Sadaqat).

Major Differences among the Systems

3. Distribution of wealth
Capitalism leads to unfair distribution of wealth (as
discussed in the previous lecture) which creates so many
social problems.
Socialism and communism claim equal distribution of
wealth which is against the laws of nature, as it will limit the
desire to work.
Islam allows the people to earn using Halal means and get
rich, also Islam allows the people to be poor and rich but
not to the extent that it create classes in the society.

Major Differences among the Systems

4. Reward of labor in Capitalism Socialism and
Islamic Economic System
Capitalism, Socialism and Islamic economic system
recognizes the hard work of the laborers by paying them
accordingly, where as communism doesnt recognize it.
Recognition and sense of achievement makes people more
productive and innovative.

Major Differences among the Systems

5. Innovativeness of the system
Freedom of production and marketing, sense of
achievement and recognition in Islamic economic system
and Capitalism result in more sophisticated, innovative and
useful products in the economy.
Socialism and Communism being controlled form of
economies where state determines what to produce, how
much to produce and for whom to produce, leads to
stagnation and low growth in the economy

Major Differences among the Systems

6. Social Structure
Socialism and Communism diminishes and eliminate the
class distinctions; Islam also doesnt believe in class
system rather sets the piety as the standard of being
respectable.
Capitalism on the other hand has created classes in the
societies based on the level of wealth people possess.

Major Differences among the Systems

7. Ways of Change
In Socialism and Communism governments and workers are
the agents of change and the even control the ideologies and
desires of the people.
In Capitalism free market would determine the change in
production, while government only regulates the business
practices.
Islam allows change through the forces of the market
provided that it doesnt go against the religious and moral
values of the society.

Major Differences among the Systems

8. Religion
Capitalism, Socialism, and Islam give the people right to
follow the religion.
Communism bans the religion, which is against the human
nature. Majority of the people in the world do have a
religion or want to follow the religion.

Summary of the Lecture

In todays lecture we discussed the following
1.characteristics of Socialism and communism,
such as their definition, ideas, economic system,
social structure, freedom of choice, ownership of
private property, and means of control etc.
2.A comparison of the major economic systems in
the world, i.e. Capitalism, Socialism, Communism,
and Islamic economic system.