Definition
Communism is a socioeconomic ideology and political movement that advocates for the establishment of a classless and stateless society where the means of production are owned and controlled by the community as a whole. In this system, wealth and property are distributed equally among the people, with the intention of preventing exploitation by eliminating unequal power dynamics. However, in reality, communism is often characterized by the centralization of power in the government and lack of individual freedoms.
Key Takeaways
- Communism is a socio-economic system where all property is publicly owned and each person works and is paid according to their abilities and needs.
- There is no private ownership in a communistic system, which means no individual or group can own productive resources. Wealth is distributed equally amongst the entire population, aiming to eliminate class struggle.
- Under communism, there can be no capitalist economy where individuals or businesses profit from their efforts; instead, everything is collectively owned and managed by the state or the public.
Importance
The finance term Communism is important because it represents a radical approach to wealth distribution and economic control.
As a social, political, and economic ideology, it promotes the collective ownership of the means of production and opposes individual profit and capitalist economic systems.
It argues for equal distribution of wealth among the community with the goal of achieving a classless, stateless, and oppression-free society.
This economic model can drastically influence the economic operations, investment plans, career opportunities, and overall quality of life of its citizens.
Understanding and studying Communism is essential for those who want to have a comprehensive understanding of various economic theories and systems.
Explanation
Communism is an economic ideology that aims to eliminate the societal issues brought by capitalism, such as income inequality, class struggles, and exploitation of workers. The purpose of communism is to create a classless society where wealth and property are publicly owned, and each person works and is paid according to their abilities and needs.
The fundamental principle behind communism is “from each according to their ability, to each according to their needs.”In communist societies, the government has a central role in managing the economy. It is responsible for planning and directing all economic activity.
This includes making key decisions about what is produced, how it’s produced, and who gets the output. Because the theory proposes that the means of production, like factories and land, are owned collectively by the community, it aims to ensure a more equitable distribution of resources and benefits among the population.
Ideally, this model should prevent concentration of wealth in few hands and promote socio-economic equality. In essence, communism is used as a tool to create a society free from exploitation and injustice.
Examples of Communism
Communism as a finance term aligns with the overall economic and political approach of sharing ownership of property and means of production. The philosophy aims at classless society where wealth is distributed according to the needs of individuals. Here are three real-world examples:
The Soviet Union (1922-1991): It was a federal socialist state that existed in northern Eurasia, applying principles of communism through state ownership of industries and central planning. The government controlled all aspects of economic production, and wealth generated was redistributed proportionately among the citizens as per perceived need.
The People’s Republic of China (1949-Present): While China has adopted certain capitalist measures in the 21st-century, it still identifies as a communist state. The Communist Party of China continues to control and direct economic production. It prioritizes state-owned enterprises and enforces the planned and socialist market economy.
Cuba (1965-Present): Cuba is another example of a modern communist state. Property and businesses are owned by the state and the profits are evenly distributed among the populace. Workers are employed by the state, which determines wages.It’s important to note that modern interpretations of communism often differ from the original intent, with governments typically maintaining significant if not total control over wealth distribution.
FAQ: Communism
What is Communism?
Communism is a political and economic ideology where all property is publicly owned, and each person works and is paid according to their abilities and needs. Central to this theory is the elimination of class struggle and the creation of a society where wealth is shared equally.
How does Communism affect the economy?
In a communist system, the government owns and controls all means of production. There is no private ownership or capitalistic competition. Economic decisions are made by central authorities, often leading to a planned economy. This can lead to efficiencies in resource allocation but can stifle innovation and entrepreneurship.
Has Communism been successful in any country?
Socialist ideologies, such as communism, have been implemented in various forms in different countries like China, Russia (formerly Soviet Union), and Cuba. While these countries have seen some success under these principles, it’s important to note that absolute communism, in its theoretical definition, has not been achieved fully in any country. The success of communism in these countries is a subject of ongoing debate.
How does Communism differ from Capitalism?
Communism and Capitalism are regarded as two opposing political and economic models. While Communism advocates for complete public ownership and a classless society, Capitalism is based on private ownership and free-market competition. Wealth distribution in capitalism is determined by free-market dynamics, while in communism it is centrally planned and equally divided.
Is Communism the same as Socialism?
While Communism and Socialism both advocate for the means of production, distribution, and exchange to be owned or regulated by the community, they are not the same. Socialism is a range of economic and social systems characterized by social ownership, whereas Communism is a specific stage of socialism that follows after the proletariat has overthrown the bourgeoisie.
Related Entrepreneurship Terms
- Marxism
- Planned Economy
- Proletariat
- Public Ownership
- Social Equality
