Americans Need To Learn The Difference Between Socialism, Communism and Capitalism


Socialism is, “a range of economic and social systems characterized by social ownership and democratic control of the means of production.  Although there are many varieties of socialism and there is no single definition encapsulating all of them, social ownership is the common element shared by its various forms.”

Communism is, “a social, political, and economic ideology and movement whose ultimate goal is the establishment of the communist society, which is a socioeconomic order structured upon the common ownership of the means of production and the absence of social classes, money, and the state.”

Capitalism is, “an economic system based on private ownership of the means of businesses and their operation for profit. Characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange, a price system, and competitive markets. In a capitalist market economy, decision-making and investment are determined by the owners of the factors of production in financial and capital markets, and prices and the distribution of goods are mainly determined by competition in the market.



Socialism basically amounts to cooperatively owned businesses. In its purest sense, it has nothing to do with government. You can appoint political leaders any way you want and still have an economy where the workers share ownership/profits of the business they work for. Though a government can be socialist if it dictates businesses must be jointly owned by the workers.

Americans tend to think socialism is the government giving away free stuff like healthcare, welfare, housing, and food to people who don’t work. Socialism isn’t giving away free stuff. It’s people getting a fair share in return for their work.

Having said that, countries like Spain, Italy, Australia, the UK and the Nordic countries have universal healthcare and call it socialized medicine. Hugo Chavez and other politicians who want to spend taxes on social services call themselves socialists. If everyone is going to start using the word “socialist” to mean getting stuff in return for paying taxes, then we can do that, but if that’s the case, then public roads and schools are socialist.

Getting stuff from the government in return for paying taxes looks like socialism because workers are getting a share of the pie, but it’s not really socialism unless everyone gets a fair share of the pie. When you work yourself to death your entire life, and all you get in return is a police state and a few free visits to the doctor’s office, you’re not getting your fair share. That’s not sharing ownership of anything. That’s just getting a negative return on investment.

In order for these services to be truly socialized, the workers would own the hospitals, welfare offices, and public utilities, etc., but in the real world, they’re just allowed to access them to a limited extent as determined by the government. They don’t own these organizations. They’re at the mercy of them.

In many cases, the government doesn’t own them either. The funding for socialized services often trickles down into the pockets of private businesses the government contracts their work out to. That’s not socialism. That’s subsidizing a capitalist economy. Ironically, Americans hate socialism, because it’s obvious that paying companies to give people free stuff is throwing money down a bottomless well. They’re right. It’s a recipe for bankruptcy, but that’s not because socialism doesn’t work. The root of the problem is capitalism.

The goal of capitalism isn’t to spread the wealth among the workers. The goal is for business owners to siphon as much money as possible by underpaying their workers and overcharging their customers. The guiding principle of capitalism is the law of the jungle: survival of the fittest. So when the government pays a company to provide a service, they get the lowest quality product at the highest possible price, and the price is always going up. This isn’t socialism. This is feeding yourself to the wolves.

It would be socialist if everyone paid 50% of their income to the government, and in return, they were given ownership of their own home, free food produced on government owned-land by government employees and bill-less utilities for life.




Americans use the words “socialism” and “communism” interchangeably. In reality, they’re not mutually exclusive. Communism includes socialism, but socialism can and does exist independently of communism. Socialism can be as small as a cooperatively owned grocery store. Communism takes socialism to the farthest extent possible: The people own the government, and the government owns everything. Plus, communism goes a thousand steps further to structure every aspect of the government around the philosophies of Karl Marx.

Of all the countries that have called themselves communist, none of them fully adopted all of Marx’s ideas. Blue collar workers never even came close to functionally owning the country’s infrastructure and sharing the profits of the nation’s labor equally. Russia, Cuba, China, and all the Eastern European countries that called themselves communist, were oligarchies or dictatorships that stole the fruits of the people’s labor and gave them barely enough to survive in return. Plus, they all contained pockets of capitalism, especially China. Any country that has miles and miles of sweatshops can’t be communist because slavery is the antithesis of communism.

The Soviet Union didn’t collapse because communism doesn’t work. It collapsed because Leninism and Stalinism don’t work. Nobody knows if communism works because it has never been tried. I’m not saying communism would have worked if anyone had executed Marx’s ideas exactly. I’m just saying, don’t point to failed, self-proclaimed communist states and say they prove communism is evil, especially if the only alternative you’re willing to offer is capitalism.


Picture of Joseph Stalin with the caption, "Implemented a dictatorship, called it 'communist.' Generations later, conservatives unable to correctly define 'communism.''"


Calling Barack Obama and Bernie Sanders communists is as ludicrous as calling China communist. Barack Obama gave trillions of dollars to predatory banks, crushed social outcry for economic reform, fed the industrial war complex and forced everyone to pay private health insurance companies for low-quality care. Barack Obama is the poster child for extreme capitalism.

Bernie Sanders wants to roll all the costs of medical care and education into the tax fund. If he does that by subsidizing private companies, he’s a capitalist too. If the services are completely government owned, that’s just a socialist island in an ocean of capitalism., which is barely enough to warrant calling Bernie Sanders a socialist, and it’s in a completely different ballpark than communism.



Americans love capitalism because they’ve been indoctrinated to since birth. Pro-capitalism propaganda is ubiquitous in American culture. It’s built into elementary school textbooks and children’s cartoons. American patriotism and capitalism-worship didn’t become staples of American culture organically. It was carefully crafted during the Cold War.

Every time a country like Vietnam became “communist” it would stop selling its goods to America, and more importantly, America couldn’t sell their goods to them, buy up their natural resources, or use their workers as outsourced slave labor. The more countries that became communist, the more money American businesses lost. If communism spread to America, business owners would lose all their money. CEOs couldn’t allow that to happen, but they couldn’t tell the American people the real reason they feared communism because poor people wouldn’t fight for the profits of big corporations. So the government and the big businesses convinced the people communism is just evil, and fighting it amounted to fighting for freedom and economic opportunities for everyone.

In theory, capitalism should provide opportunities for everyone, but America arguably doesn’t even have a capitalist economy. In a capitalist economy, every business competes on an equal playing field, but the American laws strangle small businesses into bankruptcy and subsidize big businesses.



Even without laws that favor the rich, American business can’t afford to pay their workers a living wage or charge their customers fair prices. Business owners have to be as sociopathic as possible to compete in America’s cut-throat market. Perhaps greed and sociopathy are so ingrained in human nature that capitalism needs regulations to work. If that’s the case then capitalism, let alone libertarianism, is as doomed as Stalinism.

Millions of Americans consider it heresy and treason to question the preeminence of capitalism, but it can’t be evil to criticize an economic system. Economies are just tools we’ve created to accomplish a common goal: create an environment out of anarchy that helps everyone survive, fulfill their potential and enjoy life.

Capitalism, communism, and socialism could all work when done efficiently. They could work in conjunction with each other. Every inch of the earth doesn’t need to have the same kind of economy, and everyone doesn’t need to be equal, but everyone deserves the bare minimum of food, water, shelter, healthcare, and utilities.

The only way the masses will ever secure that is if they cooperate. We can’t fight our way to utopia. We have to work together. In order to do that we need to stop dividing the world into “us and them,” and we need to stop demonizing the enemy and focus on uncovering our own flaws.  If we each objectively analyzed our economies and found logical solutions to the problem of poverty, we’d all end up with systems that work.

We could speed up the process If we all just stopped being evil of our own volition. Then we wouldn’t even need to design a new system. We’d just take care of each other and get on with our lives. Either way, we need a revolution in education before any political or economic revolution will work. As it stands, America can’t have this conversation because it doesn’t know what it’s talking about.


If you enjoyed this post, you’ll also like these:


Predatory Capitalism Creates Poverty
Socialism and Communism
The Life of the Rich
The Life of the Poor
Oppression in the Workplace
Success and Retirement
The Housing Market
Healthcare in America
The Stock Market
Fixing the Economy
My Tweets About Economics

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