The Advantages and Disadvantages of Capitalism and Communism

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Capitalism or Communism, which side you are on? It is either black or white, you cannot choose both nor you can be in the middle. Pick your side. Well, I will try to help you with your answer. An answer to such question will require stepping in the shoes of the other side and making the argument a such. It is not America versus the Soviet Union; it is a school of thought. Adam Smith or Karl Marx? In the following paragraphs, we will look into the historical creation of the systems then the advantages and disadvantages of the systems. In my arguments, I will refer to central planning as communism and free market as capitalism, although some may argue that socialism is central planning as well. My response to that is socialism is a hybrid between both, thus we cannon explicitly associate any of these labels with it. I also will not distinguish between the advantages and disadvantages of both systems, rather I will only account the advantages since advantages for one system is a disadvantage to the other.

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First, Capitalism started before Communism as a reaction to the industrial revolution in Europe, when capital started to accumulate in the hands of few who controlled the economy and pushed the industrial revolution further in a profit-driven economy. This system has been implemented in the west ever since, but recently being challenged by socialism. In the 1800s, intellectualism grew and the best example of that is Karl Marx, who argued that capitalism will turn into socialism then eventually communism. Vladimir Lenin followed this line of thinking; thus, it was implemented in the former USSR.

The advantages of capitalism (disadvantages of communism) are the following:

  1. Consumer control: because the economy produces whatever in demand.
  2. Intrapreneurship: as in the case of Andrei in My Perestroiks.
  3. Avoids market collapse, as seen in the last days of the Soviet Union when stores were closed for not having supplies.
  4. A competition that creates a verity of choices and prices.
  5. Less inflation; as was the case when the inflation in Russia went from 20-30% in 1992-1993 to 10-15% in the early 2000s.
  6. Efficiency, as the workers in the USSR, did not produce as much as Americans. These are the main advantages of capitalism, now let’s look at the opposite.

The argument for communism could be made in a simple question; are free-market societies free? As we saw in the transformation of Russia from communist to capitalist, John M. Thompson stated that on the high road to capitalism: “small elite seized control of many enterprises and natural recourses,” which created oligarchy. This exact premise was what drove Karl Marx to introduce Elite Managerial framework in the study of power and politics. In the case of Russia, the same elite group that controlled the economy before is the same group that took control of various industries; thus, the power structure is still the same. Now we look at the advantages of communism. The controlled gap between the rich and the poor as everything was owned by the state. 2) People did not have to worry about their everyday needs; such as food, education, and work as they were completely covered by the government. 3) It promotes huge economic advances, as was apparent in the early days of Lenin.

Increase in education, as around 98% of the former Union citizens knew how to read and write. 5) Fast change starting from the government. Many arguments could be made for or against any system but at the end of the day; looking at the present day, we see that capitalism is the better system, not necessarily because it promotes better ideals but because it survived longer and defeated communism.

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