Capitalism vs. Communism: A Look at the Difference in Economic and Social Freedoms

(Gabriele P. Period 4 Honorbound)

Many may wonder whether citizens are ever free under any type of government rule. Well, that depends on what they think of as freedom. Are citizens able to freely decide on what they want to do, eat, and buy? Are they able to own whatever they would like and work for the type of pay they desire?  The question then becomes—what type of government enables its citizens the most freedom? The two main branches of governments are socialism and capitalism, and they rule their citizens in ways that are on completely different ends of the economic and social spectrum. By comparing and contrasting the differing economic and social aspects of capitalism to socialism with the support of the philosophical works of Karl Marx and Ludwig von Mises, one can recognize that the type of government which provides its citizens with the most freedom economically and socially is capitalism.

To get a fundamental perspective, looking at the economic philosophies of the father of communism, Karl Marx, versus the capitalist philosophies of Ludwig von Mises provides insight on the origin and structure of the two governmental systems. Communism was first established to create equality between the classes, and to bring the lower class out of the gutter. When that happened, the communist government sacrificed the many choices and opportunities that individuals in a booming society could make. All the classes became equal and everyone had to work under one mastermind. Karl Marx strongly believed that communism was the best type of government because it provided equality and stability. Additionally, in The Communist Manifesto, he stated that communism was the end goal of all governments and history. On the other hand, capitalism was established to promote the individual in a working and trading society. Ludwig von Mises, author of Liberty and Property, strongly agrees with capitalism because he believes that it puts the power in the hands of the people and that the citizens are able to choose what pleases them. Thus, by looking at the origins of communism and capitalism, one can gain insight on the different perspectives and the liberties that were set out for the citizens under both types of government.

Nowadays capitalism is seen as an economic system which allows its citizens to own private property and to live under a free market. The ability to own private property gives people the incentive to work and earn money to purchase what they desire [4]. According to Ludwig von Mises, capitalism gives the power to the consumer, where the consumer is the king. If the consumers are in charge, that means they have the power to freely decide on what they want and are then able to control the market based on what they demand. This is also seen in the short story I, Pencil, which vividly describes how we as consumers are able to control the price system that is based on incentives and signals, rather than a mastermind doing it for us [5]. Additionally, citizens are able to expand their businesses and become entrepreneurs. Since citizens are able to control what they want, they are able to create competition in the marketplace and increase wealth for them and the economy [1]. Therefore, it is evident that capitalism provides its citizens with an ample amount of economic individuality.

On the contrary, communism is a form of government which controls all production and owns all property. No one can own or control their own private property and with no private property, people are seen to act lazier because they have little incentives to work [1]. Nowadays many critics would argue that communism does not allow its citizens to become entrepreneurs, to develop, compete, pursue certain careers, or stand out in the economic spectrum. In Liberty and Property, von Mises mentioned how communist leader Lenin and his government could not see the difference between freedom and slavery and wanted the whole of society to become like a working factory. Therefore, communism is not a form of government that allows its citizens the most economic freedom because it pushes away from individual desires and liberties.

By considering the current situation going on in North Korea and South Korea, one can see the difference in the economic freedom that both communism and capitalism offer and how both countries are operating differently. Under the communist rule of supreme leader Kim Jong-un, North Korea is not currently a booming country and is one of the few countries left under communism. This is evident from looking at the recent GDPs of both countries. The recent GDP for North Korea was only $40 billion [6]. The recent GDP under the capitalist system in South Korea was $1.6 trillion [7]. That is around a $1.5 trillion difference in two countries that are of similar size. Just by looking at the economic situation in North Korea and South Korea, capitalism proves to enable more economic freedom for their citizens, and creates a better economy overall.

In addition to economic freedom, capitalism is a form of government which puts the power in the hands of the citizens. Socially, capitalism offers its citizens the freedom of choice. “People are encouraged to direct their talents in a way that benefits themselves” [1].  Citizens are able to choose what they want to do, where they want to live, where they want to study, with some restrictions of course. These restrictions end up being that the government only intervenes to protect the lives and the property of the citizens [1]. Therefore, capitalism allows its citizens social independence and the opportunity of choice.

Contrariwise, communism places little importance on the individual and focuses more on the goal of the whole of society and the control of its citizens [3]. Under communism, one has to obey everything the government says. “In a communist society, the individual’s best interests are indistinguishable from the society’s best interest” [4]. Some may think that since citizens are seen as equal under communist rule, everyone should get the right to contribute what they would like to society. Unfortunately, harsh censorship has occurred in many countries that were under communist rule which never allowed their supposedly equal citizens’ voices to be heard [4]. Forms of this censorship include barriers on the internet and books to brainwash its citizens and cut them off from the outside world [4]. For example, when Russia still had control of some of the Baltic States in the 80s and 90s, it did not allow any form of their countries transmission to be heard by the citizens. The only type of transmission on TV and on the radio was Russian propaganda trying to scare the Baltic people. Additionally, communist governments do not value privacy as capitalist governments do [4]. Communists have the right to delve into someone’s private lives and make sure they are not going against the government or the communist beliefs in any way. Therefore, countries in the past along with the few countries that are still communist today make their citizens live in a very structured and limited society.

By looking at the social success of one country that is under capitalist rule, the United States, it provides insight on how citizens under capitalism truly are in power and receive the most freedom. The United States would not be called the “Home of the Free” for nothing. In the United States, citizens are able to make something of themselves. Capitalism promotes a desire to grow because there is a sense of competition and promotion of the betterment of oneself [2]. One is able to decide how hard they want to work and how hard they want to study for their education and their future job. Being an immigrant from the  previously communism oppressed country of Lithuania, I have heard many stories about the communist rule of Russia and the strong Russian oppression on many Baltic States that only ended a few years before I was born. The communist oppression was very harsh and powerful. Russia wanted to make the classes equal, but that is truly not possible. There are people in this world that are meant to be workers and there are people who are meant to be industrialists, and taking that away from them simply cannot work for long. Additionally, seeing the way that Lithuania and the other Baltic States have boomed since their independence also shows that communism does not promote more freedom and cannot make the economy operate more efficiently than other types of government rule.

In the eyes of philosopher Aristotle, a government should enable its citizens to be able to fulfill their function as human beings by living in accordance with reason and virtue. In The Politics, Aristotle mentions that man is unable to fulfill his full potential without a government, and he must be provided with opportunities to achieve such a life. Additionally, every human is crafted differently and we can never all be equal in our intelligence, our emotions, and our thoughts. Being under a type of government that allows a sense of individuality and competition, along with a sense of order, is the ideal government for all humans to fulfill their end goal of happiness. Evidently, capitalism would fit with Aristotle’s description of a government and how people should be able to live and fulfill their function as humans.

In conclusion, capitalism provides the most freedom that a government could provide to its people. Even though the theories of Marx argued that communism is the best type of government, they showed many weaknesses that would not work efficiently in modern society. Through capitalism, people are able to fulfill their function as humans and are able to live freely, own property, and work for the pay they desire. Additionally, capitalism fulfills the objective of a government as stated by Aristotle, to ensure that all citizens could fulfill their function as human being and reach their end goal of happiness. Therefore, capitalism is the ideal type of government as compared to communism based on the freedom it provides economically and socially to its citizens.




[1] Anglin, M.R., “What Is the Difference Between Capitalism and Socialism?”, last modified April 26 2014,

[2] Even, Louis, “Capitalism versus Communism,”,

[3] “Capitalism, Socialism, Communism: Social Justice and Income Redistribution,” Culture War, last modified September 2013,

[4] “Communism and Computer Ethics,”, china/index.html

[5] Read, Leonard E., “I, Pencil: My Family Tree as told to Leonard E. Read,” The Foundation for Economic Education, Inc,

[6] “North Korea,” 2014 Index of Economic Freedom,

[7] “South Korea,” 2014 Index of Economic Freedom,

“Cartoon Communist Capitalism.” Bennet the Christian Science Monitor, (accessed May 5, 2014). 


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