What Are the Differences Between Communism and Capitalism?

n/a/Vetta/Getty Images

According to the Library of Economics and Liberty, capitalism is based on the principle of individual rights, a free market economy, an uneven distribution of wealth and very little government interference. Communism is based on the principle of community rights, controlled economic production, an even distribution of wealth and high levels of government oversight.

A critical difference between these two ideals is the ownership of economic production. Communism allows the central government to determine what goods to produce or sell and what price is charged for these goods. Capitalism leaves the decisions of economic production to the owners of the individual businesses. Communism believes in the distribution of wealth to enable everyone in society to achieve equality, whereas capitalism defines social classes, which have varying degrees of wealth. According to HowStuffWorks, individuals have the right to pursue their own financial goals, but advocates of communism dictate that government intervention is needed to protect the less influential members of society. The Library of Economics and Liberty notes that communism has historically been successful only in heavily agricultural societies. On a basic level, the goal of communism is an equal outcome for all members of society, while the objective of capitalism is equal opportunity.