, Research Paper This essay will compare the economic principles of capitalism and communism by giving brief historical background on both and describing the two. I will begin with the father of economy, Adam Smith, and finish with the theories of Karl Marx.
, Research Paper
This essay will compare the economic principles of capitalism and communism by giving brief historical background on both and describing the two. I will begin with the father of economy, Adam Smith, and finish with the theories of Karl Marx.
Adam Smith believed that if everyone behaves selfishly we are doing what is best for the economy of our society. This is what is known as “enlightened selfishness.” “Enlightened selfishness” is one of the main elements of capitalism. Profit is the motive for production of goods and greed is a virtue. You can own private property, but to maintain that private property you need capital to invest. Investing in something is always a risk. The larger the risk, the larger the pay-off. In a capitalistic society, the government does what is known as laissez-faire. This means that the government does not interfere with the market. This is known as the “hidden hand.” The desired result of laissez-faire and “enlightened selfishness” is competition. Ideally, this competition will bring out the best product for the buyers, and those who produce the best will be rewarded.
Before explaining the theories of communism it is necessary to understand the factory system of the time, otherwise known as industrialization. In the mid 1800’s, the cottage industry was switching over to the factory industry. The invention of the steam engine benefited the cities closest to water. Many new industries were emerging, but there were many negative effects of industrialization such as the exploitation of the worker. This was accomplished by the regimentation of the working class in the massive factories of the times. The factory system increased production but the workers were poorly treated; struggling to support their family; working 60-72 hour workweeks; suffering the horrors of working with dangerous machinery and they were being paid subsistent wages. The workers were, in general, unskilled and often repeated the same series of actions for 12 hours a day. The owners were the people profiting the most from this system. Because the common worker was so easy to come by and easy to underpay, the owners could have a higher profit. All of this and child labor too. Children and women were under paid even more so than men. Urbanization forced the creation of working class districts. These slums had no running water, diseases such as small pox and typhus were commonplace, people were clustered around the factories creating crowded flats and mortality rates were incredibly high. Marx and others saw capitalism as going hand-in-hand with these horrors.
Communism is considered a reaction to the “evils of capitalism.” Another way of saying communism is “dialectical materialism.” Karl Marx borrowed many ideas from the ideas of Gregor Hagel. Karl Marx was a German professor and theoretician, he published 2 famous works The Communist Manifesto (1848) and Das Kapital (1866). Before he could finish Das Kapital he died, Friedrich Engels finished the book. Frederik Angles was a collaborator of Marx’s and co-author of the book. Marx saw the exploitation of the common worker and predicted a revolution that would see the rise of the proletariat against the capitalistic suppressors. Proletariat is a term used by Marx to describe the working class. He also used the term bourgeoisie to describe the middle class, and aristocracy to describe the upper class with the distinction of being titled and privileged (no taxes before the French Revolution). Marx thought that there was a natural order to history, so naturally communism would follow capitalism. Communism would be the next evolution in the stage of history, it would be superior, more advanced. Most importantly though, was the belief that communism would have to be accepted, by any means necessary. Because of this revolutionary, radical attitude, any other sort of economic principle would be dismissed as wrong. Marx knew that the key to this revolution would be to make the downtrodden worker realize that he is just that: an exploited, oppressed victim. Ideally, communism is a classless society with no need for a government. To obtain a classless society the proletariat must become the government and abolish the power of the bourgeoisie. During the transition period between capitalism and communism it would be necessary to have a brief period of time where the state would be ruled by the dictatorship of the proletariat. After the revolution, the power of the newly communist country would be greatly taxed and vulnerable to attack of neighborhood countries fearing the “infection” of communism. Only through a temporary dictatorship could the nation be protected from the onslaught of other nations and from the class enemies (counter-revolutionaries, reactionaries, and propagandists seeking to undo communism).
The several distinct differences between communism and capitalism are made apparent by studying the principal theories behind the two.
The Communist Manifesto (1848)
Das Kapital (1866)
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