Both socialism and communism place great value on creating a more equal society and removal of class privilege. The main difference is that socialism is compatible with democracy and liberty, whereas Communism involves creating an ‘equal society’ through an authoritarian state, which denies basic liberties.
Democratic socialism in the west involves participating in democracy to seek an incremental reduction in inequality. It implies a mixture of public sector intervention and private enterprise.
Communism is a political and economic ideology – closely associated with the state Communism of the Soviet Union and China. It aimed at state control of the economy to attain greater equality – often at the expense of individual liberty.
George Orwell, who was a committed socialist, fought in the Spanish Civil War for a socialist-anarchist party on the side of the Republican movement. However, he was deeply critical of the Soviet-backed Communists who behaved more like the extreme right, with their authoritarian actions.
“the Communists stood not upon the extreme Left, but upon the extreme right. In reality this should come as no surprise, because the tactics of the Communist parties elsewhere.”
George Orwell, Homage to Catalonia
What is socialism?
There are several different types of socialism. But, in the west, the best guide to socialism is through the prism of democratic socialist parties. For example, the UK Labour Party won the 1945 General election and implemented several socialist policies, which included
- Higher-income tax on high-earners
- Creation of National health care system – free at the point of use
- Nationalisation of key industries, such as coal, electricity and gas.
- Creation of welfare state with minimum income guarantee for the unemployed.
- Labour market reforms, such as greater protection for trade unions.
- Expansion of free education
- Socialism emphasises equality of opportunity, using the state to redistribute income from the highest earners to others. But, it does not insist on equality, only aiming for equality of opportunity. Democratic socialism combines both public sector intervention with private sector enterprise.
- Traditionally socialist parties may want to nationalise key public sector industries (which are natural monopolies), but private firms are free to operate in the free market. Rather than control individual firms, the state implements rules to avoid the exploitation of workers and consumers.
- Socialism allows private property and private ownership, but it may place a certain tax on wealth and inheritance to redistribute opportunity and wealth.
What is Communism?
- Communist economic and political theory was developed by Karl Marx. He developed the concept of a ‘Dictatorship of the Proletariat’ arguing that the working class should rule in the interests of the people, and ignore democratic norms.
- Marx also advocated for a revolution to overthrow capitalism and create a new economy where industry was owned and managed by the government rather than private individuals.
- In practice, the Soviet Union did achieve a new kind of economy through the 1917 revolution. Lenin and then Stalin also cracked down on individual liberty and removed all forms of democracy. An overriding aspect of the Communist society was the lack of individual liberty and freedom.
- In the Communist Soviet Union, the state became all-powerful in managing the economy, setting targets, deciding what to produce and how to produce. It left very little if any role for the price mechanism and free markets.
The main difference between democratic socialism and Communism
|Parliamentary democracy. Socialist parties in western Europe seek to gain power through democracy and winning elections.||Revolution. Communist parties disdain capitalist democracy and believe power should be exercised by “The people” and not democracy|
|Individual liberty important. Protection for human rights and free speech.||Authoritarian state ignores liberty and cracks down on criticism and dissent.|
|Mix of public and private sector. Democratic socialism may nationalise key industries, such as gas, transport and electricity but leaves most private industry unaffected.||State control of all industry. Only very limited role for free enterprise. Setting up new enterprise requires government approval.|
|Prices determined by the free market, with some exceptions, e.g. rent controls.||Prices and output set by the government. Can lead to shortages and surpluses.|
|Redistribution of income through tax and benefits, e.g. progressive marginal income tax rates and benefits for unemployment.||Equality of income – wages set by the government.|
|Equality of opportunity main goal. Support free public education to enable all people to gain qualifications.||Equality of outcome. Even those who work hard or are more intelligent should get the same wage.|
|Decentralised initiatives, e.g. local worker councils or local democracy on decisions like new roads.||Centralised economy, with decisions coming from the top.|
|Support for trade unions and right to strike. Also labour market policies, such as a maximum working week and minimum wages.||Trade unions not allowed as state claim ‘not needed’ No right to strike as government always give ‘good’ conditions.|
|Broadly Keynesian economic policies to deal with recession, demand management.||Direct intervention in economy and claim ‘no unemployment’|
|Progressive tax system||No need – wages the same|
|Subsidised house building. A mixture of private and public ownership||Mostly public housing with limited scope for private property.|
|Makes use of the existing financial system, but tries to reform||State control of banks and finance.|
- The socialism of George Orwell
- Pros and cons of socialism
- Different types of socialism
- Capitalism vs Socialism
Tejvan Pettinger, Oxford, UK, www.economicshelp.org, 6 May 2020