Economic Systems in the World Socialism and Communism http://www.diffen.com/difference/Communism_vs_Socialism#

Summary of Previous Lecture Economic systems in the world Capitalism and its different forms Advantages and disadvantages of capitalism Comparison of capitalism with Islamic economic system.

Learning outcomes After this lecture you should be able to Understand the characteristics of socialism and communism Analyze and evaluate which economic system is superior among the major economic systems in the world, i.e. Capitalism, Socialism, Communism, and Islamic economic system.

Characteristics of Socialism and Communism Definition Ideas Philosophy Religion Economic Coordination Economic System Key Elements

Characteristics of Socialism and Communism Political Structure Social Structure Free Choices Way of Change Private Property Ownership Structure Discrimination Means of Control

Definition Communism Socialism A theory or system of social organization based on the holding of all property in common, with actual ownership ascribed to the community or state. A theory or system of social organization based on the holding of most property in common, with actual ownership ascribed to the workers.

Ideas Communism Socialism Human societies have always been divided into warring classes. The Industrial Revolution has enriched the wealthy and impoverished the poor. The workers must overthrow the bourgeois. All people should be given an equal opportunity to succeed. Workers should have most say in their factory's management. The free market suffers from problems like tragedy of the commons. Government regulation is necessary.

Philosophy Communism Socialism From each according to his ability, to each according to his needs. Free-access to the articles of consumption is made possible by advances in technology that allow for super-abundance. From each according to his ability, to each according to his contribution. Emphasis on profit being distributed among the society or workforce in addition to receiving a wage

Religion Communism Socialism Abolished Freedom of religion

Economic Coordination Communism Socialism Government controls all business, as well as business decisions. Planned-Socialism relies principally on planning to determine investment and production decisions. Planning may be centralized or decentralized. Market-socialism relies on markets for allocating capital to different socially-owned enterprises.

Economic System Communism Socialism Wealth redistributed so that everyone in society is given equal shares of the benefits derived from labor. All means of production are controlled by the state. Wealth redistributed so that everyone in society is given somewhat equal shares of the benefits derived from labor, but people can earn more if they work harder. Means of production are controlled by the workers themselves.

Key Elements Communism Socialism An enhanced form of the principle of “Production for use”. Economic activity and production especially are adjusted to meet human needs and economic demands. "Production for use": useful goods and services are produced specifically for their usefulness.

Political System Communism Socialism No leader, directed directly by the people. This has never been actually practiced, and has just used a one-party system. Multiple parties, but the ruling party usually goes by the name "Socialist“.

Social Structure Communism Socialism All class distinctions are eliminated. Class distinctions are diminished

Free Choice Communism Socialism All choices, including education, religion, employment and marriage, are up to the individual. All health care and education is provided fre.e to everybody In real communism, where a leader does not exist, everything is chosen freely. In those that have been practiced though, all choices, including education, religion, employment and marriage, are controlled by the state.

Way of Change Communism Socialism Workers in a Socialist-state are the agent of change rather than any market or desire on the part of consumers. Change by the workers can be swift or slow, depending on change in ideology or even whim. Government in a Communist-state is the agent of change rather than any market or desire on the part of consumers. Change by government can be swift or slow, depending on change in ideology or even desire.

Private Property Communism Socialism Two kinds of property, private property, such as land, houses, clothing, etc. owned by the individual. Public property, factories, and means of production owned by the state but with worker control. Abolished

Ownership Structure Communism Socialism The means of production are socially-owned with the surplus value produced accruing to either all of society (in Public-ownership models) or to all the employee-members of the enterprise (in Cooperative-ownership models). The means of production are commonly-owned, meaning no entity or individual owns productive property. Importance is ascribed to "usership" over "ownership".

Discrimination Communism Socialism The people are considered equal, laws are made when necessary to protect people from discrimination. In theory, all members of the state are considered equal.

Means of Control Communism Socialism Proletariat engages in taking charge of the factories and means of production. Prolétariat engages in violent rebellion.

Estimated number of victims Since these systems are not compatible with the human nature so there was a fierce resistance from the public particularly the capitalists, entrepreneurs, and farmers. In his book “The Black Book of Communism” Stéphane Courtois claims that total death toll reaches 94 million during its implementation. The breakdown of the number of deaths given by Courtois is as follows: 65 million in the People's Republic of China 20 million in the Soviet Union 2 million in Cambodia 2 million in North Korea 1.7 million in Africa 1.5 million in Afghanistan

Estimated number of victims 1 million in the Communist states of Eastern Europe 1 million in Vietnam 150,000 in Latin America (mainly Cuba) 10,000 deaths "resulting from actions of the international Communist movement and Communist parties not in power." Courtois claims that Communist regimes are responsible for a greater number of deaths than any other political ideal or movement, including Nazism. The statistics of victims includes executions, famine, deaths resulting from deportations, physical confinement, or through forced labor.

Major Differences among the Systems 1. Liberty to Earn Capitalism is a voluntary economic system where people trade in a free market and earn product of their labor and can trade it against the product of others labor. Unbridled liberty leads to so many immoral activities that cause the destruction of the health, moral values and economic conditions of the nations. In Communism and socialism (to a large extent) the product of peoples labor is confiscated by the state to distribute it equally among the public. People have to lose their earning in a coercive environment, e.g. many Ukrainian farmers were killed because they tried to conceal the grains of their sustenance. Islamic economic system allows individuals to operate in a free market but all the activities should be Sharia Compliant.

Major Differences among the Systems 2. Liberty to own Capitalism allows the people to own as much they can and lust to accumulate more and more wealth leads towards unfair means of earning and an imbalance is the distribution of wealth. Communism and socialism restrict the right of ownership, in communism no individual has the right to own property. Islam allows the people to own property as much they want but with the unique concept that Allah is the owner of everything; and holds the followers accountable regarding the legality of property (Sharia compliance and also apply obligatory taxes like Zakat and encourages Sadaqat).

Major Differences among the Systems 3. Distribution of wealth Capitalism leads to unfair distribution of wealth (as discussed in the previous lecture) which creates so many social problems. Socialism and communism claim equal distribution of wealth which is against the laws of nature, as it will limit the desire to work. Islam allows the people to earn using Halal means and get rich, also Islam allows the people to be poor and rich but not to the extent that it create classes in the society.

Major Differences among the Systems 4. Reward of labor in Capitalism Socialism and Islamic Economic System Capitalism, Socialism and Islamic economic system recognizes the hard work of the laborers by paying them accordingly, where as communism doesn’t recognize it. Recognition and sense of achievement makes people more productive and innovative.

Major Differences among the Systems 5. Innovativeness of the system Freedom of production and marketing, sense of achievement and recognition in Islamic economic system and Capitalism result in more sophisticated, innovative and useful products in the economy. Socialism and Communism being controlled form of economies where state determines what to produce, how much to produce and for whom to produce, leads to stagnation and low growth in the economy

Major Differences among the Systems 6. Social Structure Socialism and Communism diminishes and eliminate the class distinctions; Islam also doesn’t believe in class system rather sets the piety as the standard of being respectable. Capitalism on the other hand has created classes in the societies based on the level of wealth people possess.

Major Differences among the Systems 7. Ways of Change In Socialism and Communism governments and workers are the agents of change and the even control the ideologies and desires of the people. In Capitalism free market would determine the change in production, while government only regulates the business practices. Islam allows change through the forces of the market provided that it doesn’t go against the religious and moral values of the society.

Major Differences among the Systems 8. Religion Capitalism, Socialism, and Islam give the people right to follow the religion. Communism bans the religion, which is against the human nature. Majority of the people in the world do have a religion or want to follow the religion.

Summary of the Lecture In today’s lecture we discussed the following characteristics of Socialism and communism, such as their definition, ideas, economic system, social structure, freedom of choice, ownership of private property, and means of control etc. A comparison of the major economic systems in the world, i.e. Capitalism, Socialism, Communism, and Islamic economic system.