The differences between Capitalism, Communism, Socialism, and a Social Safety Net

Socialism and communism are ideological doctrines that have similarities as well as differences. One point that is frequently raised to distinguish socialism from communism is that socialism generally refers to an economic system, and communism refers to both an economic system and a political system.

The fall of communism in the Soviet Union did not mean socialism failed. It meant the autocratic, one-party state that defined communism failed.

After all, Russia still has a social safety net that funds health care and pension programs.  With at least five years of coverage, men age 60 and women age 55 are covered for old-age pensions. Russia also offers a disability pension and a survivor pension.

Having socialist safety net programs does not mean a country is socialist or communist. For example, the United States is not a socialist country just because it has Medicare, and Social Security. The difference is that the United States has a multi-party political system and still has private ownership of property and a capitalist business system.

China changed in the early 1980s when its Communist Party adopted elements of capitalism and joined the World Trade Organization. It’s true that part of China’s economy is still state-run, but there are not as many social programs as there once were under the previous communist system.

That leads to this question: If China allows capitalism to coexist with socialism, is it still a Communist country? Just to make a point, in 2014 Bloomberg reported that about 75-percent of China’s industrial output came from private businesses and not state-owned enterprises.

While no one in China may own land (yet), private citizens and even foreigners may lease land in urban areas while land in most rural areas is still owned by village collectives in conjunction with the central government and cannot be bought or sold because no one holds the title to most rural land. There is also no property tax, rent, or mortgages that come with interest payments for rural areas. This means being poor in rural China isn’t the same as being poor in the United States, because families can’t lose their homes to a bank.

Imagine what it must be like to not worry about making the rent, mortgage, and property tax payments. There are almost 600-million rural Chinese, and they even get to vote in democratic elections for their village leaders.

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Lloyd Lofthouse is the award-winning author of My Splendid Concubine, Crazy is Normal, Running with the Enemy, and The Redemption of Don Juan Casanova.

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4 Responses to The differences between Capitalism, Communism, Socialism, and a Social Safety Net

  1. Debbie says:

    Lloyd, while house prices in the big cities along the east coast have skyrocketed out of all proportion, causing all sorts of social issues, you raise a salient point about land ownership in the countryside. Those rural houses – some now still existing on the outskirts of all those bigger and bigger big cities – all were also quite large, nothing like the small apartments many people live in now. From all I read, the government has a long plan to build up social security systems. the next few years are going to be very interesting.

    • Do you have any details about the CCP’s plans to build up the social security system – rural or urban or both? Sounds like China is going in the opposite direction from what the illegitimate U.S. president, alleged traitor, and Malignant Narcissist Donald Trump is doing out of the White House. While Take-a-Dump (No mistake in spelling. Trump is what’s created when someone takes a dump) weakens the social safety net, China strengths theirs.

      I guess it’s obvious I don’t like this vile creature who manipulated and lied his way to win the 2016 election.

      • Debbie says:

        well i think you are on the side of the majority regarding number 45, Lloyd. the best china-watcher I know is Stephen Perry, his insight’s are usually pretty spot on. Regarding social security, he commented here

        about common prosperity, here:


        about state finance and the social security fund

        about investment building the funds for social security provision

        the 2020 vision for social security, including unemployment benefits, medical insurance and old age pension, can be found in
        Hu Angang’s China in 2020: A New Type of Superpower”
        published by Brookings Institution Press. Hu has been forecasting China’s economic development for a few decades now, and has been involved with the Chinese government’s five year plans.

        Hope that is all helpful. 🙂

      • China is doing the right thing with their Social Security Fund. The California State Teachers Retirement Fund does about the same thing. But the U.S. Congress borrowed all of the revenues for the federal Social Security program in the United States as fast as the money was collected and there is no money in that fund. There is only IOU’s from the federal government and the tax revenues that feed the general fund are being swamped to pay those IOUs. During the election campaign, the Malignant Narcissist in the White House said he’d solve the national debt be declaring bankruptcy (something he does all the time with his businesses. Trump’s ventures have filed bankruptcy 5 or 6 times to the tune of billions lost to banks and he has been involved in more than a 100 other bankruptcy court cases that might have involved partnerships he was in) and defaulting on all that debt.

        I know that China holds the largest foreign share of U.S. debt (7-percent of the total I think) but the U.S. people hold the largest share at 60-percent and if #45 defaults and declares bankruptcy to erase the national debt, that means Social Security and Medicare could collapse and vanish along with not only the economy of the U.S. but the entire world would crash and burn. This is exactly what Steve Bannon wants. He has been quoted in interviews saying he wants to bring the entire (not just the U.S. but the world) system down and cause constant rebellion. Bannon has said he is a Leninist, and he is Trump’s closest advisor in the white House. Steve Bannon is no different than Russia’s Rasputin and Nazi Germany’s Goebells.

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