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

April 4, 2017

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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