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Updated December 19, 2018

Communism is an economic system where the groupowns thefactors of production. In countries, the government represents the group. The means of production arelabor, entrepreneurship,capital goods,andnatural resources. Although the labor force aren't legally owned by the government, the central planners tell the people where they should work.

German philosopher Karl Marx developed the theory of communism.

He said it was, "From each according to his ability, to each according to his need." In his view, capitalistic owners would no longer siphon off all the profits. Instead, the proceeds would go to the workers.

To Marx, "From each according to his ability," meant people would work at what they loved and did well. They happily contributed these skills for the good of all. The economy would prosper because they would work harder than in capitalism.

"To each according to his need" meantthe community would take care of those who couldn't work. It would distribute goods and services to everyone as they required them. Those who were able to workwould be motivated by enlightened self-interest.

In the Communist Manifesto, Marx and co-auther Friedrich Engels outlined the following 10 points:

The manifesto mentions state ownership in its last three points. That makes even this pure vision of communismsoundlike socialism. But Marx argued that state ownership is a valid stage in the transition to communism.

In a true communist economy, the community makes decisions. In most communist countries, thegovernment makes those decisions on their behalf. This system is called acommand economy. The leaders create a plan that outlines their choices. It's executed with laws,regulations,and directives.

The goal of the plan is to give to "each according to his need." Communist countries have freehealth care, education, and other services. The plan also seeks to increase the nation'seconomic growth. It secures national defense and maintains infrastructure.

The state owns businesses on behalf of the workers. In effect, the government owns amonopoly. The government rewards company managers for meeting the targets detailed in the plan.

In communism, central planners replace the forces of competition and the laws of supply and demand that operate in amarket economy. They also replace the customs that guide atraditional economy.

Communism is most similar to socialism. In both, the people own the factors of production. The most significant difference is that output is distributed according to need in communism, and according to ability under socialism. Communism is most different fromcapitalism, where private individuals are the owners. It is similar to fascism in that both use central plans.

But fascists allow individuals to retain factors of production. Many countries turned to fascism to ward off communism.

Advantages

Communism has a centrally planned economy. It can quickly mobilize economic resources on a large scale. It is able to execute massive projects and create industrial power.

Communism can move so effectively because it overrides individual self-interest. It subjugates the welfare of the general population to achieve imperative social goals.

Communist command economies can whollytransform societies to conform to the planner's vision. Examples includeStalinistRussia, MaoistChina, and Castro's Cuba. Russia's command economy built up the military might to defeat the Nazis.It then quickly rebuilt the economy after World War II.

Some say communism's advantages mean it is the next obvious step for any capitalistic society. They see income inequality as a sign oflate stage capitalism. They believe that capitalism's flaws mean it has evolved past its usefulness to society.

They don't realize that capitalism's flaws are endemic to the system, regardless of the phase it is in. America's Founding Fathers included promotion of the generalwelfare in the Constitution to balance these flaws. It instructed thethe government to protect the rights of all to pursue their idea of happiness as outlined in theAmerican Dream. It's the government's role to create a level playing field to allow that to happen. That can happen without throwing out capitalism in favor of another system.

The most significant disadvantage of communism stems from its elimination of the free market. The laws ofsupplyanddemanddon't set prices, the government does. Planners losethe valuable feedback these prices provide about what the people want. They can't get up-to-date information about consumers' needs.As a result, there is often a surplus of one thing and shortages of others.

To compensate, citizens create a black market to tradethe things the planners don't provide. This destroys the trust inMarx's pure communism. People no longer feel the government can give "to each according to his needs."

The last five remaining Communist countries are China, Cuba, Laos, North Korea, and Vietnam.They aren't pure communism butare transitioning from socialism. That's where the state owns the components ofsupply. According to Marx, that is a necessary midway point between capitalismand the ideal communist economy. Modern communist societies rely on amixed economy.

China. In October 1949, Mao Tse Tung established the Chinese Communist party. In the late 1970s, China began moving toward a mixed economy. It phased-out collective farms and allowed private businesses. But it still strictly follows a five-year economic plan. The government's policies favor state-owned enterprises in sectors vital to its goals. In 2010, China became the world's largest exporter. In 2016, it became the world's largest economy.

Cuba. In April 1960, Fidel Castro proclaimed thePartido Communista de Cubato be the ruling party. The Soviet Union gave economic support to the impoverished country. In return, Cuba supported it patron in the Cold War against its neighbor, the United States. After the fall of the USSR, Cuba suffered. In April 2011, it began allowing economic reforms. Cubans can now buy appliances, cell phones, real estate, and cars. More than 400,000 Cubans have created their own businesses. For example, farmers can now sell goods to hotels.

Laos. In 1949, the nation won independence from France. In 1986, it began decentralizing control and encouraging private businesses. It's created tax incentives to encourage foreign direct investment. It wants to expand its economy beyond exporting its natural resources.

North Korea. In 1953, its allies China and Russia helped create North Korea to endthe Korean War. The country followed strict central planning with communal farming. It suffered famine and poor living conditions in the 1990s and 2000s. In 2002, it allowed semi-private markets to sell some goods.

Vietnam. In 1945, communist leader Ho Chi Minh declaredhis country'sindependencefrom France. The French, backed by the United States, seized southern Vietnam. Ho, backed by China, took the northern part. In 1954, the French agreed to divide Vietnam at the 17th parallel. But in 1964, Ho led Viet Cong soldiers to reunite the country. In 1975, the communists were successful. In 1986, Vietnam began transitioningtowards a more market-based economy. It still needs to reform state-owned enterprises, reduce red tape, and increase financial sector transparency.

In 1922, the Union ofSoviet Socialist Republics was established with six communist countries: Russia, Belorussia, Ukraine, and the Transcaucasian Federation. In 1936, the Federation became Georgia, Azerbaijan, and Armenia.

By 1992, when it dissolved, the USSR contained 15 countries. The remaining nine were Estonia, Latvia, Lithuania, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan.

In 1955, the USSR created theWarsaw Pact with other communist military allies. They included:Albania,Bulgaria, East Germany, Hungary,Poland, and Romania.

The USSR had many other communist allies. Many became communist in the 1970s, but shifted to another form of government after the USSR collapsed. They included:Afghanistan,Angola,Benin, Congo, Ethiopia, Mongolia, Mozambique, Somalia,South Yemen, andYugoslavia.

Cambodiawas a communist country from 1975 to 1979. In his misguided attempts to create an agricultural communist society, he killed 2 million people.

Originally posted here:
Communism: Definition, Pros, Cons, Examples, Countries