Communism Versus Capitalism: Contrasting Economic Systems
What are the key differences between communism and capitalism in terms of economic aspects?
Go through the statements and match each aspect to the correct economic system.
Answer:
1. Profits - Communism: All of the money earned beyond the cost of running the shoe manufacturing business goes to the government.
2. Product Availability - Communism: Since sweater selection is so limited, Penny has a difficult time finding one to purchase that makes her stand out from the crowd.
3. Business Ownership - Capitalism: Selena Franka chose to give all the money earned beyond the cost of running her footwear company to charity.
4. Competition - Capitalism: Jack Sampson works in a highly competitive industry. He has to make sure he knows the trends of his market so he always offers good value and retains his competitive advantage.
5. Competition - Communism: Since bread production and sales are the same each month, the factory managers can ignore competition from other bread companies.
6. Price - Capitalism: Each time there is a risk that the oil supply will decrease, or the supply does in fact decrease, gasoline prices skyrocket.
7. Profits - Capitalism: When John Wakoski was a teenager, he worked at his uncle’s famous artisan pottery shop on the weekends.
8. Employment Options - Communism: When Suzanna Kogan was a teenager, she worked at the state-owned bread factory where everyone in her family worked.
9. Price - Communism: Relative to people’s income, the price for gasoline is quite high, so those who own cars are very conscientious about using them.
10. Product Availability - Capitalism: When Janet goes to the mall to buy shorts for summer, she becomes frustrated when she can’t decide which ones to buy due to so many different choices.
11. Employment Options - Capitalism: Sara completes her college application to start her studies in Accounting.
12. Business Ownership - Communism: Mike receives notice from the government regarding where he is assigned to work.
Understanding Communism and Capitalism Economic Aspects
In the comparison between communism and capitalism in terms of economic aspects, it is essential to grasp the fundamental differences between the two systems.
Communism: In a communist system, profits are typically redistributed to the government to be used for the collective welfare of society. This ensures that resources are allocated based on communal needs rather than individual gain. Product availability may be limited, as production is controlled centrally, leading to less variety and choice for consumers. Business ownership is usually centralized under the state in communism, where the government controls the means of production. Employment options are often determined by the government, assigning individuals to work in various sectors.
Capitalism: In contrast, capitalism allows individuals and businesses to own and operate enterprises, leading to a more decentralized form of business ownership. Competition is a driving force in capitalism, with businesses striving to offer unique products and services to gain a competitive edge in the market. Prices fluctuate based on market demand and supply, and profits generated by businesses are retained by the owners. Employment options are determined by individual choices and qualifications, with individuals free to pursue careers of their choosing.
By understanding these differences, individuals can gain insight into how economic systems shape resource allocation, business practices, and employment opportunities within a society.