Under capitalism, individual people can own and control land, capital (money), and production of industry. Individuals are free to purchase and own their own homes, cars, furniture, and other goods such as TV, radios, computers, boats, or anything else they might want. People have total freedom to live where they want and to choose the type of job they want to pursue. If someone has an idea for a new business or invention, he/she is free to pursue this without government interference. Under this system people have the maximum number of choices in life. This is what is meant by the “pursuit of happiness” from the Declaration of Independence.
Another name for capitalism is the free-market system. The "free" in free-market system means that the market is free to work itself out without government interference. Businesses can decide what products to make and how much to sell them for. People can decide what products to buy and how much they want to pay.
The idea of the free-market system was first introduced by Scottish economist Adam Smith in 1776. He wrote a book called The Wealth of Nations that described how a free-market economy would work. He said that government should stay out of the economy and let pure competition determine pricing and products.
Pros of Capitalism
Efficiency - Capitalism forces companies to compete for business. This competition makes companies be more efficient.
Freedom - People and companies are free to do what they want in a capitalist economy. Governments in a capitalist economy have less control and less power. This leads to greater political freedom.
Innovation - In a capitalist economy, people and companies are rewarded for innovation. This leads to greater technological advances.
Economic Growth - Capitalism leads to economic growth and a higher standard of living.
Communism’s stated goal is to form a society where everything is shared equally. Under communism, individual people cannot own land, capital (money) or industry. Under communism, the government controls these things and has total control of everything produced, what is made, and who will receive the goods and services produced. Individual people are not allowed to own their homes, cars, furniture, or even the food they eat. The government decides what people can use and where people will work. Under communism, people have few if any rights.
History of Communism
Karl Marx is considered the Father of Communism. Marx was a German philosopher and economist who wrote about his ideas in a book called the Communist Manifesto in 1848. His communist theories have also become known as Marxism. These are some important aspects of a communist government:
There is no private property. All property would be confiscated (taken) by the government
The government owns and controls all communication and transportation
The government owns and controls all education
The government owns and control factories and agriculture
The government tightly controls labor
Farming and regional planning would be run by the government
Communism in Russia
Communism began in Russia with the rise of the Bolshevik Party led by Vladimir Lenin. They led the 1917 October Revolution and took power. Lenin was a follower of Marxist philosophies. His views on government became known as Marxism-Leninism.
Russia became known as the Soviet Union. In World War II Russia, under Joseph Stalin, sided with the Allied Powers in order to help defeat Germany. However, after the war the Soviet Union took control of several countries in Eastern Europe. They became known as the Eastern Bloc. The Soviet Union became one of the world's two superpowers along with the United States. For many years they fought the west in what is today called the Cold War.