Communism economic type assumes strict regulation of production and consumption following the capabilities of the economy, the interests of society, and then the interests and status of individual citizens. The presence of a market for goods and services under capitalism and the absence of such a market almost or completely under communism economic type are the distinctive features.


Over the years, a battle has been fought between the two dominant systems – capitalism and communism. Both competing economies are classified as rationalized distribution of goods and services to the population. Capitalism is a specific type of economic system; it uses democracy and free markets to efficiently distribute capital for its most efficient use without regard to economic equality. Instead, communism focuses on massive planned economies that share resources equally, ignoring personal ambitions or incentives. Comparing the capitalist and communist types of the economic system, it’s possible to identify its differences in critical features.

Consider the key features of the economic formations of capitalism and communism and their differences.

  1. The right to private ownership of production means. A significant difference between capitalism and communism is the presence of private ownership of the production means. In a capitalist society, each person individually has the right to private ownership of the production means, as well as the products they produce. In a communist society, ownership of the production means belongs either to the state or cooperatives, that is, collectives of people. It should be noted that the form of state ownership is also a communal property. Accordingly, everything that is produced using manufacturing is either in-state or in collective ownership. There is no private ownership of the production means and the products of labor with their use.
  2. The market economy (market of goods and services). The situation is that there are a significant number of owners of the production means, and, accordingly, owners of the labor products in capitalist countries. Therefore, capitalism directly provides for the existence of a market for goods and services. Hence, the frequently used name of the capitalist economy as the market economy. A consequence of the presence of a market for products and services is a competition between sellers of these goods and services and the formation of market prices under the influence of supply and demand. It should be borne in mind that monopoly directly contradicts the nature of capitalism and, in the absence of state regulation, leads to its systemic death. That is why one of the main tasks of the capitalist state is the state regulation of the economy to prevent the emergence of monopolies. On the chance of natural monopolies emergence, state regulation of their activities should be carried out, in particular, the pricing of their products.
  3. Entrepreneurship. This feature of capitalism is a consequence of its two previous items. The capitalist economy is a system of subjects’ entrepreneurial activity of different forms of ownership. Entrepreneurial activity is the external, most visible, and, at the same time, the generalizing attribute of capitalism. A completely different situation is under communism, where entrepreneurial activity is a criminal offense since it directly violates the foundations of the system. They include the monopoly right of the state to possess the production means and products of manufacture, planned (non-market) distribution of labor products, and a state monopoly on the hiring and labor exploitation.

Most countries and their economic theories are between capitalism and communism. Some countries include both the private capitalism system and the state-owned enterprise of communism to overcome the shortcomings of both systems; they have a mixed economy. Under these conditions, the government intervenes to prevent a person or company from having a monopoly position and excessive concentration of economic power. Resources in these systems can belong to both the state and private individuals.