Capitalism as envisioned by Smith called for complete private control of the economy, and a small government that practiced a hands off policy. Such a system, Smith believed, would allow for the greatest amount of wealth, and as a byproduct would benefit the majority of the citizens. Capitalism quickly became the economic standard in the British Empire and post-revolutionary France and America, as well as in Germany and the Scandinavian countries as they industrialized. This switch in economic philosophy would result in an unprecedented shift in western society from chiefly agrarian to mostly urban, from feudal lords to corporate tycoons, and from frugality to consumerism.
Under capitalism people for the first time in history could, on a large-scale, improve their economic and societal status through hard work and perseverance. Under this system someone like Andrew Carnegie the son of a weaver could through intelligence and determination found a corporate empire. Capitalism was and is by no means perfect, as is evident by the vast separation of wealth it creates, in America today for example according to the University of California at Santa Cruz, the top twenty percent of Americans control 85 percent of the countrys wealth. This obvious economic inequality is the greatest shortcoming of capitalism, and the primary reason for the creation of communism.
Under communism the government controls every aspect of the economy and society. Communism calls for a classless society in which there is no private property and citizens work for the good of the state rather than their personal well being. The few examples of pure communist countries North Korea, Cuba, China under Zedong, and the USSR under Stalin that have been created were or still are dysfunctional states. They are characterized by violent oppression, famines and the rise of dictators. On a smaller scale though communism has proved quite successful, a hundred and fifty years before Marx coined the term early religious sects in America, namely the Puritans and later on the Mormons, had perfected small scale communism. These settlers worked not for themselves but for the community, and proved that such a society could govern effectively.
Communism at its core calls for the people to sacrifice individuality and work for the benefit of the state rather than for their personal well being. Capitalism on the other hand is focused on working for individual growth, and personal ownership to provide wealth for ones self. Communism places the economy in governments hands, while capitalism removes the government from the economy entirely. Communism sets direct demands on the work you do and what you need to produce, so others can benefit as well as you from your hard work. Communism asks the government to decide what is needed for each individual to live and be equal. The government tells the community what demands need to be meets to produce and distribute enough materials equally.
Capitalism depends on supply and demand instead of quotas, in order to make sure there is not too much or too little of certain products. If there is not enough of a product wanted then the price will rise, which will in turn cause production to increase. Once there is more than enough of that product on the market, the demand will begin to drop, resulting in the price and production to drop and so on. Capitalism creates a system where peoples first concern is themselves, rather than the others, making things a personal investment instead of community investment. Communism is built on the idea that humans are inherently just, and as such will work not just for themselves, but for their countrymen as well. Capitalism is built on the idea that humans are inherently greedy and self-promoting, which will in turn lead to a great importance being placed on attaining wealth.
Capitalism calls for freedom at the expense of equality while communism calls for equality and neglects liberty. Communism with its drive towards collectivization, and a classless society, clashes with the very principle that western democracies are based on individuality. Neither capitalism nor communism is ever going to be perfect for a nation, but a system that rewards hard work and self-determination will always outdo a system that calls for dependence and mediocrity.
Communism Marxism & The Communist Manifesto. All About Philosophy. 9 Oct. 2008 .
Capitalism. The European Enlightenment Glossary. 10 Oct. 2008 .