Communism vs. Socialism: Similarities & Differences

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  • 0:02 Socialism
  • 2:17 Communism
  • 4:10 Lesson Summary
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Lesson Transcript
Instructor: Shawn Grimsley
People often confuse socialism and communism. In this lesson, you'll learn about the differences and similarities between each of these theories. You'll also have a chance to take a short quiz after the lesson.


Heidi is attending college in the United States but is a citizen of a Northern European country that actively pursues a policy of socialism. She spends a lot of time educating her American friends about socialism and the fact that it is not communism. This is a topic that comes up all the time, like today during her lunch with Cassandra.

Heidi explains that socialism is a social and economic philosophy that attempts to reduce inequality among different social classes of people through creating a more equal distribution of resources. Socialism is a flexible theory and different countries use different approaches to achieve this equality. One approach is the collective ownership of the means of production, which are the resources used to produce things such as land, capital and tools. Another approach is to provide comprehensive social welfare services funded through taxation. Heidi uses her own country as an example.

Heidi is from Sweden, which is considered a socialist country. It, and others like it, are often referred to as social democratic countries to differentiate them from more authoritarian states that follow socialism, such as North Korea. Sweden is a democratic country in which most businesses are actually privately owned, just like in the United States. Instead of focusing on community ownership of property, Sweden and other social democratic countries focus on providing comprehensive social welfare services to their citizens. Some of these services found in Sweden include healthcare, dental care, parental benefits, like paid parental leave and a child allowance until a child reaches 16, sick leave, unemployment, state pension, subsidized higher education and elderly care.

Heidi explains that North Korea, on the other hand, is an authoritarian government that has instituted a command economy with central planning. It's an example of the other economic approach to socialism. In a command economy, pretty much all business enterprises and farming is owned and controlled by the state. All decisions regarding the production and distribution of goods and services are made by a central planning authority in the government. In other words, the government determines what gets produced, how much is produced and who gets what is produced.


Cassandra is still not convinced and asks Heidi to explain what makes communism different. Heidi explains that communism is a social and economic philosophy that is based on the elimination of all private property ownership to create complete equality. Karl Marx and Friedrich Engels provide the most common explanation of communism in their 1848 book, The Communist Manifesto.

Communists argue that, since resources are limited, private ownership creates inequality and encourages competition for resources. This results in a social class system wherein lower classes are oppressed by higher classes with greater access to resources. Communists believe by eliminating private property, human effort can focus on cooperation instead of competition and social injustice will disappear as a classless society arises.

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