Next video:
Loading the player...

Communism and socialism are economic and political structures that promote equality and seek to eliminate social classes. The two are interchangeable in some ways, but different in others.

In a communist society, the working class owns everything, and everyone works toward the same communal goal. There are no wealthy or poor people -- all are equal, and the community distributes what it produces based only on need. Nothing is obtained by working more than what is required.

Communism frequently results in low production, mass poverty and limited advancement. Poverty spread so widely in the Soviet Union in the 1980s that its citizens revolted.

Like communism, socialism’s main focus is on equality. But workers earn wages they can spend as they choose, while the government, not citizens, owns and operates the means for production. Workers receive what they need to produce and survive, but there’s no incentive to achieve more, leaving little motivation.

Some countries have adopted aspects of socialism. The United Kingdom provides basic needs like healthcare to everyone regardless of their time or effort at work. In the U.S., welfare and the public education system are a form of socialism.

Both are the opposite of capitalism, where limitations don’t exist and reward comes to those who go beyond the minimum. In capitalist societies, owners are allowed to keep the excess production they earn. And competition occurs naturally, which fosters advancement. Capitalism tends to create a sharp divide between the wealthiest citizens and the poorest, however, with the wealthiest owning the majority of the nation's resources.

  1. No results found.
Related Articles
  1. Insights

    Can Socialism Work In America?

    Capitalism has its shortcomings, but pure socialism is not the answer. The American system of capitalism with socialistic touches might be good for the US.
  2. Personal Finance

    Social Finance Careers: How to Get Started

    Find out how to get a financial career in the specialized field of social finance with a more social objective that goes beyond just bringing in profits.
  3. Retirement

    Will Social Security Be Around for My Retirement?

    Here's what you may not know about our Social Security system and how it can affect your future.
  4. Retirement

    Social Security Benefits for Non-U.S. Citizens

    Social Security benefits, which are confusing for U.S. citizens, can become even more confusing for resident aliens and non-resident aliens.
  5. Retirement

    What Will Social Security Look Like When You Retire?

    Many workers are not confident that Social Security will be around during their retirement. Here's what you need to know about its future.
  6. Retirement

    When Do I Stop Paying Social Security Tax?

    Almost never, unless you belong to one of these special groups.
  7. Retirement

    Can Immigrants Over 65 Receive Social Security?

    Under some circumstances, the answer is yes. Here's how the rules work.
  8. Retirement

    Can the Market Affect Social Security Benefits?

    What you should know about the relationship between the stock market and your monthly Social Security check.
  9. Small Business

    Social Media: High Risk, High Potential Returns

    Carefully selecting social media ETFs can provide you with the opportunity to diversify your portfolio and enjoy financial rewards due to user growth.
Trading Center