Socialism and Capitalism – SS1 Government Lesson Note (First Term)

Socialism, communism and capitalism are ideologies that describe who owns and controls the means of production, distribution and exchange. Under socialism and communism, the government owns and controls them for the citizens. Under capitalism, private individuals own and control them, and government activity is kept to a minimum. Profit is the main motive in capitalism.

Behavioural objectives

By the end of the lesson, students should be able to:

1. Define socialism, communism and capitalism.
2. State the features of each ideology.
3. Name the classes of people in a capitalist society.
4. Describe the three types of Bourgeoisie.
5. Compare the role of government in socialism and in capitalism.

What is socialism?

Socialism is an ideology that advocates collective ownership, control and organisation of the means of production, distribution and exchange of goods and services. In this system, most of the factors of production and distribution are controlled and operated by the government on behalf of the citizens. Goods and services are produced to satisfy the wants of all citizens, and profit is not the aim.

The ideology was formulated by Karl Marx, a German (1818-1883). He hoped, through this ideology, to fight the evils of capitalism.

Features of socialism

1. The government owns and controls almost all the means of production and distribution.
2. Goods and services are produced according to the needs and satisfaction of the citizens, and profit is not the aim.
3. There is central planning of production, distribution and exchange of goods and services.
4. Full employment is one of the cardinal principles of socialism.
5. Socialism encourages equality and equal opportunities for all.
6. Wealth is distributed according to individual contributions and needs.

What is communism?

Communism is the highest stage of socialism, in which all the means of production and distribution are controlled by the government. Individual ownership of property is completely abolished in a communist state.

Karl Marx also propounded this ideology. According to the theory and principles of communism, the state owns everything and resources are distributed to the citizens according to their needs and ability. No country has ever practised communism.

Features of communism

1. Communism advocates the complete abolition of government and a stateless society where there is no government, exploitation or oppression.
2. It seeks to enthrone a classless society where everybody is equal socially and economically.
3. It stipulates compulsory confiscation of private properties without compensation.
4. There is a centrally planned economy and the use of force in achieving a communist goal.
5. Citizens receive resources only according to their needs and ability.

What is capitalism?

Capitalism is an economic ideology that permits individuals to own and control the means of production, distribution and exchange in a country, while the economic activity of the government is at a minimum.

This political and economic ideology has been practised in nearly all countries of the world since the fall of socialism in the 1900s. In this system, private individuals who have economic strength participate in all sectors of the economy. Profit is the main motive for participation, and resources are allocated according to prices.

Features of capitalism

1. Private individuals are permitted under the law to own and control most means of production and distribution. Government participation is at a minimum.
2. Consumers have a wide range of choice in a capitalist economy.
3. The forces of demand and supply of essential commodities determine their prices and distribution.
4. The major goal of the businessman in a capitalist economy is profit.
5. There is usually competition and economic rivalry between firms, consumers and others.
6. A capitalist society promotes a class society. There are three classes of people in a capitalist society (see the next section).
7. Capitalism is often associated with democratic principles. This is shown in the choice of leaders and the permission of individual liberties.
8. A capitalist state allows freedom of enterprise. Private individuals can own companies and manufacture goods of their choice.
9. Advanced technology is used to ensure a high level of productivity, favourable competition and an increase in profit.
10. The masses can determine what type of goods to buy and where to work. No laws restrict people from working in any particular firm or for the government.
11. There is personal liberty.

What are the classes in a capitalist society?

1. The Peasants: the downtrodden masses who are struggling to earn their living.
2. The Bourgeoisie: the rich capitalists who own large business organisations and control political power. There are three types:
   • National Bourgeoisie: people who become wealthy through hard work.
   • Comprador Bourgeoisie: those who make wealth through fraud, money laundering, drug trafficking and similar means.
   • Petit Bourgeoisie: the emerging wealthy persons.
3. The Proletariat: the working class, who earn their livelihood by selling their labour for a wage or salary.

Apart from the proletariat, there is also a set of people known as the lumpenproletariat. They are the unemployed or under-employed people in society. They are usually a security risk in society.

Evaluation

1. Define socialism and state four of its features.
2. Explain how communism differs from socialism.
3. State four features of capitalism.
4. Name the three types of Bourgeoisie and describe each.

Assignment

1. Write short notes on the Proletariat and the lumpenproletariat.
2. Compare the role of government in a socialist economy with its role in a capitalist economy.