Frequently Asked Questions

Karl Marx was the co-author of The Communist Manifesto and an avowed communist. However, he recognized that promoting socialism was a means of achieving communism.

Socialism allows for some private property, while the government maintains control over businesses and resources in the economy. Communism goes further by abolishing private property. In practice, the differences are minor since both systems give the state ultimate control over an individual’s economic liberties.

Historically, the only people who have benefitted in “socialist” or “communist” countries are those who control the political system. Living standards fall or stagnate, personal liberties are curtailed, and economic opportunities shrink for most of the population, especially when compared to countries that embrace capitalism. The Soviet Union, Cuba, and modern-day Venezuela are clear examples.

The twentieth century demonstrates what happens when countries reject state-controlled economies and embrace capitalist economies. Incomes rise and people are lifted out of poverty. Critics of capitalism often contend that the rich gain but the poor don’t. The truth is that both gain, especially when compared to socialist alternatives.

The government always has a role to play in even the most “capitalist” economies. It acts to enforce contracts and uphold the rule of law. Since free-market capitalism is predicated on voluntary agreements, the government provides assurance that any injuries done to one another in the form of violence or breaking of contracts is punished with just compensation.

The government centrally plans the economy in a socialist economy. Individuals must obtain permission from the government in order to work, change occupations, and even purchase scarce goods.

Yes. Many people believe that the larger the social safety net, the more “socialist” a country is. But that’s not necessarily the case. Under socialism the government owns the “means of production” and makes economic decisions instead of individuals. Large government transfers are consistent with market economies that tax economic activity, but ultimately leave individuals free to work and run businesses.

Supply and demand determine prices in a capitalist economy. If consumers and producers can agree on a price for a sale, that is what the price will be. In a socialist economy, it is the government who sets the supply and price level of products. If demand is higher or lower than what the government supplies, there are shortages and surpluses, respectively.