27/12/2019 Communism Definition

ECONOMY GOVERNMENT & POLICY

Communism
By JAMES CHEN | Updated Apr 29, 2019

What is Communism?
Communism is a political and economic ideology that positions itself in opposition to liberal
democracy and capitalism, advocating instead a classless system in which the means of
production are owned communally and private property is nonexistent or severely curtailed. 

https://www.investopedia.com/terms/c/communism.asp 1/9
27/12/2019 Communism Definition

Understanding Communism
"Communism" is an umbrella term that encompasses a range of ideologies. The term's
modern usage originated with Victor d'Hupay, an 18th-century French aristocrat who
advocated living in "communes" in which all property would be shared and "all may benefit
from everybody's work." The idea was hardly new even at that time, however: the Book of
Acts describes first-century Christian communities holding property in common according to
a system known as koinonia, which inspired later religious groups such as the 17th-
century English "Diggers" to reject private ownership. 

The Communist Manifesto

Modern communist ideology began to develop during the French Revolution, and its seminal
tract, Karl Marx and Friedrich Engels' "Communist Manifesto," was published in 1848. That
pamphlet rejected the Christian tenor of previous communist philosophies, laying out a

https://www.investopedia.com/terms/c/communism.asp 2/9
27/12/2019 Communism Definition

materialist and – its proponents claim – scientific analysis of the history and future trajectory
of human society. "The history of all hitherto existing society," Marx and Engels wrote, "is the
history of class struggles." 

The Communist Manifesto presented the French Revolution as a major historical turning
point, when the "bourgeoisie" – the merchant class that was in the process of consolidating
control over the "means of production" – overturned the feudal power structure and
ushered in the modern, capitalist era. That revolution replaced the medieval class struggle,
which pitted the nobility against the serfs, with the modern one pitting the bourgeois owners
of capital against the "proletariat," the working class who sell their labor for wages. (See
also, What Is the Difference Between Communism and Socialism?)

In the Communist Manifesto and later works, Marx, Engels and their followers advocated
(and predicted as historically inevitable) a global proletarian revolution, which would usher
in first an era of socialism, then of communism. This final stage of human development
would mark the end of class struggle and therefore of history: all people would live in social
equilibrium, without class distinctions, family structures, religion or property. The state, too,
would "wither away." The economy would function, as a popular Marxist slogan puts it,
"from each according to his ability, to each according to his needs."  

KEY TAKEAWAYS
Communism is an economic ideology that advocates for a classless society in which
all property and wealth is communally-owned, instead of by individuals.
The communist ideology was developed by Karl Marx and is the opposite of a
capitalist one, which relies on democracy and production of capital to form a
society.
Prominent examples of communism were Soviet Union and China. While the former
collapsed in 1991, the latter has drastically revised its economic system to include

https://www.investopedia.com/terms/c/communism.asp 3/9
27/12/2019 Communism Definition

elements of capitalism.

The Soviet Union

Marx and Engels' theories would not be tested in the real world until after their deaths. In
1917, during Word War I, an uprising in Russia toppled the czar and sparked a civil war that
eventually saw a group of radical Marxists led by Vladimir Lenin gain power in 1922. The
Bolsheviks, as this group was called, founded the Soviet Union on former Imperial Russian
territory and attempted to put communist theory into practice.

Prior to the Bolshevik Revolution, Lenin had developed the Marxist theory of vanguardism,
which argued that a close-knit group of politically enlightened elites was necessary to usher
in the higher stages of economic and political evolution: socialism and finally communism.
Lenin died shortly after the civil war ended, but the "dictatorship of the proletariat," led by
his successor Joseph Stalin, would pursue brutal ethnic and ideological purges as well as
forced agricultural collectivization. Tens of millions died during Stalin's rule, from 1922 to
1952, on top of the tens of millions who died as a result of the war with Nazi Germany.

Rather than withering away, the Soviet state became a powerful one-party institution that
prohibited dissent and occupied the "commanding heights" of the economy. Agriculture, the

https://www.investopedia.com/terms/c/communism.asp 4/9
27/12/2019 Communism Definition

banking system and industrial production were subject to quotas and price controls laid out
in a series of Five Year Plans. This system of central planning enabled rapid industrialization,
and from 1950 to 1965 growth in Soviet gross domestic product (GDP) outpaced that of the
U.S. In general, however, the Soviet economy grew at a much slower pace than its capitalist,
democratic counterparts.

Weak consumer spending was a particular drag on growth. Central planners' emphasis on
heavy industry led to chronic underproduction of consumer goods, and long lines at
understocked grocery stores were a fixture of Soviet life even during periods of relative
prosperity. Thriving black markets – termed the "second economy" by some academics –
catered to demand for cigarettes, shampoo, liquor, sugar, milk and especially prestige goods
such as jeans smuggled in from the West. While these networks were illegal, they were
essential to the party's functioning: they alleviated shortages that, left unchecked,
threatened to spark another Bolshevik Revolution; they provided party propagandists with a
scapegoat for shortages; and they lined the pockets of party officials, who would either take
payoffs to look the other way or grow rich running black market operations themselves.

The Soviet Union collapsed in 1991, following a push to reform the economic and politic
system and provide greater room for private enterprise and free expression. These reform
pushes, known as perestroika and glasnost, respectively, did not halt the economic decline
the Soviet Union suffered in the 1980s and likely hastened the Communist state's end by
loosening its grip on sources of dissent.

Communist China
In 1949, following more than 20 years of war with the Chinese Nationalist Party and Imperial
Japan, Mao Zedong's Communist Party gained control of China to form the world's second
major Marxist-Leninist state. Mao allied the country with the Soviet Union, but the Soviets'
policies of de-Stalinization and "peaceful coexistence" with the capitalist West led to a
diplomatic split with China in 1956.

Mao's rule in China resembled Stalin's in its violence, deprivation, and insistence on
ideological purity. During the Great Leap Forward from 1958 to 1962, the Communist Party
ordered the rural population to produce enormous quantities of steel in an effort to
jumpstart an industrial revolution in China. Families were coerced into building backyard
furnaces, where they smelted scrap metal and household items into low-quality pig iron that
offered little domestic utility and held no appeal for export markets. Since rural labor was
unavailable to harvest crops, and Mao insisted on exporting grain to demonstrate his
policies' success, food became scarce. The resulting Great Chinese Famine killed at least 15

https://www.investopedia.com/terms/c/communism.asp 5/9
27/12/2019 Communism Definition

million people and perhaps more than 45 million. The Cultural Revolution, an ideological
purge that lasted from 1966 until Mao's death in 1976, killed at least another 400,000 people.

After Mao's death, Deng Xiaoping introduced a series of market reforms that have remained
in effect under his successors. The U.S. began normalizing relations with China when
President Nixon visited in 1972, prior to Mao's death. The Chinese Communist Party remains
in power, presiding over a largely capitalist system, though state-owned enterprises
continue form a large part of the economy. Freedom of expression is significantly curtailed;
elections are banned (except in the former British colony of Hong Kong, where candidates
must be approved by the party and voting rights are tightly controlled); and meaningful
opposition to the party is not permitted. 

The Cold War

The U.S. emerged from World War II the world's richest and most militarily powerful nation.
As a liberal democracy that had just defeated fascist dictatorships in two theaters, the
country – if not all of its people – felt a sense of exceptionalism and historical purpose. So
did the Soviet Union, its ally in the fight against Germany and the world's only revolutionary
Marxist state. The two powers promptly divided Europe into spheres of political and
economic influence: Winston Churchill called this dividing line the "Iron Curtain."

The two superpowers, both of which possessed nuclear weapons after 1949, engaged in a
long standoff known as the Cold War. Due to the doctrine of Mutually Assured Destruction –
the belief that a war between the two powers would lead to a nuclear holocaust – no direct
military engagements occurred between the U.S. and the Soviet Union, and the Iron Curtain
was largely quiet. Instead they fought a global proxy war, with each sponsoring friendly
regimes in post-colonial nations in Africa, Asia and Latin America. The U.S. and Soviet Union
both sponsored coups to install such regimes in various countries.

The closest the U.S. came to a direct military conflict with the Soviet Union was the 1962
Cuban missile crisis. The U.S. did fight a prolonged hot war in Vietnam, however, in which its
military supported South Vietnamese forces fighting the Chinese- and Soviet-supported
North Vietnamese army and South Vietnamese communist guerrillas. The U.S. withdrew
from the war and Vietnam was united under communist rule in 1975.

The Cold War ended with the collapse of the Soviet Union in 1991.

Why did Communism Fail?

While there has been extensive study of the reasons for communism's failure, researchers
have pinpointed a couple of common factors that contributed to its demise.

https://www.investopedia.com/terms/c/communism.asp 6/9
27/12/2019 Communism Definition

The first is an absence of incentives among citizens to produce for profit. The profit incentive
leads to competition and innovation in a society. But an ideal citizen in a communist society
was selflessly devoted to societal causes and rarely stopped to think about his or her welfare.
"At all times and all questions a party member should give first consideration to the interests
of the Party as a whole and put them in the foremost and place personal matters and
interests second," wrote Liu Shaoqi, the second chairman of the People's Republic of China.

The second reason for communism's failure were the system's inherent inefficiencies, such
as centralized planning. This form of planning requires aggregation and synthesis of
enormous amounts of data at a granular level. Because all projects were planned centrally,
this form of planning was also complex. In several instances, growth data was fudged or
error-prone in order to make facts fit into planned statistics and create an illusion of
progress.

The concentration of power into the hands of select few also bred inefficiency and,
paradoxically enough, provided them with incentives to game the system for their benefit
and retain their hold on power. Corruption and laziness became endemic features of this
system and surveillance, such as the one that characterized East German and Soviet
societies, was common. It also disincentivized industrious and hard working people. The end
result was that the economy suffered.

Related Terms
What Is Socialism?
Socialism is an economic and political system based on public or collective ownership of the means of
production, which emphasizes equality rather than achievement. more

Vladimir Lenin
Vladimir Lenin was the architect of Russia’s 1917 Bolshevik revolution and the first leader of the Union
of Soviet Socialist Republics. more

Marxism Definition
Marxism is a social, political, and economic philosophy that examines the effect of capitalism and
advocates for revolutionary communism. more

Karl Marx
Karl Marx was a 19th century philosopher, author and economist famous for his ideas about
capitalism and communism. He was the father of Marxism. more

Friedrich Engels Definition

https://www.investopedia.com/terms/c/communism.asp 7/9
27/12/2019 Communism Definition

Friedrich Engels was a German philosopher, social scientist, journalist and businessman who
is credited with helping begin the communist movement. more

Conflict Theory Definition

The conflict theory states that society is in a constant state of conflict due to competition for limited
resources. more

Partner Links

Related Articles
GOVERNMENT & POLICY
What is the difference between Communism and
Socialism?

ECONOMICS
What Exactly is a Socialist Economy?

MACROECONOMICS
How did the Soviet economic system affect consumer
goods?

https://www.investopedia.com/terms/c/communism.asp 8/9
27/12/2019 Communism Definition

ECONOMICS
Why the USSR Collapsed Economically

GOVERNMENT & POLICY

Socialist Economies: How China, Cuba And North Korea
Work

GOVERNMENT & POLICY

Capitalist vs. Socialist Economies: What's The
Difference?

TRUSTe

Terms of Use Contact Us News

Advertise Dictionary Careers

Investopedia is part of the Dotdash publishing family.

The Balance | Lifewire | TripSavvy | The Spruce and more

https://www.investopedia.com/terms/c/communism.asp 9/9