The REAL Difference Between Socialism and Capitalism

For as much as I hear people trying to do so, I have never heard anyone explain the real difference between Capitalism and Socialism.  If you understand what these two things are, the difference is actually quite easy to understand.  If you have a few short minutes, I’ll prove it.

Capitalism is an economic* system — not a system of government. 

As a system designed to facilitate a free and efficient exchange of goods and services, Capitalism is neutral.  It is neither ‘good’ nor ‘evil’: neither ‘greedy’ nor ‘altruistic.’  How it manifests itself is entirely up to the nature of the people who use it, as well as those who write the laws of the society within which the Capitalist system must operate.  But this is the key point: Capitalism does not make the laws, therefore, it is governed, it cannot ‘force.’

Socialism is a system of government — not an economic* system.

Socialism is also a system, but it is a tyrannical system of government.  It is tyrannical because it assumes authority over every aspect of society.  But also because it is not based upon voluntary participation.  On the contrary.  Because Socialism is predicated upon the enslavement of those who produce for the benefit of those who consume, it must always be forced upon a society.  By definition, this is tyranny.  It makes no difference whether it is forced on society by revolution or by popular vote, Socialism is still tyranny.  In the case of ‘Democratic Socialism,’ it is, the tyranny of the massesBut this is the key point: Socialism makes the laws, therefore, it does the governing, the ‘forcing.’

Let’s clear up the primary objection that I am sure will come from what I just wrote.  If you look up the definition of ‘Capitalism,’ it will usually say that ‘Capitalism’ is a political system.  IT IS NOT!  That idea has been inserted into the definition by people who are anti-Capitalist.  How do I know this is true?  Look up the definition of a legal system.  If you use a credible source, you are going to find that the definition of ‘Political System’ will tie it to the actual government.  Capitalism is not the government.  It is a means of exchanging goods and services, not for making laws and regulating a nation’s legal affairs.  This means that Capitalism is not a political system.  Never has been and never will be.

So, this is the primary difference between Capitalism and Socialism: one is a market system, the other is a system of government.  The first — Capitalism — is neutral, and can be ‘greedy’ nor ‘altruistic,’ and is most often a mixture of both as this is the nature of humanity.  The other — Socialism — is a system of government and it is always tyrannical.  Capitalism never dictates to government, but Socialism is government — pure government — and it always dictates.  The two simply are not the same thing — not even close.  Therefore, any comparison between the two is a false comparison — a fallacy.  It is as wrong to compare them as it is to compare a driver to the traffic laws (and yes, the driver is to traffic laws as Capitalism is to the government: the driver can obey the laws or not, but has little to no control over the laws).

  • NOTE: I am using ‘economic’ here in terms of our modern understanding (i.e. a system by which goods and services are exchanged for currency).  However, this has not always been what the word, ‘economic,’ meant.  It was once understood to mean a system of management by laws and regulations/rules.  The term started to take on our more modern meaning when it was used by the earliest Socialist political thinkers in the late 1700’s and early 1800’s.  If you realize that they are Socialists, and that Socialism is a system of centralized planning for every aspect of society, then it is easy to see how the word was co-opted to mean the rules, laws and regulations by which the nation governs the exchange of goods and services.  The point here is, while we may call Capitalism an economic system today, it is not a system of governance.  It does not make laws, it operates under and within them.  Socialism may also be called an economic system, but it does make laws — the very laws that govern the exchange of goods and services. This means that, once again, we have lost a clear understanding of the difference between Capitalism and Socialism because we have lost a clear understanding of our language.  But then, that was by the Socialists’ design. 

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