Communism

Topic: Scarcity, Choice and Economic Systems · NCERT: Beyond NCERT

Meaning

Communism is Karl Marx's ideal final stage of society. In it, all property is owned in common, there are no classes (no rich owners and poor workers), there is no state, and goods are shared according to need.

It matters because it is the far end of the scale of economic systems. Exams often test how it differs from socialism. Marx's formula (1875) is: "From each according to his ability, to each according to his needs."

Explanation

The four features of the communist ideal

• Common ownership of all property. Land, factories and tools belong to the whole community, not to any person or the state.
• Classless society. Nobody owns the means of production (land, factories, machines), so there is no owner class and no worker class.
• Stateless society. The state has "withered away" (slowly disappeared) because it is no longer needed. The community decides what to produce, how and for whom.
• Distribution by need. People work as much as they can, and they take what they need, whatever work they did.

Where communism sits among economic systems

• Every economy must answer three central problems of an economy:
• What to produce, and how much.
• How to produce it.

• For whom to produce it.

• A market economy leaves these to buyers and sellers, through prices.

• A centrally planned economy (also called a command economy) leaves them to the government or one central authority.
• Socialism gives them to the government, based on what society needs. The state still exists and owns property.
• Communism gives them to the community. The state is gone.
• In Marx's thinking, socialism is a stage on the way. Communism is the end point.
• It is an ideal. No country has ever fully reached it.

Communist parties and real states

• A communist party can run a socialist state.
• The USSR's ruling party was the Communist Party. Its planning body, Gosplan, turned the Party's goals into detailed national plans [1].

• But the USSR never reached the stateless "communism" that Marx described. It had a strong state that owned most property.

• Gosplan was set up in February 1921 as an advisory council. It got full planning powers in 1928, when the First Five-Year Plan was adopted [1].

• First Soviet Five-Year Plan (1928–32), under Joseph Stalin: it focused on heavy industry and collectivisation of agriculture (merging private farms into state-run or collective farms). The cost was a steep fall in consumer goods [2].
• Gosplan's role changed many times until the breakup of the Soviet Union in 1991 [1].

Why the ideal ran into trouble: incentives and information

• The incentive problem. An incentive is a reward that makes a person work harder or better.
• Soviet fruit example (Class 11): farmers packed rotten fruit together with fresh fruit.
  • They did not own the land.
  • So they gained no profit and suffered no loss.
  • So they did not care about quality, and output stayed poor even on fertile land.

• Worked example:

  • A farmer who owns the land sorts out 10 kg of rotten fruit. The rest sells at a better price, so they earn, say, ₹500 more.
  • A worker on a state farm gets the same fixed wage either way. Sorting earns them ₹0 extra.
  • So only the owner has a reason to sort. With common ownership, nobody has this reason.

• The information problem (socialist calculation debate, 1920s–1940s).

• Ludwig von Mises (1920): without market prices, planners cannot work out the best use of resources.
• Friedrich Hayek (1945): the knowledge an economy needs is spread across millions of people, and prices collect it automatically.
  • The price of wheat rises.
  • Farmers grow more wheat and buyers use less.
  • No central office has to gather this information.
• A system with no markets and no prices loses this signal. Nobody can collect that information by hand for millions of goods.

In India

• India never chose communism. It borrowed the Soviet Five-Year Plan idea but kept a mixed economy, where the state and the private sector both work. Private property and markets stayed.
• Planning Commission: created by a Government Resolution of 15 March 1950 [3].
• NITI Aayog (National Institution for Transforming India) replaced it and came into force on 1 January 2015. The 1950 resolution was superseded (replaced) [3][4].
• Planning moved from a body that shared out resources to a policy think tank. This matched the market-oriented shift that began with the 1991 reforms.
• "Land to the tiller" land reforms follow the opposite logic to common ownership. The person who actually farms the land should own it, so they have a reason to invest in it.

Don't confuse with

• Socialism: the state still exists and owns property, and the classic formula is "to each according to his contribution" (pay for the work you give). Communism is stateless and pays by need.
• Centrally planned (command) economy: a way of running an economy, where a central authority makes production decisions (e.g. USSR, North Korea, Cuba). Communism is a final ideal society with no state at all, so there is no central authority.
• Communist Party rule: a party that has "Communist" in its name, like the USSR's [1], can run a socialist state. That does not mean the country has reached communism.
• Mixed economy (India): the state and the private sector work side by side, and private property is kept. Communism abolishes private property completely.

Prelims Hooks

• Communism = a classless, stateless society with common ownership of all property. It has never been fully achieved.
• Trap: "From each according to his ability, to each according to his needs" = communism (Marx, 1875). "To each according to his contribution" = socialism.
• In communism, the community decides and the state "withers away". In socialism, the government decides based on social need.
• Gosplan (USSR's planning board): set up February 1921, full planning powers 1928 [1]. First Soviet Five-Year Plan: 1928–32 (Stalin), which stressed heavy industry and collectivisation [2].
• Class 11 lists Cuba and China as socialist examples, not communist ones. Class 12 calls China (most of the 20th century) the closest example of central planning.
• Mises (1920) and Hayek (1945): the socialist calculation debate. Without prices, planners lack the information needed to allocate resources.

Mains Points

• Equity vs efficiency:
• The communist ideal aims at full equity (fairness): goods by need, no classes.
• But without ownership, people have no reason to work better (the Soviet fruit example). Without prices, planners lack information (Hayek). So quality, innovation and output suffer.

• Useful in GS-III answers on the role of the state in the economy.

• India's middle path:

• India used Soviet-style Five-Year Plans [2] but kept private property and markets in a mixed economy.
• It moved further towards markets after 1991, and from the Planning Commission to NITI Aayog in 2015 [3][4].

• The state still keeps a role in merit goods such as health and education.

• Ownership and incentives in policy:

• "Land to the tiller" reforms reverse the common-ownership model. They give farmers ownership so they invest more and output rises.
• Link this to debates on agrarian reform and farm productivity.

Related concepts

• Centrally planned economy
• Socialism
• Ownership and incentives

Read more

• Economic systems II: central planning, socialism and communism