Capitalism vs Communism[1] What is the difference between capitalism vs communism? If indeed "a picture is worth a thousand words," the difference may best be explained by this Pentagon photo of the Korean Peninsula at night, showing capitalist South Korea glowing with prosperity and communist North Korea mired in darkness:
Capitalism is an informal economic system in which property is largely privately owned, and in which profit provides incentive for capital investment and the employment of labor. Communism is a formal economic system in which property, particularly capital property (e.g. factories, machines, tools, etc.), is commonly owned and scarce resources are allocated through planning as opposed to price signals in a free market. [3] The differences between capitalism and communism can be summarized as follows:
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