What is Communism?

Robinhood Learn
Democratize finance for all. Our writers’ work has appeared in The Wall Street Journal, Forbes, the Chicago Tribune, Quartz, the San Francisco Chronicle, and more.

Communism is a political ideology focused on creating a classless society, eliminating private ownership of property, and promoting communal ownership of the means of production.

🤔 Understanding communism

Communism is a political ideology founded on the belief that a society can achieve equality by eliminating private ownership of the means of production (resources required to produce goods). They are instead controlled by the state, and every individual receives a share of the benefits derived from communal labor, based on their needs. This idea was first expressed by German philosophers Karl Marx and Friedrich Engels in The Communist Manifesto in 1848. They argued that class conflict was inherent in capitalism and encouraged the working class to rise up against the bourgeoisie, which owned the means of production and took all the profits. The goal was to create a classless society in which everyone would contribute based on their abilities and receive according to their needs.


After Fidel Castro’s forces overthrew a US-backed military dictator in 1959, Cuba became the first communist state in the Western Hemisphere. Castro nationalized private business and industry, oversaw massive land reforms, and took control of American businesses and estates. The Communist Party exerted control over all aspects of Cuban life, and dissent was brutally quashed. At the same time, the government guaranteed employment and offered free education and healthcare to all citizens. In 2008, Castro’s brother, Raul, took over as Cuba’s leader, and sixty years later, it remains a communist country.


Communism is like a round table that revolves, giving everyone a share of the harvest…

In an ideal communist society, it doesn’t matter who grew the crops, because no one can claim to own the land. You give your harvest to the state, which then distributes it among everyone. Everybody eats because it’s their right, even if they didn’t work for it.

Ready to start investing?
Sign up for Robinhood and get your first stock on us.
Sign up for Robinhood
Certain limitations apply

The free stock offer is available to new users only, subject to the terms and conditions at rbnhd.co/freestock. Free stock chosen randomly from the program’s inventory.

Tell me more…

What is communism?

Communism is a political ideology that advocates for public ownership of all means of production — everything needed to produce goods, from capital to factories to raw materials. Communism seeks to eliminate the class system that stems from capitalism, in which one group (the proletariat) does all the work and the other (the bourgeoisie) gets all the profits, since it owns the means of production. This political theory, based on the work of Karl Marx, argues for a class war that would eliminate private ownership of property, and along with it, the inequality and suffering inherent in capitalism. Everyone would work according to his abilities and get paid based on their needs.

How is communism different from socialism and capitalism?

Communism and socialism are often used as synonyms. They both refer to political and economic philosophies that argue for public rather than private ownership, especially of the primary ways of creating, distributing, and trading goods. Both are supposed to fix problems attributed to free-market capitalism, such as vast inequality and exploitation.

Marx didn’t clearly differentiate between socialism and communism, but some people see socialism as the first phase on the path to communism. In pure communism, private property doesn’t exist. Everyone owns everything in common and gets a share based on their needs. The state provides citizens with basic services, like housing, healthcare, and education, and controls all production. Violent revolution is seen as key to creating a communist state.

Socialism, on the other hand, allows individuals to own property. However, the main ways of generating wealth, such as industry, are owned in common and managed by a government that is democratically elected. Reform can happen through a democratic process, not necessarily violent overthrow. In social democracies, reform and wealth redistribution can take place through a democratic government and go along with free-market capitalism.

What is the political ideology behind communism?

German philosophers Karl Marx and Friedrich Engels first outlined the foundation for communist ideology in their seminal work, The Communist Manifesto, in 1848.

According to Marx, society was divided into two classes: the bourgeoisie and the proletariat. The bourgeoisie owned all the means of production and used it to generate wealth. The proletariat was the working class laboring for the bourgeoisie for meager returns. The result was an inevitable class struggle playing out in historical events such as the French Revolution.

Marx advocated for a new classless political system in which the proletariat would dominate. This perfect society would be achieved by revolting against and replacing the old system. A central planning committee would then be established to help smooth out the transformation process. The state would then wither away as a classless communist society took form. In theory, this would create a communist society where equality prevailed.

What are the characteristics of a communist government?

In The Communist Manifesto, Karl Marx envisioned a communist system run according to the following principles:

  • Heavy progressive taxation on income.
  • No private ownership of assets or right to inheritance.
  • Everyone is required to work according to his abilities. However, child labor is abolished, and all children receive free education in public schools.
  • The state manages all capital and regulates prices. It also manages all means of transport and communication.
  • Eventually, when the ideals of communism are realized, the state withers away.

Marx was vague about the type of political system to be established after a successful uprising. Attempts to establish communism in the real world have ended up creating authoritarian governments that benefited a political elite. Here are two examples:

The Soviet Union

During the Russian Revolution in 1917, Bolsheviks — a group of intellectuals motivated by communist ideology and led by Vladimir Lenin — toppled the last Russian monarch, Czar Nicholas II. A provisional government took control of Russia, but it became unpopular since it was mostly made up of the wealthy and opposed social reform. Lenin took this opportunity to organize the working class into a volunteer paramilitary force, known as the Red Guards. Together with the Bolsheviks, they seized power from the provisional government in a bloodless coup making Lenin the leader of the Soviet Union, the world’s first communist state.

After a devastating civil war, Czarist forces were defeated in 1920, and the Union of Soviet Socialist Republics (USSR) was established two years later. Lenin nationalized all industries and expropriated grain from farmers. Industrial and agricultural production plunged, and around five million people died of famine in 1921. Lenin silenced dissent with a new secret police force.

After Lenin died in 1924, Joseph Stalin rose to power. He implemented a series of five-year plans meant to transform the Sovient Union from an agricultural to an industrial society. The government controlled the means of production and decided what to produce and where. Prices were usually set by controls, not market forces. And the government took over farms through a process of forced collectivization. Although the economy improved during Stalin’s reign, which lasted until 1953, some estimate that the dictator was responsible for 20 million deaths, plus millions being sent to forced labor camps.

After Stalin died, the Communist Party stayed in power. Leaders focused on the Cold War, competing in an “arms race” with the US and extending influence in Eastern Europe and beyond. After Mikhail Gorbachev took the reins in 1985, he promoted glasnost (political openness) and perestroika (economic restructuring) to try to promote economic growth. That wasn’t enough to prevent the Soviet Union from eventually collapsing in 1991.

Communist China

After a civil war, Communist leader Mao Zedong founded the People’s Republic of China in 1949. The state took ownership of factories, and Chinese farmers were forced into collectives. During the “Great Leap Forward” starting in 1958, Mao mobilized workers with the goal of increasing agricultural and industrial production. Instead, the policy led to a famine, and millions of people died.

In 1966, Mao launched the “Cultural Revolution” in an attempt to strengthen his power and stamp out opposition. This effort emphasized ideological purity and revolutionary spirit, and associated repression led to the deaths of 1.5 million people.

When Mao died in 1976, he was succeeded by Deng Xiaoping. He initiated market reforms that saw China move from a centrally planned economy to a more market-oriented one and opened the country to foreign trade and investment.

Though the Communist Party still rules China today, the private sector can start and operate businesses. The country also has Special Economic Zones (SEZs) that offer tax and business incentives to foreign investors and where foreign and domestic trade can take place without any interference from the Chinese government. China does not have an electoral democracy, and there’s limited freedom of speech. However, China’s economy has become the largest (based on purchasing power parity) and is among the fastest-growing in the world.

Why did communism fail?

Communism in some form still exists in countries like China, Cuba, North Korea, and Vietnam. However, its sway as a political philosophy has waned, particularly after the collapse of the Soviet Union.

Communism failed in the Soviet Union for several reasons. Under Mikahil Gorbachev, economic mismanagement and a command economy meant chronic shortages of consumer goods, stagnation, and vulnerability to declines in the price of oil. Gorbachev’s glasnost opened the door to widespread criticism of the government and exposed citizens to more ideas from Western capitalism. The Soviet occupation of Afghanistan weakened the military. And the nuclear disaster in Chernobyl destroyed trust in the government.

This followed decades of tragedies and brutal suppression in communist nations, from famines in Ukraine and China to the deaths of millions under Stalin and Mao. Ultimately, people lost trust in communist ideology because it didn’t deliver what it had promised.

North Korea, which still calls itself a communist country, has maintained its political system through totalitarian rule and isolation. In China and Vietnam, the Communist Party recognized the need to put economic reform before politics. In China, for example, 800 million people were lifted out of poverty thanks to free-market reforms.

Ready to start investing?
Sign up for Robinhood and get your first stock on us.Certain limitations apply

The free stock offer is available to new users only, subject to the terms and conditions at rbnhd.co/freestock. Free stock chosen randomly from the program’s inventory.


Related Articles

You May Also Like

The 3-minute newsletter with fresh takes on the financial news you need to start your day.
The 3-minute newsletter with fresh takes on the financial news you need to start your day.

© 2020 Robinhood Markets, Inc. Robinhood® is a trademark of Robinhood Markets, Inc.

This information is educational, and is not an offer to sell or a solicitation of an offer to buy any security. This information is not a recommendation to buy, hold, or sell an investment or financial product, or take any action. This information is neither individualized nor a research report, and must not serve as the basis for any investment decision. All investments involve risk, including the possible loss of capital. Past performance does not guarantee future results or returns. Before making decisions with legal, tax, or accounting effects, you should consult appropriate professionals. Information is from sources deemed reliable on the date of publication, but Robinhood does not guarantee its accuracy.

Robinhood Financial LLC provides brokerage services. Robinhood Securities, LLC, provides brokerage clearing services. Robinhood Crypto, LLC provides crypto currency trading. All are subsidiaries of Robinhood Markets, Inc. ('Robinhood').