The thread below seems to have gotten out of hand, so I offer this as a comment on some of the misconceptions permeating the discussion on economics.
Capitalism is not a “system.” Capitalism is the lack of a system. It is what happens when men are allowed to act freely, but are unable to use force against each other.
Communism is a “system.” Communism uses force to place certain individuals into positions from where they can exert artificially created power over wealth-generating entities. Communism requires a network of people thus empowered to maintain it. Capitalism requires nothing at all, it simply exists.
Communism is founded upon what is universally considered within the economics world to be a flawed theory. The Marxian theory of wealth, the labor-value theory, was shown to be flawed over 100 years ago, first by Bohm-Bawerk, then others.
Imagine this scenario: three men, each beginning with $1 worth of raw materials. One man can turn the $1 into a fine shoestring, worth $2. The second can turn the $1 into an excellent sole, worth $2. The third can turn the $1 into finely crafted leather, worth $2. Under the Marxian theory, the story ends there. Each man has used his labor-power to increase wealth by $1, for a total generation of $3.
Now this: another man desires to produce and sell shoes. He finds the three laborers, informs them of each other’s existence, secures a place where they can meet to combine their efforts, and the result is a shoe. Assuming for hypothetical that the labor involved in assembling the three pieces is negligible, $3 of goods is the cost. Few people desire to track down all three elements of a shoe themselves, so they pay $10 for a finished product. Instead of $3 wealth generation, there is $7 wealth generation. Yet the Marxian theory only accounts for the $3 which was provided by laboring on materials to produce more valuable materials. It does not account for the other $4. A share of this $4 is taken by the fourth man, who produced nothing by labor, and the rest is divided among the first three men.
Could the three men have simply found each other, and went into business themselves thus dividing the entire $4 amongst themselves? Certainly, that’s exactly what would often happen. A common misconception about Communism is that this is facilitated, cutting out the capitalist’s share and dividing the benefits among the laborers only. In reality, Communism supplants the capitalist and replaces him with a government figure. Government organizes people together in ways that it believes will best generate wealth (proving that even no Communist government has ever bought into Marx’s economic theory.) The capitalist’s share is not directly taken, rather the salary of the government official is taken from the entire population.
As an economic system, Communism replaces hundreds of capitalists working to facilitate the generation of wealth with one conceptual entity, staffed by hundreds of government officials with no direct stake in the results of their efforts. How does it do this? By the use of force. It puts a gun to our heads and demands we hand over control of our labor to government. This is a “system” in every sense of the word.
A position espoused often is that communism works in theory, but not in the real world. It doesn’t even work in theory. There is simply no way to efficiently supplant self-interested capitalists with government officials and retain the levels of wealth-generation that capitalism affords us.