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The death of Fidel Castro has given investors a renewed sense of optimism about the future of U.S.-Cuba relations. The Herzfeld Caribbean Basin Fund, Inc (NASDAQ: CUBA) is trading up by more than 12.5 percent in Monday’s session. Most Americans are aware that Cuba has a communist government. However, the economic distinctions between the U.S. capitalist structure and Cuba’s communist structure may not be so clear. Here’s a look at four ways capitalism and communism are different. 1. Factors Of Production Factors of production is an economic term for the elements required to produce goods and services. These factors include land, labor and capital. In a capitalist economy, factors of production are owned by individuals. In a communist economy, the factors of production are owned by the government. 2. Production Decisions In a capitalist economy, production is determined by free market forces such as supply and demand. In a communist economy, the government determines which goods and services get produced and how much is available at any given time. 3. Prices When the government controls supply and demand, it also controls prices. Prices are set by market competition in a capitalist economy. In a communist economy, the government sets the prices for goods and services. 4. Resource Allocation In a capitalist economy, successes and failures (profits) of individuals and companies determine the allocation of resources. In a communist command economy, the government determines resource allocation. These decisions are typically made based on macro-economic and/or political considerations. Visit BZTeach for more awesome educational content! Image Credit: By Gastón Cuello (Own work) [CC BY-SA 4.0], via Wikimedia Commons See more from Benzinga © 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
How are capitalism and communism similar and different?The primary difference explained in capitalism vs communism is that capitalism is an economic system that allows private ownership and promotes the idea of a free market; in contrast, communism favors collective ownership and restricts the free market with government intervention portraying a planned economy.
What's the similarities between communism and capitalism?So what do capitalism and communism have in common? They both assumed nature's resources to be infinite and placed value on extracting resources at faster rates distributing them through an ownership-based model.
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