IN POLITICAL DISCUSSIONS, it’s important to define terminology carefully—that can be difficult when it comes to the differences between capitalism and socialism. The broad definition of capitalism is the economic, political, and social system where the means of production (e.g., businesses, factories, farms) are privately owned. The distribution and exchange of goods are coordinated primarily through the free market.
But the latter term in this pairing, “socialism,” is more complex. Socialism is a broad umbrella term for a variety of political, economic, and social philosophies—all related but differing in sometimes subtle ways. The following glossary clarifies the different varieties of socialism that come up in this discussion.
Socialism describes the political, economic, and social ideology in which the government controls the means of production, distribution, and exchange. Decision-making is centrally planned, and private property rights may be limited or even non-existent in favor of forms of communal ownership of property.


Communism is a form of socialism that envisions a classless society in which private property ownership is forbidden or severely limited and most capital and the means of production are commonly owned. Communism’s proponents typically see it as the “ultimate form” of socialism. Thus, all communists are socialists—but not all socialists are communists.
Marxism is a method of political, economic, and social analysis promulgated by the German socialist thinkers Karl Marx (1818–1883) and Friedrich Engels (1820–1895) in works like The Communist Manifesto (published in 1848) and Das Kapital (published in 1867).
Marxism views history as a class conflict in which the labor class should take control of the means of production. A Marxist view of history sees society evolving from feudalism to capitalism, resulting in a revolution to establish socialism, ultimately giving way to communism. Marxism served as the ideological underpinning of various strains of communism—like Leninism, Trotskyism, Stalinism, and Maoism—that emerged around the world in the 20th century.
Democratic Socialism seeks a hybrid version of capitalism and socialism, with private property ownership and some free market operations functioning within government control. Communist thinkers and many socialists typically don’t view democratic socialism as “real” socialism. Instead, they characterize it as capitalism with limited socialistic elements, like state ownership of some corporate entities or a more expansive welfare state funded by higher taxes.
Though there are key differences among these variants, they all share a common ideological DNA, where the state plays a much larger and more direct role in economic activity than under capitalism.