Which Did Better, Communist or Capitalist Countries?

This page compares two kinds of state as they were run. On one side are the states ruled by a communist party with a centrally planned economy: the Soviet Union, Maoist China, East Germany, North Korea, Cambodia under the Khmer Rouge, Cuba, and Vietnam before its 1986 reforms. On the other side are market economies, including welfare states such as Sweden and West Germany, which kept private ownership and markets.

None of the communist-ruled states is communism as Karl Marx described it. Marx pictured communism as a future classless society, and he said little about how it would be run. The record here tests communism as states governed it, not as Marx theorised it.

Statistics from planned economies need care. They measured output as Net Material Product, which leaves out services counted as non-productive, such as state administration. In the 1990s most former communist states in one set of health surveys still counted a tiny or extremely premature baby as born alive only if it survived seven days. That makes infant mortality look lower than under the World Health Organization's definition.

Reported growth is also less reliable where governments face fewer checks. A 2022 study compared reported gross domestic product (GDP) growth with satellite images of light at night. Its results suggest that autocracies overstate their yearly growth by about 35%. A true growth rate of 2%, for example, is reported as 2.7%.

Germany comes close to a controlled experiment, and its eastern half fell far behind. The country shared a language and institutions until 1945, then ran two systems for about 40 years.

In 1936 the territory that became East Germany had gross domestic product (GDP) per head of 103% of the western territory's, on the reconstruction by the economic historian Jaap Sleifer. By 1950 East German GDP per head was 56% of West Germany's, and it stayed at about that level until 1989. Income per head then fell to 31% of the western level in 1991, after demand for East German goods dropped.

Sleifer dates most of the gap to the years between 1936 and 1950. War damage was about the same in both halves. But the Soviet Union dismantled some East German machinery and took reparations from its output. Marshall aid helped investment in the West, while the East's move to central planning discouraged it. The division also cut some eastern industries off from western suppliers.

Under planning, East German labour productivity fell further behind. GDP per head held at about 56% because more East Germans worked, women especially, and for longer hours. Other reconstructions give different levels: a 1985 World Bank study by Irwin Collier put East German national product per head in 1980 at roughly 70% of the West German level.

Most migrants went west. About 2.7 million fled East Germany for the West between 1949 and the building of the Berlin Wall in 1961. East Germany's population fell from 18.4 million at the 1950 census to 16.4 million at the end of 1989. West Germany's grew over the same years, to 62.7 million.

The end of the system had a health cost for men. East German men's life expectancy fell by 0.9 years in 1990 and was back at its 1989 level only in 1992. A study counted 3,400 more deaths among men under 65 in 1990 and 1991 than 1989's death rates predicted, while women's life expectancy hardly fell.

Infant mortality was higher in almost all eastern states than in the west in 1991. By 1997 the gap had gone, after falls of 31% to 52% in the eastern states.

Korea shows the widest income gap, on the weakest data. When the peninsula was divided in 1945, the North held much of the heavy industry, hydroelectric power and mining that Japan had built in Korea.

South Korea's central bank, the Bank of Korea, estimates the North's income each year. For 2025 it put North Korea's gross national income per head at about 3.6% of South Korea's. The South's income per head was 15 times the North's in 1999 and 27 times in 2019, in figures compiled by Statistics Korea.

Health diverged too. A 2018 study estimated that the gap in life expectancy between the two Koreas grew from about one year in 1993 to about ten years in 2008.

These are outside estimates. The Bank of Korea values North Korean output at South Korean prices and value-added ratios. The 2018 study worked out life expectancy from North Korea's own censuses, and used South Korean data only to split the 2008 gap by cause. The figures are rough, but all point the same way. The comparison cannot separate central planning from everything else that differed between the two Koreas, such as the United Nations sanctions imposed on the North.

China's income rose quickly after the market reforms it began in 1978. Its gross domestic product (GDP) per head was 381 yuan in 1978. By 2011 it was 16 times that level after inflation, an average rise of about 8.8% a year, on the National Bureau of Statistics' own index.

Poverty fell with it. At the World Bank's current extreme poverty line of $3.00 a day, 97% of China's people were poor in 1981. From 2018 the figure was under 1%.

Vietnam followed China into market reforms. Inflation ran at 300% to 400% a year in the mid to late 1980s. The International Food Policy Research Institute puts it at 775% in 1986. In 1987 and again in 1988 the country imported more than 460,000 tons of food to cover shortfalls.

In 1988 a reform known as Resolution 10 contracted collective farmland to households for 15 years or more. In 1989 Vietnam became the world's third-largest rice exporter. Its GDP per head, in constant 2015 dollars, rose from about $608 in 1986 to about $4,308 in 2025.

Life expectancy rose earlier. China's rose from 35 to 40 years in 1949 to 65.5 years in 1980, which Kimberly Babiarz and co-authors call “among the most rapid sustained increases in documented global history”. Most of that rise came under Mao, before the reforms. In the World Bank's series it was 63.1 years in 1978, when the reforms began, and 78.0 in 2024.

The same authors also ran an exploratory analysis. It suggests that the 1950s expansion of schooling and public health campaigns together explain roughly 50% to 70% of the fall in infant and under-five mortality from 1960 to 1980.

The pre-reform path also had costs. The economist Martin Ravallion compares China with South Korea and Taiwan. He attributes about two-thirds of China's poverty in 1980 to the path it took under Mao. He finds that half or more of the recovery from that poverty came by 1990.

Neither case isolates markets. Both countries kept one-party rule, and in China the Communist Party still controls businesses as well as the state. Vietnam's reforms also set out to stabilise the economy, so freeing markets was not their only aim.

Download this conclusion: China before and after its reforms

This section as one image. It shows China's life expectancy: 35 to 40 years in 1949, 63.1 in 1978 and 78.0 in 2024. It also gives China's gross domestic product (GDP) per head in 2011, 16 times the 1978 level.

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Soviet output grew much more slowly than its official statistics said. The official series put growth in national income at 8.8% a year from 1928 to 1985. Western estimates, by the economist Abram Bergson and the Central Intelligence Agency (CIA), put it at 4.3%. In 1987 two Soviet economists, Vasily Selyunin and Grigory Khanin, published an estimate of 3.3% in the magazine Novy Mir.

TsSU was the Soviet Union's official statistical agency. Source: Stanley Fischer (1994), table 7.4, from Richard Ericson (1990); the Western figures for 1928–40 and the 1960s are Gur Ofer's (1987).

The estimates differ most for 1928 to 1941, when the official figure is 13.9% a year and Khanin's is 2.9%. All three show growth slowing from the 1950s to 1985. By 1980 to 1985 Khanin's estimate was 0.6% a year, close to stagnation, against 2.0% in the Western estimate. The population grew by 0.9% a year in those years, so on Khanin's figures output per head was falling.

Download this conclusion: Soviet growth

This section as one image, with the three estimates of Soviet growth from 1928 to 1985: 8.8% a year officially, 4.3% in the Western estimate and 3.3% in Khanin's.

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Famines under communist rule killed millions, and estimates of the toll vary widely. Many deaths went unrecorded, so researchers infer them from population counts, and their methods give different totals.

Lost births are a separate count and cannot be added to deaths. One study estimates 18.286 million fewer births than expected in China in 1959 to 1961, and Smil puts births lost or postponed at about the same number as the deaths.

A total of about 100 million comes from The Black Book of Communism. One author, Stéphane Courtois, wrote that communist regimes “committed crimes involving about 100 million people, as against about 25 million people under the Nazis”. In a row that broke out weeks before the book came out in France, two of his co-authors, Nicolas Werth and Jean-Louis Margolin, challenged his comparison with Nazism. Margolin told Le Monde, “You can't reduce it to a question of numbers,” as Times Higher Education reported.

Other systems had famines and killings too. The Bengal famine of 1943–44, under British rule, killed about 2.1 million people on Arup Maharatna's estimate. Chile's official commissions recognise more than 3,000 people killed or disappeared under military rule from 1973 to 1990. Whether these deaths, or the famines under communist rule, can be blamed on a whole economic system is contestable.

Death rates in Russia rose sharply after 1990. Men's life expectancy fell from 63.8 years in 1990 to 57.7 in 1994. Women's fell from 74.4 to 71.2 over the same years. Age-adjusted mortality rose by almost 33%.

More than 75% of the fall in life expectancy came from higher death rates at ages 25 to 64. Heart disease, stroke and injuries accounted for 65% of it.

Russia's western neighbours saw similar falls. Between 1989 and 1994 men's life expectancy fell by 4.6 years in Estonia and by 3.3 years in Belarus, with Latvia, Lithuania and Ukraine in between. The most successful economic reformers, the Czech Republic, Poland, Hungary and Slovenia, saw life expectancy rise almost every year, Elizabeth Brainerd and David Cutler found.

The fall is not disputed, but its cause is. A 2009 study in The Lancet by David Stuckler and colleagues found rapid mass privatisation associated with a 12.8% rise in short-term mortality among working-age men, possibly through unemployment. Two reanalyses of the same kind of data, by Christopher Gerry and colleagues and by John Earle and Scott Gehlbach, found the link did not hold up. Earle and Gehlbach also found little support for the unemployment pathway.

In a 2005 paper, Brainerd and Cutler found alcohol, and stress about poor prospects, the two most important factors, with much left unexplained. A 2017 study surveyed relatives in 20 single-industry Russian towns, with information on 38,339 people. After adjusting for drinking, smoking and other factors, working-age men in towns privatised quickly had 13% higher mortality between 1992 and 1998 than in towns privatised slowly. The 95% confidence interval ran from 1% to 26%.

Extreme poverty has fallen, mostly in China. In June 2025 the World Bank raised its extreme poverty line from $2.15 a day, in 2017 prices, to $3.00 in 2021 prices. At the new line about 824 million people, 10.1% of the world, were poor in 2024.

Computed from the World Bank's Poverty and Inequality Platform, release of 22 September 2026, in 2021 prices. The $4.20 and $8.30 lines are the World Bank's lines for lower-middle-income and upper-middle-income countries.

At the extreme line, China accounts for about three-quarters of the world's fall from 1981 to 2022. At $4.20 a day it accounts for more than all of it, because the number of poor people outside China rose.

At $8.30 a day, 3.76 billion people were poor in 2024. That is about the same number as in 1990, 3.73 billion, though a smaller share of a larger world. Neither the $3.00 nor the $8.30 line is wrong; they answer different questions.

A further critique prices a basket of basic needs instead of using one fixed dollar line. On data from the Organisation for Economic Co-operation and Development, Dylan Sullivan, Michail Moatsos and Jason Hickel find China's extreme poverty averaged 5.6% from 1981 to 1990. They find it rose during the market reforms of the 1990s to a peak of 68%, as privatisation raised the prices of essential goods.

Download this conclusion: world poverty

This section as one image, with the change in the number of poor people from 1981 to 2022. At $3.00 a day it fell by 964 million in China and 296 million in the rest of the world. At $8.30 it fell by 693 million in China and rose by 1,408 million elsewhere.

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The states still ruled by communist parties are among the least free. Freedom House's 2026 scores for China, Cuba, Laos, North Korea and Vietnam run from 3 to 20 out of 100. It rates all five Not Free and says one party rules each.

Planning also did great environmental damage. Water from the rivers that fed the Aral Sea, once the world's fourth-largest lake, was diverted to irrigate farmland. The geographer Philip Micklin titled a paper in Science on the result “Desiccation of the Aral Sea: A Water Management Disaster in the Soviet Union”. By 2010, Micklin said, the sea had lost 88% of its surface area and 92% of its water volume since 1960.

Rich market economies' records look better when only the emissions inside their borders are counted. The carbon dioxide emitted to make goods and services traded between countries rose from 4.3 billion tonnes in 1990 to 7.8 billion in 2008. The net transfer of emissions from developing to developed countries, 1.6 billion tonnes in 2008, exceeded the cuts made under the Kyoto Protocol.

The case for planning rests mainly on health and schooling. In a study published in 1986, Cereseto and Waitzkin compared 123 countries using World Bank data. Socialist countries had better results in 30 of 36 comparisons with capitalist countries at similar levels of development, on measures of health, nutrition and education. The study compares countries with one another, so it cannot show that the system caused the difference.

Planning's defenders have to concede the famines, the slowdown that all three estimates of Soviet growth show, how far North Korea trails the South, and East Germany's failure to close the gap that opened between 1936 and 1950.

The case for markets rests on the income records of West Germany, South Korea, and China and Vietnam after their reforms, and on the fall in extreme poverty. Its defenders have to concede that most of China's gain in life expectancy came under planning, that most of the fall in world poverty is China's, and that rich countries' emission cuts shrink once the emissions in their imports are counted.

Some on the left argue that the Soviet Union was never communist. Leon Trotsky called his 1936 book about it The Revolution Betrayed, and Tony Cliff later called it state capitalist. The evidence on this page is about states as they were run, so it cannot test the classless society Marx described.

Mostly the capitalist ones. The clearest tests are the two divided countries, and in both the market side finished far richer. In Germany the gap opened mostly between 1936 and 1950, and forty years of planning never closed it; in Korea the gap is far wider. China and Vietnam grew fast once they let markets in.

The planned economies' strongest record is in health and schooling, and against it stand famines that killed millions.

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The verdict above as one image, with the figures behind it. East German gross domestic product (GDP) per head was 103% of West Germany's in 1936 and 56% in 1950, and about the same until 1989. North Korean income per head was about 3.6% of South Korea's in 2025.

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