This is a good and important question because people often confuse the two, thinking that Sweden, for example, must be a socialist country because it has strong welfare protections.
The welfare state arose in capitalist countries to preclude the appearance of socialist sentiments in the population. If life is good, if people know they will get help in times of need, why want a complete reformatting of society and call for the nationalization of everything?
A simple method of knowing if a society is socialist is to look at who owns your favorite restaurant, store, café, or car wash. Are they owned by the government? If all of what we know as “businesses” are owned by the government, that’s socialism. If not, it’s capitalism. Many capitalist countries have very strong welfare protections because they can afford them. Socialist countries often have no real welfare protections because their economic system doesn’t generate enough of a surplus to pay for them.
The number one difference between socialism and capitalism is the ownership of the means of production. In socialism, you can still have your private property but you are barred from using it to generate profit. Once your private property becomes a means of generating profit, that’s no longer allowed. For example, you can own a car but you can’t buy a fleet of cars and start a taxi service. There are some small areas for individual entrepreneurship in socialist countries that are taxed to the gill and regulated severely. But individual entrepreneurs can’t hire other people because that’s considered exploitation.
The difference between socialism and communism is that communism is the next stage. The state dies off and the means of production are owned collectively by the people. The issue of exploitation doesn’t arise because there no longer is any money, nobody is forced to work, everybody who does work does it completely voluntarily and for no additional consideration compared to those who choose not to work. Yes, it’s a fantasy, it never happened, it never will happen, but that’s the theory.
I always insist that we use terminology correctly because once we start slipping, we get ourselves mega confused and achieve nothing. Clearly, Sweden and the USSR have nothing in common. So how can we call them both socialist? All this does is obscure the terribly and unavoidably genocidal nature of socialism. Socialism always ends up oppressing and murdering people. It’s baked into the design. It goes completely against human nature. Once we start saying that Sweden is “also socialism”, we have not only sinned against the truth but whitewashed what socialism actually is.
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