What does these definitions mean?
Simple!
It is a system where the government takes away your earnings and distribute to all, including you. ie, distribution of wealth.
For the government to distribute the wealth, someone has to accumulate it at first. But, if the government is going to take away all my hard earned wealth, over a limit, why should I work so hard to earn over that limit. Thus people does not have the motivation to accumulate wealth. So " The distribution of wealth " actually becomes "Distribution of poverty".
Moreover, when the people have only a limited amount of resource left with them, they could be able to meet only their basic needs. So the consumption will be less which will lead to less production. Lower production levels obviously lead to reduced wealth generation. And that's the reason why socialist economies grow at a slower pace.
What?...you are asking about China?
Come on.. China was doing everything possible to attract private firms, to make it a manufacturing hub. And that's exactly when they started growing.
So what is right?
Of course.. you heard it right. But I didn't mean RIGHT.
The right scenario is where communism blossoms from within, that's when the people won't lose their motivation to go an extra mile to earn more. Communism cannot be imposed on someone. People should be motivated to accumulate wealth by sustainable means and voluntarily contribute back to the society.
Moreover, when people earn and a variety of production houses are available ( they give more options for spending ), the consumption would increase. This again leads to increased production and generation of wealth and increased investments as well.
And this is why a liberalised economy grows at a good pace, comparatively.
