I wouldn't say the dwarves are stupid... actually they are a species where communism really works, since they don't fall prey to the usual problems communism has:
* Individual motivation (dwarves will do their tasks motivated if they just have enough beer)
* Communism needs pretty powerfull leaders to organise it all, which most times soon enough turns around in being actually a dictatorship with a corrupt dictator just naming itself a communistic state to blend the people. Does not happen in dwarffort, the dictator is I, the player, and I don't get corrupt.
* Communism proved itself great when catching up on technology (look in 1900 russia made in 20-30 years what europe took aprox 300), however proved itself to be quite bad when pushing at the state of the art of technology. There is no technological development in dwarf fort. So restrictions don't apply.
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Appart from that what the game calls "economy" is everything but an economy. Its definitively not a capitalistic economy, since who owns now the goods of production? dwarves? No. They are still common good, so its still some sort of communisism. Note that communists allowed private property of luxery goods and had money, so this does not set anything apart. IMHO the economy add on, is an experiment to mimic something, which enourmously failed.