What you are battling is the preconceived notion that communists are all evil. It's actually the governments that run the communists countries that are evil, just like the corporate interests that run so-called democratic countries. Yes, dwarfs are communist; they live in a communal society where their hard work individually helps the whole community. Think of hippies living on a commune; they are essentially communist without the totalitarian government exploiting them.
The western governments have a way of demonizing certain entities that they feel stand in their way. For example, the US wanted to get their hands on Middle Eastern oil, therefore they turned their sites on Islam. So they set up a number of fake terrorist attacks and suddenly everyone hates and fears Islam, giving the government carte blanche to do as they please in the middle east. Same thing happens in South America and it happened with communism in the 40s and 50s.
http://en.wikipedia.org/wiki/McarthyismThe people of a nation are never to blame for the wrongs that their governments do. Mostly the people have no choice. How many Americans voted to invade Iraq? None, because there was never a democratic vote on it. Same thing is happening now in Afghanistan.
Dwarfs are communal whose only real government is you, the player. Are you a totalitarian? Are you fair to your dwarfs? This game would get pretty complicated if every move you make in game had to be voted on by the whole lot. You would say "Dig here", and they would all gather together to discuss if it was a good idea, who was going to dig and put a price on the work. Then they would dig one square and start all over. The farmers would have to buy seeds from caravans individually, grow and harvest, then sell their yield to cooks. Cooks would also buy fish from the fishermen. Each entity would need to set up booths to sell their raw wares. The richest dwarfs would be the gem cutters or the miners who were able to mine more precious minerals. There would be no more nobles (big loss), but a large body of worthless politicians who got paid a lot to get together 2 or 3 times a year and pretend to get stuff done. I would quit this game if it were "democratic".