It’s hard to back up such a broad, sweeping statement since even a single counter example would render it incorrect in its absolutely stated form. That said, it’s possible to assess the spirit of what Engels is suggesting here: that for most of its history, human kind existed in a state of relatively equal societies.

While “village” is not necessarily the way that all societies progressed, it was certainly the dominant way of life. There’s a multitude of reasons of that hunter-gatherers bands may have begun to settle in more or less permanent villages (historians and geographers have argued everything from climate change to increasing inter-tribal bonds and various combinations). However, it is also true that not all societies ever “progressed” (for lack of a better, non-moralistic term) along this path. Various island groups, Aboriginal Australians and various other indigenous peoples never developed sedentary villages, in large part due to lack of need. Some kept their lives as wandering hunter-gatherers due to the relative abundance of their environment. Others settled in villages and maintained largely hunter-gatherer lifestyles for highly debated reasons (the work coming out around Çatalhöyük being some of the most fascinating in this regard). Even in the case of Aboriginal Australians there is some variance by environment, with cultivation and sedentary lifestyles characterising some groups.

So, “village” may not be a perfect way to describe the multitude of sedentary, semi-nomadic and persistent nomadic cultures which have developed across human history, but what about the term “communism”? Well, in their more anthropological works, Marx, Engels and those in their tradition have tended to use “primitive communism”, both to distinguish it from the idea of a future communism and to cut against the common sense idea that inequality has always characterised human societies. Anthropologist Richard Lee described this state as consisting of kin-based, small scale social groups with collective ownership of resources, generalised reciprocity and relatively egalitarian political relations (Reflections on Primitive Communism in Ingold, Riches and Woodburn, Hunters and Gatherers, vol 1, 1988). Exactly how long this state of equality co-existed with sedentary living, and the concrete way in which social classes crystalised and inequality came to characterise human society is extremely contested, and new evidence is discovered every year. However, most archaeologists perceive a very strong, direct link between agriculture and the end of this primitive communism (Chris Harman, A People’s History of the World, 1999). It is certainly true that "villages" were not communistic for their entire history, since villages, agriculture and development of inequality have a causal relationship in human history. Villages, as a form of living arrangement, and primitive communism, as an economic arrangement, do not necessarily coincide.

It is also worth noting that despite the utility of the term for Engels, he was also careful to clarify that the various ideas of communism being developed throughout the Nineteenth Century were distinguished from this primitive communism by the fact that they assumed a modern ability to extract resources from nature to overcome the limitations of early human society (such as famine caused by temporary poor weather). Nevertheless, the term “communism”, as referring to communal ownership of resources is as good a term as any to apply to these early societies (Engels, Socialism: Utopian and Scientific).

Other historians and anthropologists with interest in these societies are those who pursue the history of gender and sexuality since these societies tended to have fairly liberal views on these matters (see, for example, Eleanor Burke Leacock).