Definition
In capitalist systems, individuals and firms own productive assets, make investment decisions, hire labor, and exchange goods and services through markets.
Political Dictionary
Capitalism
Capitalism is an economic system based largely on private ownership, markets, and profit-seeking.
Why It Matters
It affects innovation, growth, inequality, consumer choice, labor relations, and government regulation.
How It Works
Prices, profits, competition, contracts, and investment guide much economic activity, usually alongside government rules and public services.
History
Capitalism developed gradually through commerce, property law, industrialization, finance, and global trade.
Example
A private company raises capital, hires workers, and sells products for profit.
Common Misconceptions
- Capitalism means no government regulation.
- Every capitalist economy is identical.
- Capitalism guarantees equal outcomes.
Related Terms
- Free Market
- Mixed Economy
- Socialism
- Classical Liberalism
- Private Property
Related Topics
See Also