1. Money
You can opt-out at any time. Please refer to our privacy policy for contact information.

Capitalism - What is Capitalism



Capitalism is an economic system that emphasizes private ownership of the means of production or a privately controlled economy. In a capitalist society, you have a free market and companies live by the profit motive. They exist to make money and maximize the wealth of their shareholders, whether they have one shareholder or thousands. Prices, production, and the distribution of goods are determined by competition in a free market.

A capitalist system is also called a market economy. There is a limited regulatory framework. Legislation is supposed to define and enforce the basic rules of the free market. The government does provide some public goods and services as well as support.

Under a this system, small businesses drive the economy. They provide most of the jobs - up to 70-80%. Large corporations provide most of the profit, but small businesses are the job creators.

Pronunciation: kap-i-tl-iz-um-m
Also Known As: democracy, competition, free enterprise, private enterprise, open market, free economy, self-regulating market, free competition, free enterprise system, free trade
Alternate Spellings: None
Common Misspellings: None
Capitalism is an economic system where the means of production are privately owned by individuals rather than by the government.

©2014 About.com. All rights reserved.