An economic system based on a free market, open competition, profit motive and private ownership of the means of production. Capitalism encourages private investment and business, compared to a government-controlled economy. Investors in these private companies (i.e. shareholders) also own the firms and are known as capitalists.
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In such a system, individuals and firms have the right to own and use wealth to earn income and to sell and purchase labor for wages with little or no government control. The function of regulating the economy is then achieved mainly through the operation of market forces where prices and profit dictate where and how resources are used and allocated. The U.S. is a capitalistic system.
Related Links
Economics Basics Tutorial
Macroeconomic Analysis
Understanding Supply-Side Economics
See also: Dog Eat Dog, Economy, Free Market, Invisible Hand, Keynesian Economics, Macroeconomics, Microeconomics, Supply-Side Theory
Also spelled: capitalizm
[kap-i-tl-iz-uh
m] 
| capitalism (ˈkæpɪtəˌlɪzəm) | |
| —n | |
| Compare socialism free enterprise, Also called: private enterprise an economic system based on the private ownership of the means of production, distribution, and exchange, characterized by the freedom of capitalists to operate or manage their property for profit in competitive conditions | |
An economic and political system characterized by a free market for goods and services and private control of production and consumption. (Compare socialism and communism.)
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