[kap-i-tl-iz-uh
m] 
| an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, esp. as contrasted to cooperatively or state-owned means of wealth. |
| cap·i·tal·ism (kāp'ĭ-tl-ĭz'əm) n. An economic system in which the means of production and distribution are privately or corporately owned and development is proportionate to the accumulation and reinvestment of profits gained in a free market. |
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.)
Capitalism
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.
Investopedia Commentary
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