Capitalism

In common usage capitalism refers to an economic system in which all or most of the means of production are privately owned and operated, and where investment and the production, distribution and prices of commodities (goods and services) are determined privately in a free market, rather than by the state. Those in control of the means of production generally run them for monetary profit. For examples of how capitalism has been defined by various sources, see .

Related Topics:
Means of production - Privately owned - Operated - Investment - Production - Distribution - Price - Commodities - Goods - Services - Free market - State - Profit

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Capitalism contrasts with socialism and communism, where the means of production, and the resulting products, are owned and used by the state, or by the community collectively. Capitalism is also contrasted with feudalism, where land may be privately operated, but is owned by the state and held in fee.

Related Topics:
Socialism - Communism - Feudalism

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An economy with a large amount of intervention (which may include state ownership of the means of production) in combination with capitalist characteristics is often, but not always referred to as a mixed economy, rather than a capitalist one http://economics.about.com/od/howtheuseconomyworks/a/mixed_economy.htm. If intervention is to such a degree that it overwhelms private decision, such an economy is often referred to as statist. Some economists, such as Milton Friedman, oppose all or almost all such state control over an economy. All of the economies in the developed world are usually considered as capitalist or as mixed economies based in capitalism.

Related Topics:
Mixed economy - Statist - Milton Friedman - Developed world

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Most theories of what has come to be called capitalism developed in the 18th century, 19th century and 20th century, for instance in the context of the industrial revolution and European imperialism (e.g. Smith, Ricardo, Marx), The Great Depression (e.g.Keynes) and the Cold war (e.g. Hayek, Friedman). These theorists characterise capitalism as an economic system where capital is privately owned and economic decisions are determined in a market --that is, by trades that occur as a result of an agreement between buyers and sellers; where a market mentality and entrepreneurial spirit exists; and where specific, legally enforceable, notions of property and contract are instituted. Such theories typically try to explain why capitalist economies are likely to generate more economic growth than those subject to a greater degree of governmental intervention (see economics, political economy, laissez-faire). Some emphasize the private ownership of capital as being the essence of capitalism, or an emphasize of the importance of a free market as a mechanism for the movement and accumulation of capital, while others measure capitalism through class analysis (ie class structure of society, relations between the proletariat and the bourgeois). Some note the growth of a global market system. Others focus on the application of the market to human labor. Others, such as Hayek, note the self-organizing character of economies who are not centrally-planned by government. Many, such as Adam Smith, point to what is believed to be the value of individuals pursuing their self-interest as opposed to altruistically working to serve the "public good."

Related Topics:
18th century - 19th century - 20th century - Industrial revolution - European imperialism - Smith - Ricardo - Marx - The Great Depression - Keynes - Cold war - Hayek - Friedman - Entrepreneurial - Property - Contract - Economics - Political economy - Laissez-faire - Capital - Free market - Proletariat - Bourgeois - Global market - Labor - Self-organizing - Self-interest

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Many of these theories call attention to various economic practices that became institutionalized in Europe between the 16th and 19th centuries, especially involving the right of individuals and groups of individuals acting as "legal persons" (or corporations) to buy and sell capital goods, as well as land, labor, and money (see finance and credit), in a free market (see trade), and relying on the state for the enforcement of private property rights rather than on a system of feudal protection and obligations.

Related Topics:
Economic - Europe - 16th - 19th - Corporations - Capital good - Land - Labor - Money - Finance - Credit - Free market - Trade - Private property

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Debates center on whether capitalism

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• is an actual system, or an ideal
• has been actualized in particular economies, or if not, then to what degree capitalism exists in them (see mixed economy)
• is historically specific (that is, that it emerged at a specific time and place), or a system that has existed in various places at various times
• is a purely economic system, or a political, social, and cultural system as well
• is fair or not. Ie, does it enrich more people (globally), or impoverish more people (globally).
• is sustainable or not
• is rational or not

Aside from referring to an economic or political system, capitalism may also refer to the condition of owning capital. Likewise, in addition to the term "capitalist" referring to someone who favors capitalism, capitalist also commonly refers to a person who owns and controls capital.

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Capitalism: Etymology ►