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Capitalism typically refers to an economic and social system in which trade, industry and the
means of production (also known as capital) are privately controlled (either singly or jointly) and
operated for a profit[1][2]
This fits in with the most commonly held notions about capitalism as the free-market economy.
However, it interprets capitalism so narrowly as to make it almost non-existent. [3]
Capitalism is often defined as an economic system where private actors are
allowed to own and control the use of property in accord with their own interests, and
where the invisible hand of the pricing mechanism coordinates supply and demand in markets in
a way that is automatically in the best interests of society.
Capitalist economy is an economy system in which the production and distribution of goods
depends upon invested private capital and profit making. It is the dominance of private owners
of capital and production for profit.
CHARACTERISTICS OF CAPITALISM
1. Private property-the right to own resources and bequeath property
2. Freedom of enterprise-own a business
3. Freedom of economic choice-work/not work, spend/not spend
4. Role of self-interest
a. People are by nature economic creatures
b. Self-interest is a fundamental characteristic of people
5. Competitive market system
a. Many buyers and sellers
b. Market participants, buyers and sellers, have little control over price
c. Competition performs the organizing and controlling functions for a market economy
6. Limited government ("laissez-faire") refers to the idea that government should let
markets be with a hands-off philosophy)
OR
THESE CHARACTERISTICS OF CAPITALISM
Capitalism - Private ownership of the means of production
An essential characteristic of capitalism is the institution of rule of law in establishing and
protecting private property, including, most notably, private ownership of the means of
production.
Capitalism - Free market
The notion of a "free market" where all economic decisions regarding transfers of money,
goods, and services take place on a voluntary basis, free of coercive influence, is commonly
considered to be an essential characteristic of capitalism.
Capitalism - Profit
The pursuit and realization of profit is an essential characteristic of capitalism. Profit is derived
by selling a product for more than the cost required to produce or acquire it. Some consider the
pursuit of profit to be the essence of capitalism.
Capitalism - Self interest
The pursuit of self-interest is commonly regarded as playing an essential role in capitalism.
Many writers, such as Adam Smith and Ayn Rand, point to what they believe to be the benefit of
individuals trading for their self-interest rather than altruistically attempting to serve the
"common good." Smith, widely considered to be the intellectual father of capitalism
Capitalism - Private enterprise
In capitalist economies, a predominant proportion of productive capacity has belonged to
companies, in the sense of for-profit organizations. This include many forms of organisations
that existed in earlier economic systems, such as sole proprietorships and partnerships. Non-
profit organizations existing in capitalism include cooperatives, credit unions and communes.
Capitalism - Economic growth
One of the primary objectives in a social system in which commerce and property have a central
role is to promote the growth of capital. The standard measures of growth are Gross Domestic
Product or GDP, capacity utilization, and 'standard of living'.
Capitalism - Economic mobility
One of the key markers of entrepreneurial economies and 'growth' in a society is its economic
mobility, defined as the existence of large changes in the make-up of its socio-economic strata.
This is manifested as the occurrence of large fluctuations in the various deciles or quintiles of
income and wealth among the population, and the existence of large changes over a person's
lifetime in relation to their real earning power.

EXAMPLE OF A CAPITALIST ECONOMY

In every economic system, entrepreneurs and managers bring together natural resources, labor,
and technology to produce and distribute goods and services. But the way these different
elements are organized and used also reflects a nation's political ideals and its culture.

The United States is often described as a "capitalist" economy, a term coined by 19th-century
German economist and social theorist Karl Marx to describe a system in which a small group of
people who control large amounts of money, or capital, make the most important economic
decisions. Marx contrasted capitalist economies to "socialist" ones, which vest more power in
the political system. Marx and his followers believed that capitalist economies concentrate
power in the hands of wealthy business people, who aim mainly to maximize profits; socialist
economies, on the other hand, would be more likely to feature greater control by government,
which tends to put political aims -- a more equal distribution of society's resources, for instance
-- ahead of profits.

While those categories, though oversimplified, have elements of truth to them, they are far less
relevant today. If the pure capitalism described by Marx ever existed, it has long since
disappeared, as governments in the United States and many other countries have intervened in
their economies to limit concentrations of power and address many of the social problems
associated with unchecked private commercial interests. As a result, the American economy is
perhaps better described as a "mixed" economy, with government playing an important role
along with private enterprise.

Although Americans often disagree about exactly where to draw the line between their beliefs in
both free enterprise and government management, the mixed economy they have developed
has been remarkably successful.