capitalism

noun
cap·​i·​tal·​ism | \ ˈka-pə-tə-ˌliz-əm How to pronounce capitalism (audio) , ˈkap-tə- \

Definition of capitalism

: an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market

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Communism, Socialism, Capitalism, and Democracy

Communism, socialism, capitalism, and democracy are all among our top all-time lookups, and user comments suggest that this is because they are complex, abstract terms often used in opaque ways. They're frequently compared and contrasted, with communism sometimes equated with socialism, and democracy and capitalism frequently linked.

Part of the confusion stems from the fact that the word communism has been applied to varying political systems over time. When it was first used in English prose in the mid-19th century, communism referred to an economic and political theory that advocated the elimination of private property and the common sharing of all resources among a group of people; in this use, it was often used interchangeably with the word socialism by 19th-century writers.

The differences between communism and socialism are still debated, but generally English speakers use communism to talk about the political and economic ideologies that find their origin in Karl Marx’s theory of revolutionary socialism, which advocates a proletariat overthrow of capitalist structures within a society; societal and communal ownership and governance of the means of production; and the eventual establishment of a classless society. The most well-known expression of Marx’s theories is the 20th-century Bolshevism of the U.S.S.R., in which the state, through a single authoritarian party, controlled a society’s economic and social activities with the goal of realizing Marx’s theories. Socialism, meanwhile, is most often used in modern English to refer to a system of social organization in which private property and the distribution of income are subject to social control. (The term is also often used in the phrase democratic socialism, which is discussed here.)

Communism and socialism are both frequently contrasted with capitalism and democracy, though these can be false equivalencies depending on the usage. Capitalism refers to an economic system in which a society’s means of production are held by private individuals or organizations, not the government, and where products, prices, and the distribution of goods are determined mainly by competition in a free market. As an economic system, it can be contrasted with the economic system of communism, though as we have noted, the word communism is used of both political and economic systems. Democracy refers not to an economic system but to a system of government in which supreme power is vested in the people and exercised through a system of direct or indirect representation which is decided through periodic free elections. (For discussion about whether the United States is accurately described as a democracy or as a republic, see the article here.)

Readers should consult the individual entries for a full treatment of the various ways in which each of these four words is used.

Did You Know?

Capital is wealth—that is, money and goods—that's used to produce more wealth. Capitalism is practiced enthusiastically by capitalists, people who use capital to increase production and make more goods and money. Capitalism works by encouraging competition in a fair and open market. Its opposite is often said to be socialism. Where a capitalist economy encourages private actions and ownership, socialism prefers public or government ownership and control of parts of the economy. In a pure capitalist system, there would be no public schools or public parks, no government programs such as Social Security and Medicare, and maybe not even any public highways or police. In a pure socialist system, there wouldn't be any private corporations. In other words, there's just about no such thing as pure capitalism or pure socialism in the modern world.

Examples of capitalism in a Sentence

Capitalism is at once far too rational, trusting in nothing that it cannot weigh and measure, and far too little as well, accumulating wealth as an end in itself. — Terry Eagleton, Harper's, March 2005 The United States has assumed a global burden—not just fighting terrorism and rogue states, but spreading the benefits of capitalism and democracy … — Brian Urquhart, New York Review Of Books, 9 Oct. 2003 The city was then the great maw of American capitalism. — Christopher Hitchens, Atlantic, August 2002 I am not the first to point out that capitalism, having defeated Communism, now seems to be about to do the same to democracy. The market is doing splendidly, yet we are not, somehow. — Ian Frazier, On The Rez, 2000 Even Cuba's famed health-care system has been unable to resist the siren song of capitalism. The Frank Pais Hospital … now offers "for pay" surgery to foreigners. — Ann Louise Bardach, Vanity Fair, March 1995
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Recent Examples on the Web Over the last few decades, a new elite has emerged, partly as a result of deregulation of the financial sector in the West and partly because of the spread of global capitalism across the world. Ashley Mears, The Economist, "Stories of an extraordinary world The secret economics of a VIP party," 26 June 2020 The beauty of capitalism, however, is that the market’s invisible hand eventually puts its finger on such mediocrity and complacency. Adam Seessel, Fortune, "Valuation: How a 1990s crisis poised this aerospace stock for a great run in the 2020s," 25 June 2020 Starting in March, market capitalism was brought to a screeching halt across America. Virginia Heffernan, Wired, "Covid-19 and Living Through a New American Revolution," 23 June 2020 Aren’t black athletes made into commodities through capitalism? Tiana Reid, The New York Review of Books, "Searching for Freedom in ‘Cane River’ and the Black Outdoors," 20 June 2020 An examination of the history of Black management reveals an overlooked form of capitalism. Alain Sylvain, Quartz at Work, "Collective action is our new power language. How will leaders respond?," 19 June 2020 Your favorite rapper’s favorite rapper, J. Cole, is back with a new song that takes aim at social injustice, capitalism and police brutality. Taiia Smart Young, Essence, "J. Cole’s ‘Snow On Tha Bluff’ Has Black Twitter Squaring Up With Their Favorite Rapper," 17 June 2020 Many of them believe that the ambition of destroying capitalism is a frivolous distraction. The Economist, "Anti-racism protest What next for Black Lives Matter UK?," 20 June 2020 Each citizen should notice their own biases, and do the personal work needed to evolve versus practicing the base, savagery of capitalism, and colonization. Indianapolis Star, The Indianapolis Star, "What prominent community members say should be done to make Indiana better for everyone," 17 June 2020

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'capitalism.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of capitalism

1833, in the meaning defined above

History and Etymology for capitalism

see capital entry 2

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Learn More about capitalism

Time Traveler for capitalism

Time Traveler

The first known use of capitalism was in 1833

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Statistics for capitalism

Last Updated

3 Jul 2020

Cite this Entry

“Capitalism.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/capitalism. Accessed 11 Jul. 2020.

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More Definitions for capitalism

capitalism

noun
How to pronounce capitalism (audio)

English Language Learners Definition of capitalism

: a way of organizing an economy so that the things that are used to make and transport products (such as land, oil, factories, ships, etc.) are owned by individual people and companies rather than by the government

capitalism

noun
cap·​i·​tal·​ism | \ ˈka-pə-tə-ˌliz-əm How to pronounce capitalism (audio) \

Kids Definition of capitalism

: a system under which the ownership of land and wealth is for the most part in the hands of private individuals

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More from Merriam-Webster on capitalism

Rhyming Dictionary: Words that rhyme with capitalism

Spanish Central: Translation of capitalism

Nglish: Translation of capitalism for Spanish Speakers

Britannica English: Translation of capitalism for Arabic Speakers

Britannica.com: Encyclopedia article about capitalism

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