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.

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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 The risks to democratic capitalism if Morena has a strong showing go well beyond a damaging policy mix that lasts a few years. Mary Anastasia O’grady, WSJ, 23 May 2021 China’s transition to capitalism saw a large increase in grassroots activism and strikes, leading to the passage of a labor contract law in 2008. Ann Scott Tyson, The Christian Science Monitor, 14 May 2021 The guide talks about the Panthers choosing a framework of socialism to fight for liberation as opposed to capitalism. Malaika Jabali, Essence, 3 May 2021 Reform has proceeded at a glacial pace, slowed by a bureaucracy worried about losing its privileges and by the revolution’s old guard, suspicious of any change that might nudge Cuba closer to capitalism. New York Times, 19 Apr. 2021 These ideas are connected to capitalism’s incessant need to sell diet products, said Connie Sobczak, co-founder and executive director of the Body Positive, a nonprofit that leads body-positivity training. BostonGlobe.com, 17 Apr. 2021 This focus on sustainability and stakeholder capitalism plays an increasing part, too, in the way that customers, partners and employees feel about engaging with organizations — and how leaders will need to make decisions about the future. Mark Foster, Fortune, 26 May 2021 But this delirious monkey-wrenching did approximately nothing either to derail the juggernaut of ecocidal capitalism or to convert the voting public to the cause. Benjamin Kunkel, The New Republic, 26 May 2021 No economic system has lifted more people out of poverty, created more opportunity, and produced a higher standard of living than democratic capitalism. James Freeman, WSJ, 26 May 2021

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

10 Jun 2021

Cite this Entry

“Capitalism.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/capitalism. Accessed 19 Jun. 2021.

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More Definitions for capitalism

capitalism

noun

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

More from Merriam-Webster on 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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