capitalism

noun

cap·​i·​tal·​ism ˈka-pə-tə-ˌliz-əm How to pronounce capitalism (audio)
ˈkap-tə-
: 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.

Example Sentences

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
Recent Examples on the Web The astonishing reduction in global poverty in the past 50 years owes a great deal to Smith’s insights about the power of individual choice and free will. London — These are tough times for those who support free-market capitalism. John Fund, National Review, 11 June 2023 Remarkably, the greatest capitalists among us, the men who belong to the elite and exclusive golf clubs of America, chose sexism over capitalism for decades. Christine Brennan, USA TODAY, 7 June 2023 The families that own the cafés each have a young son working in them – Theo and Gabi, respectively – who have to learn to overcome their own rivalry and help their families survive the precarities of operating a business in a world of cutthroat capitalism. Jonathan Alexander, The Conversation, 31 May 2023 Stakeholder capitalism is a blueprint for creating that kind of job. Peter Georgescu, Forbes, 5 May 2023 Such a set of principles can provide both a focal point for a new norm that reflects the original assumptions of shareholder primacy, and the insights of stakeholder capitalism, as well as a starting point for more constructive reasoning about specific issues. Maureen Kline, Fortune, 24 Apr. 2023 Elements of Machiavellian capitalism and religious extremism oppose finding a cure for The Blinding, and their representatives offer intriguing suspects for Owens. Jeff Calder, ajc, 3 Apr. 2023 But some of the Soviet characters come off as only slightly more fleshed out than Tim Curry escaping to the one place that hasn’t been corrupted by capitalism. WIRED, 31 Mar. 2023 The age of data is associated with late capitalism, authoritarianism, techno-utopianism, and a discipline known as data science, which has lately been the top of the top hat, the spit shine on the buckled shoe, the whir of the whizziest Tesla. Jill Lepore, The New Yorker, 27 Mar. 2023 See More

These examples are programmatically compiled from various online sources to illustrate current usage of the word 'capitalism.' Any opinions expressed in the examples do not represent those of Merriam-Webster or its editors. Send us feedback about these examples.

Word History

First Known Use

1833, in the meaning defined above

Time Traveler
The first known use of capitalism was in 1833

Dictionary Entries Near capitalism

Cite this Entry

“Capitalism.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/capitalism. Accessed 21 Jun. 2023.

Kids Definition

capitalism

noun
cap·​i·​tal·​ism ˈkap-ət-ᵊl-ˌiz-əm How to pronounce capitalism (audio)
ˈkap-tᵊl-
: an economic system in which resources and means of production are privately owned and prices, production, and the distribution of goods are determined mainly by competition in a free market
capitalist
-əst
adjective
or capitalistic
ˌkap-ət-ᵊl-ˈis-tik,
ˌkap-tᵊl-
capitalistically
-ti-k(ə-)lē
adverb

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