capitalism

noun cap·i·tal·ism \ ˈka-pə-tə-ˌliz-əm , ˈkap-tə- , British also kə-ˈpi-tə- \
Updated on: 13 Oct 2017

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

Examples of capitalism in a Sentence

  1. 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 EagletonHarper'sMarch 2005
  2. The United States has assumed a global burden—not just fighting terrorism and rogue states, but spreading the benefits of capitalism and democracy … —Brian UrquhartNew York Review Of Books9 Oct. 2003
  3. The city was then the great maw of American capitalism. —Christopher HitchensAtlanticAugust 2002
  4. 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 FrazierOn The Rez2000
  5. 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 BardachVanity FairMarch 1995

Recent Examples of capitalism from the Web

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.

communism, socialism, capitalism, and democracy

Communism is one of our top all-time lookups, and user comments suggest that’s because it is often used in opaque ways. In some sources, communism is equated with socialism; in others, it is contrasted with democracy and capitalism. Part of this 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, communism referred to an economic and political theory that advocated the abolition of private property and the common sharing of all resources among a group of people, and 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 used communism to refer to 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, controls a society’s economy and social activities with the goal of realizing Marx’s theories.

Communism is often contrasted with capitalism and democracy, though these can be false equivalencies depending on the usage. Capitalism refers to an economic theory in which a society’s means of production are held by private individuals or organizations, not the government, and where prices, distribution of goods, and products are determined by a free market. It can be contrasted with the economic theories of communism, though the word communism is used of both political and economic theories. Democracy refers 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. Democracy is contrasted with communism primarily because the 20th-century communism of the U.S.S.R. was characterized by an authoritarian government, whereas the democracy of the 20th-century U.S. was characterized by a representative government.

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.

Origin and Etymology of capitalism


Financial Definition of CAPITALISM

capitalism

What It Is

Capitalism is an economic and social system in which participants privately own the means of production -- called capital. Free market competition, not a central government or regulating body, dictates production levels and prices.

How It Works

Under capitalism, prices and wages are determined by the forces of supply and demand.

Members of a capitalist economy are driven to obtain the maximum amount of utility ("benefit" or "profit") at the least cost. Privately owned industry caters to a consumer sector that wants goods and services of the highest value for the lowest price. Competition forces companies to keep prices low to attract consumers. The role of government in a capitalist society is to protect the legal rights of actors in the economy, not to regulate the free market system.

In capitalism, the most effective companies are those that create the greatest amount of utility. The most inefficient companies will be forced out of the market when the consumer discovers he can obtain the same goods for a lower cost elsewhere.

Why It Matters

Capitalism characterizes the behavior of the global economy. Since the disintegration of the Soviet Union, capitalism has become the dominant economic system worldwide.

Capitalism is often considered the antithesis of Socialism -- an economic and political system where the ownership of capital (the means of production) is commonly owned. Socialist industry and production is regulated by the central government.

The Efficient Market hypothesis, an ideal of capitalism, states that finance market prices are always at the correct level at any given time considering all public information and expectations. Supporters of this theory believe that prices are necessarily always fair and correct. Dissidents believe that prices are often the result of random mistakes and misunderstandings and do not always represent the true value of a stock.

Through the ongoing balancing act of supply and demand, a capitalist economy is constantly striving to reach a level of long-term equilibrium where supply matches demand causing prices to stabilize. In the real world, political policy, natural weather events, consumer confidence and a whole host of other outside effects constantly affect the market, making the long-term equilibrium goal nearly impossible to achieve.


CAPITALISM Defined for English Language Learners

capitalism

noun

Definition of capitalism for English Language Learners

  • : 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 Defined for Kids

capitalism

noun cap·i·tal·ism \ ˈka-pə-tə-ˌliz-əm \

Definition of capitalism for Students

: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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