Capitalism

Capitalism is an economic system where means of production is privately owned and operated for profit.^[1][2]

Property owned by individuals, not by the government is often called private property. In theory, under competition, in capitalist free market economies, prices move up or down according to the availability of products and how many people want them. In most countries, there is some regulation (trade laws) and some planning done by the government. They are sometimes called "mixed economies" to indicate this. Some people disagree on whether capitalism is a good idea, or how much of capitalism is a good idea.

The word comes from "capital", meaning something of value that is used to make things. This can be money ("financial capital") or any other goods that can be traded. The word "capital" originally comes from the Latin word "caput", meaning "head." It was used to mean how many "head" of cattle a rich person owned, in days long ago when cattle were used as money. In fact, the words "capital" and "cattle" both come from "caput".

The philosopher Adam Smith's book, The Wealth of Nations, was an important book that developed the ideas of capitalism and the free market. The word "capitalism" was not used until the 19th century. The greatest invention of capitalism is often said to be the joint stock company.^[3][4] A joint-stock company is a business where different stocks can be bought and owned by shareholders. Each shareholder owns company stock in proportion to the number of their shares.

1. ↑ "Capitalism" Archived 2016-08-27 at the Wayback Machine Oxford Dictionaries. "capitalism. an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state." Retrieved 4 January 2013.
2. ↑ Chris Jenks. Core sociological dichotomies. SAGE, 383.
3. ↑ Ekelund R.B. & Tollison R.D. 1980. Mercantilist origins of the corporation. Bell Journal of Economics (The RAND Corporation) 11 (2): 715–720.
4. ↑ Hunt B.C. 1936. The development of the business corporation in England, 1800–1867. Cambridge, MA: Harvard University Press.