Light

Capitalism

Definition

Capitalism is an economic system where private individuals or businesses own capital goods. In this system production of goods/services is based on supply-demand in market rather than being regulated by state.

Analogy

Imagine a school bake sale where students can sell their homemade goods at prices they set based on what people are willing to pay. That's capitalism in action - private ownership, free market, competition driving prices and quality.

Related terms

Free Market: An economic system where prices for goods/services are determined by open market and consumers; it's a key feature of capitalism.

Entrepreneurship: The activity of setting up a business or businesses, taking on financial risks in the hope of profit; it thrives in capitalist economies.

Supply and Demand: Economic model that determines price in a market; it forms the backbone of capitalist economy.