Capitalism is an economic system in which private individuals or businesses own capital goods, such as factories, tools, machines, raw materials, etc. . In this system, business owners (capitalists) employ workers (labor) who only receive wages for their work. The capitalists have the right to organize the means of production and to keep the profits generated from their labor. Workers, on the other hand, do not have any claim on the means of production or the profits generated from their labor.
Capitalism is characterized by private ownership of the means of production, especially in the industrial sector, with labor paid only wages. It depends on the enforcement of private property rights, which provide incentives for investment in and productive use of productive capital. Capitalism is a relatively new type of social and economic organization, dominant in the Western world since the breakup of feudalism.
The history of capitalism is marked by the use of accumulated capital to enlarge productive capacity rather than to invest in economically unproductive enterprises, such as pyramids and cathedrals. The ideology of classical capitalism was expressed in An Inquiry into the Nature and Causes of the Wealth of Nations (1776), by the Scottish economist and philosopher Adam Smith, which recommended leaving economic decisions to the free play of self-regulating market forces.
