Capitalism is an economic system where private individuals or businesses own the means of production and operate them to earn a profit. Workers are hired and paid wages but do not own the production assets. Production and prices are largely determined by supply and demand in a market economy rather than by central planning. Capitalism emphasizes private property rights, profit motive, and market competition.
Simple Definition
- Capitalism means individuals or companies own businesses and compete to make money.
- People own factories, machines, and resources, and hire workers to produce goods.
- Profit is the main goal, and prices are set by markets through voluntary exchanges between buyers and sellers.
Key Concepts
- Private ownership of capital goods (factories, tools, land).
- Workers earn wages but do not share ownership or profits.
- Market forces (supply and demand) guide production and prices.
- Encourages competition, innovation, and economic freedom.
- Often involves some government regulation in modern mixed economies.
This simple explanation covers what capitalism is in essence as an economic system focused on private ownership and profit generation through market mechanisms.
