What is capitalism?
Capitalism depends on harnessing private motives to produce the goods and services that the public wants as efficiently as possible. Historian Charles Van Doren leads us to the early roots of “primitive capitalism” in his book A History of Knowledge: Past, Present, and Future. He provides insight to the ancient Egyptians, economic life before the peasant, the introduction of the merchant, the king, the rise of the labor markets.
Definition of Capitalism
Defined today, capitalism is a political, social, and economic system. It is characterized by the private ownership of property—not only of land and buildings but of patents, know-how, and processes that are used by entrepreneurs to create profits for themselves.
Capitalism sharply contrasts with other economic systems, like feudalism and socialism.
In capitalism, entrepreneurs are responsible for such economic decisions as what to produce, how much to produce, and what method of production to adopt.
“Entrepreneurs . . . bring the new technologies and the new concepts into active commercial use. They are the change agents of capitalism.”
– Lester Thurow, economist