Capitalism

Capitalism is an economic system in which individual people make most of the decisions and own most of the property in a country. This is the system used in the United States today.

Property

In a capitalist society, individual people and businesses can own property. Property can be a piece of land, a house, or something smaller, like a car or even a shirt. People can decide when to sell their property or buy more property, and they are free to buy or sell without asking for permission from the government. They can also decide what price they will charge for their property or how much money they will spend on a new piece of property. A big system of people buying and selling property is called a “market.”

The Role of the Government

Capitalists say the government should not make very many laws about the economy. They prefer “free markets,” which are markets with only a few laws and regulations. For example, the government could make a law telling people not to steal someone else’s property, because property is so important for everyone to succeed. However, the government should not make a law telling people a price they have to charge to sell something. Some capitalists say that the government should not use money collected from taxes to help people who are poor or sick. Instead, they believe that individual people should help each other without being forced to give away their money.

Investment

Another important part of capitalism is investment. To invest in something is to buy a small piece of something because you believe it has value. For example, if Martha wanted to start a candy store, she might ask several of her friends to invest money in her idea. Once she had money from a few different people, she could buy a building for the store. She would recompense investors by giving them a percentage of the money she made from the store’s business. Investment helped everyone in this case, because Martha got the extra money she needed to buy her store, and all her investors got to share in her success. Very large companies can sometimes get thousands of investors.

Benefits of Capitalism

Capitalist proponents believe capitalism is the best system for the economy because it can help the most people. Because it is easy to own property, people can use their property to become richer. Many capitalists also like the freedom from government and laws. They also believe capitalism allows people to make new inventions, like the car or the computer. Thanks to investors, people with good new ideas can succeed and turn their ideas into businesses that make money.

The features of capitalism may sound familiar to you, because capitalism is the type of economic system that exists in many countries today, including the United States, Canada, and Great Britain. However, some countries are not capitalist – such as China, Cuba, and North Korea. Their leaders do not believe that capitalism is the best economic system.

Anti-Capitalists

Some people in the world – including some citizens of capitalist countries – do not think capitalism is a fair system for the economy. These people are usually called socialists or communists. They often want the government to make more decisions in the economy. They believe capitalism can be unfair because it causes too much competition between people, and prevents those with less wealth from having equal opportunities. They think capitalism divides people into two groups: workers and business owners. Instead of working together, these two groups compete against each other and hurt each other.

One writer named Karl Marx wrote a book called The Communist Manifesto, which told workers to rebel against business owners. The most famous real-world example of this was the revolution in Russia in 1917. The communist government lasted until 1991. Some historians say their country fell apart because they did not use capitalism in their economy, while others point to different reasons, such as attacks from other countries.