capitalism

noun

cap·​i·​tal·​ism ˈka-pə-tə-ˌliz-əm 

ˈkap-tə-

: an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market

… that's how capitalism works — the market sets the price.

—Shawn Windsor

Profit is among the driving forces of capitalism and often stimulates overwhelming competition.

—Jaimie Green

[Thomas] Piketty argued that capitalism is fundamentally flawed because its rewards inevitably flow unequally to those who own capital, rather than those who contribute only with their labor.

—Martin Wolk

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Communism, Socialism, Capitalism, and Democracy

Communism, socialism, capitalism, and democracy are all among our top all-time lookups, and user comments suggest that this is because they are complex, abstract terms often used in opaque ways. They're frequently compared and contrasted, with communism sometimes equated with socialism, and democracy and capitalism frequently linked.

Part of the confusion stems from the fact that the word communism has been applied to varying political systems over time. When it was first used in English prose in the mid-19th century, communism referred to an economic and political theory that advocated the elimination of private property and the common sharing of all resources among a group of people; in this use, it was often used interchangeably with the word socialism by 19th-century writers.

The differences between communism and socialism are still debated, but generally English speakers today use communism to talk about the political and economic ideologies that find their origin in Karl Marx’s theory of revolutionary socialism, which advocates a proletariat overthrow of capitalist structures within a society; societal and communal ownership and governance of the means of production; and the eventual establishment of a classless society. The most well-known expression of Marx’s theories is the 20th-century Bolshevism of the U.S.S.R., in which the state, through a single authoritarian party, controlled a society’s economic and social activities with the goal of realizing Marx’s theories. Socialism, meanwhile, is most often used in modern English to refer to a system of social organization in which private property and the distribution of income are subject to social control. (The term is also often used in the phrase democratic socialism, which is discussed here.)

Communism and socialism are both frequently contrasted with capitalism and democracy, though these can be false equivalencies. Capitalism refers to an economic system in which a society’s means of production are held by private individuals or organizations, not the government, and where products, prices, and the distribution of goods are determined mainly by competition in a free market. As an economic system, it can be contrasted with the economic system of communism, though as we have noted, the word communism is used of both political and economic systems. Democracy refers not to an economic system but to a system of government in which supreme power is vested in the people and exercised through a system of direct or indirect representation which is decided through periodic free elections. (For discussion about whether the United States is accurately described as a democracy or as a republic, see the discussion here.)

Readers should consult the individual entries for a full treatment of the various ways in which each of these four words is used.

Examples of capitalism in a Sentence

Capitalism is at once far too rational, trusting in nothing that it cannot weigh and measure, and far too little as well, accumulating wealth as an end in itself. —Terry Eagleton, Harper's, March 2005

The United States has assumed a global burden—not just fighting terrorism and rogue states, but spreading the benefits of capitalism and democracy … —Brian Urquhart, New York Review Of Books, 9 Oct. 2003

The city was then the great maw of American capitalism. —Christopher Hitchens, Atlantic, August 2002

I am not the first to point out that capitalism, having defeated Communism, now seems to be about to do the same to democracy. The market is doing splendidly, yet we are not, somehow. —Ian Frazier, On The Rez, 2000

Even Cuba's famed health-care system has been unable to resist the siren song of capitalism. The Frank Pais Hospital … now offers "for pay" surgery to foreigners. —Ann Louise Bardach, Vanity Fair, March 1995

Recent Examples on the Web

The physical embodiment of a finance industry doubling down on the city is the $3 billion, gleaming, hypersustainable monument to capitalism JPMorgan just opened on 47th Street. —Liz Hoffman, semafor.com, 6 Nov. 2025

The 34-year-old democratic socialist is poised to take control of a 306,000-person municipal workforce in the global center of capitalism that also functions as a cultural hub that dictates trends around the world. —Philip Elliott, Time, 5 Nov. 2025

Nick Salvatore portrayed Debs as a union leader who gradually came to believe that monopoly capitalism was betraying the American Dream. —Literary Hub, 5 Nov. 2025

Can Republicans effectively make the next year a debate between capitalism and socialism — or will Democrats be able to band together and sell something on the economy that's better than what's currently in control of Washington? —Domenico Montanaro, NPR, 5 Nov. 2025

Word History

Etymology

capital entry 2 + -ism, after capitalist entry 1

First Known Use

1833, in the meaning defined above

Phrases Containing capitalism

• anti-capitalism
• crony capitalism
• late capitalism
• late-stage capitalism
• state capitalism
• vulture capitalism
• Woke capitalism

Rhymes for capitalism

• activism
• ageism
• albinism
• altruism
• aneurism
• animism
• aphorism
• atomism
• barbarism
• bolshevism
• botulism
• brahmanism

Kids Definition

capitalism

noun

cap·​i·​tal·​ism ˈkap-ət-ᵊl-ˌiz-əm 

ˈkap-tᵊl-

: an economic system in which resources and means of production are privately owned and prices, production, and the distribution of goods are determined mainly by competition in a free market

capitalist

-əst

adjective

or capitalistic

ˌkap-ət-ᵊl-ˈis-tik,

ˌkap-tᵊl-

capitalistically

-ti-k(ə-)lē

adverb