Next video:
Loading the player...

Capitalism is an economic system in which the free market alone controls the production of goods and services. It stands in direct contrast to government-controlled economies, where production and prices are set by a central decision-making body.
 
Economist Adam Smith famously compared free markets to an “invisible hand” pushing producers toward goods and services for which there is greatest need.
 
Related Articles
  1. Investing

    What are Capital Goods?

    Capital goods are assets with a useful life of more than one year that are used for the production of income.
  2. Insights

    Adam Smith and "The Wealth Of Nations"

    Adam Smith's 1776 classic "Wealth of Nations" may have had the largest global impact on economic thought.
  3. Insights

    Adam Smith: The Father of Economics

    Adam Smith is renowned as "The Father of Economics" for his work in pioneering ideas such as free trade and GDP.
  4. Small Business

    Understanding Capital

    Capital has a variety of meanings, but it generally refers to financial resources.
  5. Insights

    Pros and Cons of Capitalist vs Socialist Economies

    Capitalism relies on the markets. Socialism, on government planning. Each system has its pros and cons.
  6. Insights

    What's Economic Capital?

    While regulatory and economic capital use some of the same measurements of risk to determine how much capital a firm should hold in reserve, economic capital uses more realistic measures.
  7. Investing

    4 Misconceptions About Free Markets

    These fallacies have hounded free market economists since the days of Adam Smith.
  8. Investing

    Understanding Capital And Financial Accounts In The Balance Of Payments

    The current, capital and financial accounts compose a nation's balance of payments.
Hot Definitions
  1. Ex-Dividend

    A classification of trading shares when a declared dividend belongs to the seller rather than the buyer. A stock will be ...
  2. Debt Security

    Any debt instrument that can be bought or sold between two parties and has basic terms defined, such as notional amount (amount ...
  3. Taxable Income

    Taxable income is described as gross income or adjusted gross income minus any deductions, exemptions or other adjustments ...
  4. Chartered Financial Analyst - CFA

    A professional designation given by the CFA Institute (formerly AIMR) that measures the competence and integrity of financial ...
  5. Initial Coin Offering (ICO)

    An Initial Coin Offering (ICO) is an unregulated means by which funds are raised for a new cryptocurrency venture.
  6. The Bernie Madoff Story

    Bernie Madoff ran a multibillion-dollar Ponzi scheme that is considered the largest financial fraud of all time.
Trading Center