Capitalism facts for kids
Capitalism is an economic system where people and businesses own most of the things that make goods and services. They use these things to make a profit. In capitalism, people can own land, factories, and tools. They can also decide what to produce and how much to charge for it.
A key part of capitalism is that people can buy and sell things freely. They don't need special permission from the government for every trade. This system encourages competition among businesses. It also lets people choose where they want to work and what they want to buy. Most countries today have a mixed economy. This means they use ideas from capitalism but also have some government rules and services.
Contents
What is Capitalism About?
Capitalism is an economic system where individuals and private businesses own the means of production. This means they own the factories, tools, and land used to make things. They operate these for profit. In this system, people can freely buy, sell, and trade goods and services.
Buying and Selling Freely
In capitalism, people can sell or lend their property. Other people can buy or borrow it. If someone wants to buy, and another wants to sell, they don't need government permission. People can create a market (where buying and selling happens) without anyone telling them to.
What is Capital?
The word capital means things that help produce more things or money. For example, land, factories, shops, tools, and machines are capital. If someone has money they can invest, that money is also capital. People who own a lot of capital are sometimes called capitalists.
Workers and Jobs
In capitalist systems, many people are workers. They are employed to earn money for living. People can choose to work for anyone who will hire them. They agree on a wage or salary. This is different from older systems like feudalism, where most people had to work for the landowner.
Capitalism vs. Other Systems
Capitalism is different from other economic systems. In mercantilism, governments made it hard to buy things from other countries. In some mixed economies, there are many laws about what you can buy or sell. There are also rules about prices, or whom you can hire or fire.
Investing and Growing Businesses
Investment is when people use their money to buy or build things. People can put their money together to buy or build big projects. These might be too big for one person to do alone. The people who invest become the owners of what they buy or build. The stock market is a place where people can buy and sell these investments.
Why Investing Matters
Investing is very important in capitalism. People who start businesses or invest in them can make a lot of money. A business sells things that people want. The investors make extra money, which is called profit. Investors can use their profit to invest in more businesses. They can also make their current businesses bigger. If businesses are successful, investors can get more and more profit.
Different Views on Capitalism
Not everyone agrees about capitalism. Some people think it's the best system, while others have concerns.
People Who Disagree
Socialists and communists do not fully support capitalism. They say it can hurt workers. They believe businesses make more money by selling things than they pay the workers who make them. They argue that business owners become rich while workers stay poor. They also think society would be better if people worked together instead of competing.
Karl Marx was a famous communist philosopher from Germany. He wrote a famous book called Das Kapital. He believed that capitalism would eventually lead to workers taking over the government. However, capitalism did not go away. Most communist systems that tried to follow Marx's ideas have changed or collapsed.
People Who Agree
People who support capitalism often believe it offers liberty. They think it allows people to be independent. Friedrich Hayek agreed with this. He said that an open society respects individuals and their differences.
Most supporters agree that capitalism works best when the government prevents stealing. If people could steal anything, no one would want to buy things. In most countries, the government also tries to ensure fair buying, selling, and employment.
Some people, called "anarcho-capitalists", believe there should be no government at all. They think people can protect their own things or pay others to do it. They believe the government takes away earnings through taxes against people's will.
Related Pages
Images for kids
-
Cosimo de' Medici, a powerful banker who built a financial empire.
-
A painting of a French seaport from 1638, showing early trade.
-
Robert Clive with the Nawabs of Bengal, marking the start of British rule in India.
-
The Watt steam engine, which powered the Industrial Revolution in Great Britain.
-
The gold standard was a key financial system from 1870 to 1914.
-
The New York stock exchange traders' floor in 1963.
-
Many believe China is a main example of state capitalism today.
-
Adam Smith, an important thinker about capitalism.
-
The subscription room at Lloyd's of London in the early 1800s.
-
An industrial worker with heavy machinery around 1995–2000.
-
The "Pyramid of Capitalist System" poster from 1911.
See also
In Spanish: Capitalismo para niños
