Capitalism

Capitalism is an economic system based on private ownership of the means of production, in which personal profit can be acquired through investment of capital and employment of labour. Capitalism has existed to some extent in all civilizations, but it became really important from the Industrial Revolution that began in the 18th Century. That was when bankers, merchants, and businessmen became more important than landowners in Great Britain.

Free enterprise
Capitalism can involve free enterprise, which argues that government intervention in the economy should be very restricted and that a free market, based on supply and demand, will ultimately maximize consumer welfare, however, in truth laisser-faire economics only will benefit the rich fat cats that run companies while workers and consumers get exploited. Capitalists want freedom to run their business profitably exploit people but government action has been and is required to curb its abuses, which have ranged from slavery (particularly in the United States) and apartheid (in South Africa) to monopoly cartels and financial fraud.

Mixed economy with public and private sectors
Social democratic and Democratic Socialist countries run on the Scandinavian model also have a large private sector with a large public sector and with government controls over the private sector. Denmark run on the Social democrat model is one of the most advanced countries in the world and also as far as we can tell the happiest country in the world.

Different political systems
Capitalism can exist in many different types of political and social setups. The democratic socialism of the Scandinavian states, the consensus politics of Japan, and the state-sponsored rapid industrial growth of South Korea while under military dictatorship all happened with capitalism.

Government restrictions on Capitalism
Almost all governments know that they should control the worst excesses of capitalism. Governments have tried to restrict capitalism in most countries at least since the Great Depression in the 1930s. In the United States, the government uses subsidies, tax credits, incentives, and other types of exemptions to influence the private sector. Germany and Japan, both have central government plans for the capitalist sector and bankers, industrialists, and labour unions meet and try to agree to wage policies and interest rates; these countries don't want the market to determine the whole economy.

The collapse of Communism
The collapse of the Soviet Union and its satellite states in Eastern Europe (1989-91) left those countries with a heavy burden and an uncertain future, and seriously weakened capitalism's traditional enemy socialism. China's economy is also uncertain but small-scale capitalism is allowed steadily more though China stays a Communist dictatorship.