Capitalism

Capitalism is an economic as well as a cultural system based primarily on private ownership of the means of production, in which personal profit can be acquired through investment in capital and employment of labour.

History
Elements of capitalism have existed to varying degrees in all civilizations, but capitalism became dominant during the Industrial Revolution that began in the 18th Century. Gradually the bankers, merchants, and businessmen became more important than landowners in Great Britain. Many people on the traditional left have strongly anti-capitalist attitudes, though in the United States (and increasingly in the rest of the world as well), the left generally prefers to reform capitalism rather than abolish it altogether. Due mainly to the historical failure of most command economies, many leftists (though by no means all) have accepted the premise that some kind of competitive, market-based private sector is necessary for economic prosperity. There is, however, vast disagreement over how much of the economy should be organized on a capitalistic basis.

In order to understand the long-term failure of Command economies, please read the article.

'''That is why in this author's opinion people who want socialism should aim for a Social democratic system as in Scandinavia. Socialists should accept a small private sector rather than risk the way economies go wrong under central planning. '''

Free enterprise
A central component of capitalism is the notion of "free enterprise," which argues that government intervention in the economy should be relatively minimal and that a free market, based on supply and demand, will ultimately maximize consumer welfare. A system based on extremely limited government intervention and almost pure free enterprise is called laisser-faire economics. Leftists, both reformist and anti-capitalist, are very cynical toward laissez-faire economics and generally believe that it will benefit mainly the wealthy, business-owning class while workers, consumers and poor people get exploited. Capitalist owners want freedom to operate their business as they see fit, even if that means exploiting people. Because of this, government action is viewed as necessary to curb the system's abuses, which include income inequality, monopoly power, political campaign finance, market failures, environmental degradation and the business cycle.

Mixed economy with public and private sectors
Social democratic countries run on the Scandinavian model also have a private capitalist sector, but it is combined with a large public sector and extensive government regulation. Many studies suggest that Scandinavian countries such as Denmark, run on the Social democrat model, are among the happiest societies in the world. They provide generous protection against poverty and unemployment and also are relatively egalitarian in their income distribution, yet they still enjoy material living standards roughly on par with more strongly capitalist countries like the United States and Canada.