Capitalism

Electric powered conveyor. Photo courtesy Ford Motor Co.

Capitalism is one form of a political economy. Examples of other types of economic systems include socialism, feudalism or communism. Capitalism has been one of the most influential ideas of the 20th century. It is both a moral philosophy and economic framework for most of the developed economies of the world and in particular Singapore. The world “capital” is used throughout this report. Its meaning generally is not precise and is not the same as the world “capitalism”.

"Capital" is

Something which is capable of producing valuable goods and services.

"Capitalism" is

A political economy which is characterized by private ownership of the factors of production (“firms” and “households”). Households hold ownership shares in firms. Decision making is decentralized from state authority and rests with the private owners. Their decision making is coordinated by the market, which provides the necessary information. Material incentives are used to motivate participants” (Gregory, 2013) Households participate with firms through voluntary exchange of labor for wages and as customers with wages for goods and services. Firms and households seek to maximize private profit out of rational self interest (Core Economics, 2014). There is no ideal capitalist system. Each country adopts policies along a spectrum and some may have inconsistent and contradictory policies and even further inconsistencies in the interpretation and implementation of law.

The next section presents a table of common economic measures