Capitalism is the social system based on the individual’s right to life, liberty, and the pursuit of happiness.
“When I say ‘capitalism,’ I mean a full, pure, uncontrolled, unregulated laissez-faire capitalism — with a separation of state and economics, in the same way and for the same reasons as the separation of state and church.”
— AYN RAND
What is capitalism?
Capitalism (from the Latin word capta, meaning “head”) is a social system based on individual rights that unleashes the power of the human mind.
The term capitalism is used here in the broader political sense, i.e., a free society, and not in the narrower economic sense, i.e., a free-market.
Capitalism is not just an economic system that can be grafted onto any political structure, but is a complex, integrated social system that depends on a specific ethical, political, legal, economic, and cultural foundation:
1. Morality: Rational Self-Interest
Capitalism is based on the moral philosophy of rational self-interest (rational egoism): a code of morality based on what a rational being requires to achieve happiness living on earth. Such a moral code is part of an integrated philosophy that in Ayn Rand’s words holds up “the concept of man as a heroic being, with his own happiness as the moral purpose of his life, with productive achievement as his noblest activity, and reason as his only absolute”.
2. Politics: Individual Rights
To rationally pursue one’s own happiness (self-interest) in reality requires only one thing from others: freedom from coercion. Capitalism regards the individual as a sovereign being with an inalienable moral right to take the actions necessary to support one’s life, so long as one respects the equal freedom of others to do the same.
3. Legal System: Objective Law
Capitalism operates according to a rule of objective law in both form (a republican government operating with a separation of powers and a written constitution to limit those powers) and function (government’s function is the protection of individual rights by banning the initiation of physical force and fraud).
4. Economics: Free-Market in Goods, Services, and Relationships
Freedom protected by objective law, applied to the sphere of production and trade, results in a free-market in material — and spiritual — values. In such a division of labor society, one pursues one’s own self-interest by specializing in the production of goods and services for mutually beneficial trade with others.
5. Culture: Peace, Prosperity & Progress
Culturally, this freedom in the economic and personal sphere leads to innovation in the arts, technology, and sciences, leading to peace (by banishing force from all relationships), progress (by unleashing the power of the rational mind, the source of all progress), and prosperity (by the ability to create more wealth with less time, work, and resources).
To learn more about the foundations of capitalism take the Capitalism Tour.
What is a capitalist?
A capitalist is an advocate of laissez-faire capitalism, regardless of how economically rich or poor they are.
Within the specialized domain of economics, a person who owns a business is recognized as a capitalist, regardless of whether one advocates capitalism politically or not. Friedrich Engels is regarded economically as a capitalist because he is a factory owner, though politically Engels is a communist as co-author of The Communist Manifesto. Similarly, philosopher Ayn Rand is regarded economically as a novelist as the author of the best-selling novel Atlas Shrugged, though politically Rand is a self-described “radical for capitalism.” Engels is a communist, and Rand a capitalist, not because of their accumulated wealth, but because of their ideas.
To discover if you are a capitalist take the Capitalism Tour.
A visual presentation of the nature of capitalism (estimated time 6 minutes). It is the most popular feature of this site.
Capitalism Frequently Asked Questions (FAQ) covers subjects ranging from antitrust and individualism to selfishness and socialism to help you “chew” the ideas introduced in the tour.
Explore the rich literature of Capitalism. The library features a selection of books on capitalism like Ayn Rand’s classic Capitalism: The Unknown Ideal.
Capitalism Magazine is a daily magazine featuring articles defending individual rights.
Every week the Voice of Capitalism Newsletter delivers capitalism related news, events, and book recommendations to your email box for free.
Our blog, Capitalism Review, highlights articles of interest from around the web on Capitalism.
Frequently Asked Questions About Capitalism
Before you browse the questions in this FAQ, please go through the Capitalism Tour. This FAQ assumes you are familiar with the material provided in the Tour.
“One of the most revolutionary and powerful works on capitalism—and on politics—that has ever been published.”—Barron’s magazine