Capitalism is an economic system in which private people, not the government, own and run companies. These companies compete with other companies for business. They decide what products they want to produce, how much they should cost and where to sell them. Companies do all these things in order to make profits for their owners. People who use their money to start companies or run companies are called capitalists.
Even though a pure form of capitalism does not exist and governments control the economy in some ways it remains the world’s most popular economic system. In the United States the government keeps itself out of the economy as far as possible but in some European countries economic control is much larger. Other names for capitalism are free-market economy or free enterprise.