Which economic system is based on private ownership and investment in business ventures with the goal of making a profit?

Capitalism is characterized by private ownership of the means of production and the operation of businesses for profit. In a capitalist system, individuals or corporations invest their own resources into ventures, aiming to generate financial returns. This economic model encourages competition, innovation, and wealth accumulation, as success is often determined by market forces.

The significance of capitalism lies in its promotion of economic freedom and individual entrepreneurship, which can lead to more efficient allocation of resources and greater variety of goods and services for consumers. It contrasts sharply with feudalism, which is based on a system of land ownership linked to social hierarchy, as well as socialism, which advocates for collective ownership and the redistribution of wealth. Mercantilism, while also focusing on economic gain, emphasizes state control over trade and the accumulation of bullion, rather than individual profit-making through private enterprise.

Understanding capitalism's principles helps students grasp modern economic systems and their historical development, linking them to contemporary discussions about economic policy and individual rights.