Capitalism is both an economic and political system based around property ownership, private industry (that is, businesses owned by private individuals and partnerships, rather than governments), the accumulation of capital and the pursuit of rational self-interest. Under laissez faire capitalism, a nation's economy and its government are separate, with the latter having no control over the former. In reality, no nation practices true laissez faire capitalism. Instead, proponents of various forms of capitalism often argue over how much involvement the government should have in a country's economy, whether by subsidizing essential industries, owning certain companies or regulating industries in order to prevent abuse or destructive behavior.

A chief component of capitalism is the notion of competition: that relatively open markets -- i.e., with little or no government regulation, depending on the country's laws -- allow for corporations and individuals to better compete with one another, thereby creating better products and better serving consumers. But another frequent consequence of capitalism is cycles of boom and bust, which may be traced to any number of factors, including the development of monopolies or a lack of proper oversight. In recent years, the Great Recession and sovereign debt crises have apparently led to a decline in the popularity of capitalism. In April 2011, a poll of residents from a number of Western nations showed that fewer people believed in a free-market capitalist system than in previous polls [source: The Economist].

Socialists see capitalism as essentially exploitative. In their view, a small minority of businesspeople reap the benefits of the work of their employees, who are paid wages but don't profit from the firm's increased success [source: World Socialist Movement]. Proponents of capitalism, however, argue that it is a system with a level playing field, in which anyone is free to be an entrepreneur or to exercise his or her property rights. Further, they claim that the pursuit of rational self-interest actually yields benefits for all, creating a more harmonious society.

Traders work on the floor of the New York Stock Exchange. Even the United States doesn't have a true capitalist economy. (Stephen Chernin/Getty Images)