Name: Class:

Capitalism
By Jessica McBirney
2016

An economic system refers to the way the money, industry, and trade of a country or region are
organized. People often disagree about how economic systems around the world should work.
Capitalism, the system used in the United States, tends to involve fewer rules from the
government. Many people support capitalism, but some critics say that it is unfair and can
prevent poorer people from improving their lives. As you read, take notes on both the positive
and negative traits of capitalism.

[1] Capitalism is an economic system in which

individual people make most of the decisions
and own most of the property in a country.
This is the system used in the United States
today.

Property

In a capitalist society, individual people and

businesses can own property. Property can be "Money" by Pictures of Money is licensed under
a piece of land, a house, or something CC BY 2.0.
smaller, like a car or even a shirt. People can
decide when to sell their property or buy more property, and they are free to buy or sell
without asking for permission from the government. They can also decide what price they will
charge for their property or how much money they will spend on a new piece of property. A big
system of people buying and selling property is called a “market.”

The Role of the Government

Capitalists say the government should not make very many laws about the economy. They
prefer “free markets,” which are markets with only a few laws and regulations.1 For example,
the government could make a law telling people not to steal someone else’s property, because
property is so important for everyone to succeed. However, the government should not make a
law telling people a price they have to charge to sell something. Some capitalists say that the

1. Rules the government sets up to control something.

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 government should not use money collected from taxes2 to help people who are poor or sick.
Instead, they believe that individual people should help each other without being forced to give
away their money.

Investment

Another important part of capitalism is investment. To invest in something is to buy a small

piece of something because you believe it has value. For example, if Martha wanted to start a
candy store, she might ask several of her friends to invest money in her idea. Once she had
money from a few different people, she could buy a building for the store. She would
recompense investors by giving them a percentage of the money she made from the store’s
business. Investment helped everyone in this case, because Martha got the extra money she
needed to buy her store, and all her investors got to share in her success. Very large companies
can sometimes get thousands of investors.

Benefits of Capitalism

[5] Capitalist proponents3 believe capitalism is the best system for the economy because it can
help the most people. Because it is easy to own property, people can use their property to
become richer. Many capitalists also like the freedom from government and laws. They also
believe capitalism allows people to make new inventions, like the car or the computer. Thanks
to investors, people with good new ideas can succeed and turn their ideas into businesses that
make money.

The features of capitalism may sound familiar to you, because capitalism is the type of
economic system that exists in many countries today, including the United States, Canada, and
Great Britain. However, some countries are not capitalist – such as China, Cuba, and North
Korea. Their leaders do not believe that capitalism is the best economic system.

Anti-Capitalists

Some people in the world – including some citizens of capitalist countries – do not think
capitalism is a fair system for the economy. These people are usually called socialists4 or

2. Taxes are money that a government requires its citizens to pay, in order to pay for things
like roads, public schools, libraries, the military, and many other things that a government
may provide for its people.
3. Proponent (noun) supporter; advocate
4. Socialists are people who support socialism, a system in which everyone has an equal
opportunity to benefit from a country's wealth. Under socialism, the country's main

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communists.5 They often want the government to make more decisions in the economy. They
believe capitalism can be unfair because it causes too much competition between people, and
prevents those with less wealth from having equal opportunities. They think capitalism divides
people into two groups: workers and business owners. Instead of working together, these two
groups compete against each other and hurt each other.

One writer named Karl Marx wrote a book called The Communist Manifesto, which told workers
to rebel6 against business owners. The most famous real-world example of this was the
revolution in Russia in 1917. The communist government lasted until 1991. Some historians say
their country fell apart because they did not use capitalism in their economy, while others point
to different reasons, such as attacks from other countries.

© 2016. Capitalism by CommonLit is licensed under CC BY-NC-SA 2.0.

Unless otherwise noted, this content is licensed under the CC BY-NC-SA 4.0 license

industries are usually owned by the state.

5. Communists are people who support communism, the political belief that all people are
equal and that workers should control the means of producing things.
6. Rebel (verb) to reject or oppose something; to take actions to take power away from
someone who controls something

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 Text-Dependent Questions
Directions: For the following questions, choose the best answer or respond in complete
sentences.

1. What is the author's main purpose in writing this article? Cite evidence from the text
in your response.

2. PART A: One of the central topics of the article is about what capitalism is. What is
another central topic of the article?
A. Ownership of property
B. How investing works for small businesses
C. The pros and cons of capitalism
D. Karl Marx

3. PART B: Which TWO paragraphs from the text best support the answers to Part A?
A. Paragraph 1
B. Paragraph 2
C. Paragraph 4
D. Paragraph 5
E. Paragraph 7
F. Paragraph 8

4. PART A: What does the word "recompense" most closely mean as it is used in
paragraph 4?
A. to pay back
B. to apologize to
C. to offer a bribe to
D. to invest in

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5. PART B: Which phrase from the paragraph best supports the answer to Part A?
A. "buy a small piece of something"
B. "believe it has value"
C. "giving them a percentage of the money"
D. "Martha got the extra money she needed"

6. Which phrase best describes the relationship between workers and business owners
in a capitalist society?
A. working together toward a common goal
B. in conflict over personal differences
C. united in their support for capitalism
D. in competition with one another for money

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 Discussion Questions
Directions: Brainstorm your answers to the following questions in the space provided. Be
prepared to share your original ideas in a class discussion.

1. Based on the information in the article, do you believe you are more of a capitalist or
a socialist/communist? Explain.

2. Have you ever thought that the capitalist system used in the United States (and other
countries) might be flawed? Why?

3. Supporters of capitalism often say that capitalism makes it is easy to bring the best
products or services to the market, which is great for the average person. In the
context of this article, does capitalism encourage and help people start their own
businesses? Is this important for the economy? Cite evidence from this text, your
own experience, and other literature, art, or history in your answer.

4. One common criticism of capitalism is that it encourages greed and harsh

competition for money. In the context of this text, does money buy happiness? Cite
evidence from this text, your own experience, and other literature, art, or history in
your answer.