How is capitalism defined?

Capitalism is defined as an economic and political system in which trade and industry are predominantly owned and operated by private individuals or companies with the primary goal of generating profit. Under capitalism, the means of production, such as factories and machinery, are owned by private entities rather than the state. This system encourages competition, innovation, and consumer choice, as businesses operate in a market economy where prices are determined by supply and demand.

The emphasis on private ownership allows individuals and companies to make decisions regarding production, investment, and distribution based on market conditions, rather than state mandates. This feature distinguishes capitalism from other economic systems where government control plays a significant role in managing resources and trade.

The other options describe economic systems that emphasize state control or do not align with the core principles of capitalism, thereby reinforcing the distinction of capitalism as a system focused on private ownership and profit motive.