Capitalism is an economic system where people and companies, rather than the government, own businesses and property. In a capitalist system, you're free to start your own lemonade stand, bakery, or tech company. You decide what to make, what to charge, and how to run things. If customers like what you offer, your business succeeds. If not, you might need to try something different or close up shop.

The word comes from capital, meaning money or resources used to create more wealth. In capitalism, people invest their capital (their money, time, or ideas) hoping to earn profits. A baker invests in flour, sugar, and an oven, then sells bread for more than these ingredients cost. The profit becomes her reward for the work and risk involved.

Most modern economies, including the United States, blend capitalism with some government rules and services. The government might require restaurants to pass health inspections or set a minimum wage, but businesses still compete for customers. This competition can drive innovation: companies work hard to create better products or services because they want your business instead of their competitor's.

Critics point out that capitalism can create inequality, since some people start with more resources or opportunities than others. Supporters argue it encourages creativity, hard work, and progress by letting people pursue their own ideas and keep the rewards they earn.