1.      Capitalism is a system in which the means of production are owned and operated by private individuals.  It is a system of economic organization wherein privately-owned capital, and property rights are privately invested with the ultimate aim of personal gain.

Capitalism depends on the actions of capital owners, who are called capitalists or providers of capital. Active capitalists buy materials and equipments, and build factories to produce goods sold for profits.  Capitals may also come from individual savers and passive investors willing to spend their money on business enterprises.

Individual entrepreneurs are free to enter the market and produce goods and services for as long as there is demand for them.  Competitions keep prices reasonable, and make available a wide range of goods and services.

The capitalist system is based on risk and profits.  In every society, there are essential goods and services which involve too much risk and too little profit.

2.      Socialism means the ownership of production and capital by the government and the regulation by society, as a whole, of the process of production and distribution, and of the giving of essential services.

Socialism has been defined in many ways.  Some define it as an economic system with some government involvement.  Others argue that the Soviet Union and China are socialist countries.  Some use the term “democratic socialism” to mean an economic system in which important industries such as public utilities, postal services, and transportation are owned and operated by the government.

In such an economy, there is private ownership of property and there are many profit-oriented business enterprises.

A democratic socialist economy is also called a mixed economy. It is in effect, a free enterprise system with government participation.

3.      Communism stands for the collective ownership by the government of consumption goods and production goods.  It is also a way of organizing the productive forces of a society.

Communism is an utopian economic system.  It implies a classless society with no government, as suggested by Karl Marx.  But the term “communism” usually refers to the economic system in the Soviet Union and China.  In these countries, the state owns and controls all means of production.  The government plans economic activities.  These countries are sometimes called “centrally-planned economies” whereas capitalist countries are referred to as “market economies”.

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