You hear the term capitalism thrown around often these days, but few people really understand what capitalism is and what it entails. The term capitalism was popularized by Karl Marx, in his book, The Communist Manifesto. Marx used it as a word to describe private ownership and a free market. Although Marx decried it, the term defines individual economic freedom. In a broader approach, it is the free market economy.
Capitalism is often confused with crony capitalism, or what is often referred to as corporatism. Corporatism cannot exist without special interest groups and big government. The bigger the government is, the bigger and more powerful corporations are. Entrepreneurs cannot thrive under corporatism. An entrepreneur comes up with a new invention or idea to fill a demand in the market, and they also assume the risks involved with their business venture. When corporations are bolstered by special interest and lobbyist dollars, the market is stifled and competition is eliminated. Entrepreneurs need competition in order to fill the need of the market place with a good or service and at a price the consumer is willing to pay. Capitalism fills the need of the entrepreneur and the entrepreneur fills the need of society.
The risk-reward system of capitalism is often denounced, however, the free market offers true protection from greedy corporatist and unscrupulous companies. In a limited government, corporations enjoy no special status and are forced to compete with the free market. Entrepreneurs then have a chance at succeeding. Failing is also an integral part of the free market society. Companies that are not filling the need of the marketplace are forced to bring their prices down to what the consumer is willing to pay or go out of business. A society with the mindset that some corporations are too big to fail is in deep trouble as they are manufacturing success rather than allowing it to happen naturally.
Entrepreneurs would also have a choice in how to obtain their business working capital to fund their venture, rather than having stifling and stringent regulations obstructing their path. The free market allows them to absorb risks while the free market provides the incentive of making a profit. Business working capital is essential for an entrepreneur to take the risks necessary in order to gain the reward.
A market system that allows the individual to make decisions regarding the best use of its economic resources is always better and garnishes better results than a government making those decisions and controlling the marketplace.
See also: Ron Paul and The Cuban Missile Crisis