Capitalism is an economic system characterized by six key features: private ownership of productive resources (land, factories, capital), where individuals and corporations rather than the state control assets; free markets and price mechanisms, where supply and demand determine the cost of goods and services; profit motive, where businesses aim to maximize earnings for owners and shareholders; competition among producers, which theoretically drives innovation and efficiency; voluntary exchange, where transactions occur through mutual agreement between buyers and sellers; and limited government intervention, where the state's role is minimized compared to planned economies. These characteristics work together to create a decentralized economic system. Private ownership incentivizes efficiency and innovation since owners profit directly from success. Free markets allow resources to be allocated without central planning—prices signal what consumers want and what should be produced. Competition encourages businesses to improve products and reduce costs to attract customers. Voluntary exchange means both parties in a transaction expect to benefit, creating value through trade rather than coercion. Limited government allows markets to function with minimal regulation, though most capitalist economies retain some state role in areas like infrastructure, law enforcement, and consumer protection. While these six features describe capitalism's ideal form, real-world capitalist economies vary significantly in how strictly they follow these principles and how much government involvement they include.