Capitalism is another word for Market Economics. Capitalism is an economic system in which the means of production are privately owned and controlled by individuals and entities who engage in the free exchange of goods and services in competition with one another. The products, amounts, costs, and prices are determined based on supply and demand (see Free Market).
In Pure Capitalism, there would be no government regulation or intervention (see Anarchy). However, Pure Capitalism is not practiced in modern society. Limited Capitalism, or Capitalism where there is some form or level of government regulation, is most commonly practiced.
The United States of America (see Americanism) is an example of a nation that was founded based on the concepts of Limited Capitalism.
Mike and Sandy had a great idea for a new product. They had some money saved and had some friends who thought it was a good idea and wanted to invest some of their money too. They pooled their money and hired some craftsmen to build 100 of them. They put them up for sale online and so many people wanted them that they sold out within 24 hours and had backorder sales for over 10,000 more. They went to the bank to use those preorders to secure a small business loan to purchase more supplies and hire more craftsmen. Within 5 years they built a business with over 50 employees and made a net profit of over $1.5 million dollars.
The owners of the business engaged in the free exchange of goods and services with their employees and with their customers. The owners freely offered their potential employees a wage/salary in exchange for their work and the potential employees freely accepted the wage in exchange for their services. The owners freely offered their products to potential customers who freely chose to exchange their money for the product.
If at any point anyone was forced to work, to purchase a product, to offer a job, or to sell a product against his/her will then it would not be a free exchange of goods or services and would therefore not be capitalism or market economics.