Examples of Capitalist Economies
                     10 Examples of Capitalist Economies
Trading goods and services in exchange for money or products are among the 
earliest form of conducting business. Humans have relied on this exchange for 
ages. In all of humanity’s history, most businesses have been owned privately, 
and for very good reason, as interference by the authorities only makes it 
complicated for both seller and buyer. This is a widely accepted idea, therefore, 
the capitalist economy is the dominant economy in the world.

What is a Capitalist Economy?
An economy in which individuals and private businesses both control and regulate 
important factors of production like goods, labor, resources, and entrepreneurship 
is known as a capitalist economy. In a truly capitalist economy, the market is 
governed by the demand and supply of products or services. Unsurprisingly, 
earning profit is the driving force in a capitalist economy. Moreover, the 
government rarely interferes in the free market. The history of the capitalist 
economy can be traced back to the 15th century when agrarian capitalism and 
mercantilism were introduced. The presently accepted definition of the capitalist 
economy was developed by two Scottish economists, David Hume and Adam 
Smith, in the 18th century. For an economy to be considered a capitalist economy, 
these features must be followed:
● Any individual is legally allowed to establish their business and provide 
goods and services.
● Consumer sovereignty, i.e., consumers are free to choose one product or 
service over the other.
● Government is not to interfere in private business matters, except to 
protect private property.
● The financial system of a nation (including banks) must be developed to 
cater to private business and individual needs in the form of loans.
● As mentioned previously, increasing profits must be the ruling factor in 
businesses.
● The distribution of goods and services should depend on demand.
● The process of hiring and firing employees must be easy.
● Tariffs should be minimal to encourage international trade.
● Any individual can own private property and possessions. Upon the death 
of the owner, these are to be passed on to their successor.
What is a Capitalist Economy?Examples of Capitalist Economies
1. Singapore
One of the smallest island countries on the list also happens to be top ranking in terms of 
economic freedom. The economic freedom index of Singapore is 89.7, and an average 
population of 5.6 million people. A huge part of this economic success was introducing 
public housing, especially for labor, as in the 1960s strikes by workers were a common 
scene. By eliminating the need to buy a house, it resolved most of the conflicts between 
the workers and employers. Moreover, it is one of the most expensive countries in the 
world. The British decided to colonize Singapore in 1819, solely because of its location, 
i.e., it connects Asia to Europe. During the British rule in Singapore, Britishers introduced 
new manufacturing processes along with better infrastructure. In 1965, Singapore 
became independent; however, unlike other nations that largely cut ties with the former 
ruling nation, Singapore decided to maintain good relations with Britain. 
2. New Zealand
Presently, New Zealand is considered one of the most successful nations in the 
world. It consistently ranks in the top ten countries when it comes to economic 
freedom, and it is always used as an example by economists of how business should 
be conducted within a country. Interestingly, it wasn’t always the case. While New 
Zealand has always been a wealthy nation because of the colonization, it was seeing 
a rapid downfall after its legal independence in 1947. The government decided to 
intervene in the production factors, as a result, everything from manufacturing firms 
to the hotel industry was controlled by the government. In addition to that, a 
maximum wage limit was set in place, along with taxes that ranged anywhere from 
40 to 70 percent. Operating business in New Zealand was equally stressful, as there 
was a 48% profit tax, and if a foreign company wanted to conduct business in New 
Zealand, it needed to pass various regulations. 
3. Australia
Australia is another country that is considered one of the best nations to conduct business 
in because of its economic freedom. With a score of 82.4, it sits in third place in the 
economic freedom index. Unlike New Zealand, it was not a prosperous nation because it 
was used as a prison by the United Kingdom. The turning point in Australian history came 
in the 18th century when John Macarthur, an English soldier, arrived in Sydney. He saw 
the opportunity to cultivate wool from sheep in Australia and sell it to other countries. This 
resulted in a dispute between Macarthur and Governor Philip. The wool business carried 
on in Australia, and ironically, the United Kingdom became their largest buyer of wool 
during the second world war. Although Australia is still the largest producer of wool, its 
economic success is based on mining technology. During the mid-1900s, Australia started 
investing in mining technology. 
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