The end of the Cold War is often interpreted as the victory of capitalism and the defeat of communism. But what is “capitalism”? Look- ing around the world, there are many countries where the economic system is considered a capitalist economy. Nevertheless, capitalism differs from North America to Western Europe and Japan, from East Asia to Latin America. What are the minimum common denominators of capitalist economies? What are the major factors which differentiate one capitalism from another?

In my view, despite apparent differences in many respects, the capitalist economies seem to have at least the following two common denominators.

First, the existence of private enterprises, which are owned and managed by private citizens who seek greater profits through a variety of economic activities on their own initiative. Private ownership of the means of production and distribution is a very important element. Of course, not all are entirely free to act, and all of them have to comply with regulations, controls, and guidance of the state to different degrees, but they are at least privately owned and managed. In many capitalist economies, there are state-owned enterprises, but even in the countries where the state-owned enterprises are very influential, the areas they cover are still a part of the entire national economy. There are an increasing number of countries where state-owned enterprises are gradually privatized.

The second common denominator is the market mechanism, through which prices are more or less determined by market forces, that is, the balance between the demand for and the supply of goods, services, and capital. Of course, in many capitalist economies prices are regulated when the supply of certain items is not sufficient, or when control of the prices of particular items is considered crucial for the entire national economy, or in cases of national emergency. Even then, however, the authorities are prepared, perhaps reluctantly, to adjust these controlled prices if and when they clearly divert too much and too long from the equilibrating level of demand and supply.