What are capitalism and socialism?

We hear the terms capitalism and socialism often these days, but rarely do we hear definitions or explanations. Politicians and commentators say things like, “There is no good alternative to capitalism!” or “Socialism is the fairest and best system,” as if these were all-or-nothing propositions. This kind of talk leaves most discussions with a simplistic either-or conclusion, and without touching the ground of economic or political reality. Although types of economic systems are complex topics that cannot be reasonably treated in a short piece like this, we’d like to make a few points about these terms to help readers consider them further.