Glossary.

All goods and services, including law and defense, provided by competing private firms; the state abolished entirely.

Band R2

Laws against monopolization and collusion; the referee protecting competition from the competitors.

Signature feature of L1

Chen Yun's image for reform-era China: the market is the bird, the plan is the cage.

Wealth used to produce more wealth: machines, buildings, money, and increasingly software and data.

See the canonical definition on what-is-capitalism.html. Every page links there; no page redefines it.

A state institution that sets the price and quantity of money. Present from L1 leftward; absent or minimal in R1 and R2.

L1 leftward

German-model law placing worker representatives on company supervisory boards.

Signature feature of L2

The strategic sectors of an economy: finance, energy, transport, and communications. The phrase is Lenin's; who owns them is the L4 question.

The L4 question

Ricardo's case that trade benefits both sides even when one is better at everything, because relative costs differ.

A characterization, not a band: an L1 economy in which large corporations dominate markets and politics. Criteria and evidence on america.html.

Maps to L1

Schumpeter's term for the process by which new technologies and firms destroy incumbents; the competition that matters most in capitalism.

A failure mode possible in any band: success determined by political connection rather than market performance. Both defenders and critics of capitalism condemn it; they disagree about whether it is separable.

Any band

State steering of a mostly private economy through planning, directed credit, and national champions.

Band L3

Annual scoring of countries on market-friendly rules; the two standards are the Heritage Foundation's Index of Economic Freedom and the Fraser Institute's Economic Freedom of the World. Measures rules for business, not the state's footprint in assets, a distinction the Singapore entry makes vivid.

A cost or benefit landing on someone outside the transaction, pollution being the classic cost. The pure model does not price them; the bands left of center exist largely to answer that.

Left of center

Money backed by government decree rather than a commodity. Universal since 1971.

A characterization of L1 economies since roughly the 1980s in which financial activity outgrows and steers the productive economy.

Maps to L1

The Danish bargain: easy dismissal, generous unemployment support, and aggressive retraining.

Band L2

A market in which prices form through voluntary exchange without state direction.

China's household registration system, which ties benefits to birthplace and shapes internal migration.

Deliberate state steering of specific industries through subsidy, protection, or procurement. Defining tool of L3, recurring episode in L1 (CHIPS, the IRA).

L3, recurs in L1

Smith's image for self-interest channeled by competition into public benefit. Used once by Smith in The Wealth of Nations, and more famous than anything else in it.

Let do: the night-watchman state confined to courts, police, and defense.

Band R1

Collective or worker ownership combined with market exchange; the first territory past our left edge. Defined canonically on the sister site.

Defined on democraticsocialism101.com

The land, factories, machines, and tools that produce goods. Who owns them is the single variable that separates capitalism from socialism.

An economy combining dominant private ownership with a substantial state role in regulation, insurance, and provision. Our editorial classification of the United States.

Our label for the US, L1

A contested umbrella term for the post-1980 turn toward markets, privatization, and trade. Used by critics far more than by proponents; this site prefers band names.

The minimal state of band R1: protection against force, theft, and breach of contract, and nothing else.

Band R1

The German school holding that the state's job is to design and enforce the competitive order itself. Intellectual foundation of L2's German branch.

Foundation of L2

The information carried by a market price about scarcity and desire. Hayek's knowledge argument rests on it.

The pursuit of surplus over cost as the driver of production decisions. Pillar four, along with its disowned twin, loss.

A good that is non-rival and non-excludable, like national defense or clean air, which markets undersupply. The standard case for a state larger than R1's.

Beyond R1

The referee coming to serve the regulated. The right-side critique of L1.

Critique of L1

Pursuing wealth through political favor, subsidy, or barrier rather than production. Condemned by the pure model, alleged by critics to be L1's actual operating system.

Democratic politics plus L2-style policy; frequently conflated with democratic socialism, and the sister site owns the disambiguation.

Defined on democraticsocialism101.com

Free markets underneath, universal welfare and negotiated labor relations on top.

Band L2

A firm owned by the state. Marginal in L1, dominant at the commanding heights in L4.

Dominant in L4

A state-owned investment fund: the state as capitalist. Temasek, GIC, PIF, ADIA, and Mubadala are the signature examples.

Feature of L4

The state owns the commanding heights and subordinates market competition to state strategy.

Band L4

A state payment or tax break that moves a price away from its market level.

A tax on imports: the oldest tool of industrial policy and the oldest deviation from free trade.

The academic framework (Hall and Soskice, 2001) distinguishing liberal market economies (our L1) from coordinated market economies (our L2 and L3). The scholarly backbone of the spectrum.

L1 versus L2 and L3

Selling one's labor in a market rather than owning one's own means of production. Pillar seven, and the pillar critics target most.

The apparatus of universal social insurance: pensions, health, unemployment, and family support. Size of the welfare state and freedom of markets are separate dials, which Denmark demonstrates.