Basic Institutions of Capitalism
The basic institutions of capitalism are: (i) the right of ownership in productive assets, (ii) freedom of contract, and (iii) constitutional (limited) government. Those three institutions set capitalism apart from other social systems. They generate incentives that have specific and predictable effects on the behavior of decision makers, the allocation of resources, and the flow of innovation.
KeywordsPolitical Power Standard Theory Economic Behavior Capitalist Society Basic Institution
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