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It is often said that a capitalist is anyone who is greedy. But in economics, a capitalist is a person who owns capital, i.e. property that earns revenue. Capitalist do not need to work for a living because they can live off their wealth. (Of course, most people want to work, so most capitalists are not idlers.) A capitalist society (or capitalism) is one in which the major economic decision-makers are capitalists and the main economic motivation is profit-seeking.

In most economic discussions, there are two types of capital: real and financial. Real capital refers to real means of production, i.e., objects used by labor to produce products. Financial capital refers to pieces of paper (such as stocks and bonds) that allow someone to lay claim to real capital and the stream of income produced by the production process. (N.B. These are only the basic financial assets available in modern financial markets) Stocks represent shares of ownership of a joint-stock corporation, while bonds represent promises to pay interest and principal on loans.

There are two types of real capital: fixed and circulating.

1. Fixed capital is capital that is fixed to the earth i.e. buildings, machines and roads. Fixed capital can be used to receive rent, or used in production to receive profit.

2. Circulating capital is capital that is not fixed to the earth i.e. food, fuel and money. The elements of circulating capital are typically incorporated (as raw materials or intermediate goods) in some other product.

Different types of capital play different roles in a modern capitalist economy. Merchants receive profit by trading commodities. Financiers lend money and receive interest (loans, bonds, overdrafts) or buy equities from joint-stock companies to receive a dividend. Bonds and equities can also be traded for profit on a exchange.

Chief Executive Officers (CEOs) of joint-stock companies are often called capitalists, although in a strict sense they are managers. A Chief Executive Officer can manage a company without owning stocks, i.e., equity. Due to the dominance of joint-stock companies, the dominance of the individual capitalist in an individual large company has steadily declined. Corporations often involve as much bureaucracy as the government does.

Many philosophers and political theorists, e.g. Ayn Rand and anarcho-capitalists such as David Friedman, use "capitalist" to mean an advocate of capitalism.