Capitalism is a social and economic system based on private property rights, private allocation of CAPITAL, and self-interest motivation. Capitalism is often referred to as a free enterprise or market system. Capitalism contrasts with SOCIALISM, in which most RESOURCES and industrial- PRODUCTION systems are state-owned or controlled; and with communism, in which most resources are state-owned and most decisions regarding output are made through central planning. In the 18th century, capitalism replaced feudal control and MERCANTILISM as the primary basis for economic organization. Scottish philosopher Adam Smith described the benefits to society of rational self-interest, where producers would attempt to maximize their well-being by achieving the highest profit possible, and consumers would maximize their well-being by achieving the highest level of utility or satisfaction from the resources they controlled. Smith suggested that with private control and allocation of resources, ECONOMIC EFFICIENCY would result. The distinguishing force of capitalism is self-interest motivation. Those individuals in control of capital will attempt to use it in a manner to maximize their profit, thereby increasing their WEALTH. Critics of capitalism, most notably 19th-century philosopher Karl Marx, suggested capitalism contained the seeds of its own destruction. Marx saw the English Industrial Revolution factory owners becoming increasingly rich, while workers, who were being replaced by machinery, were in excess SUPPLY and therefore were paid only minimal wages. Marx argued that capitalists, acquiring the “surplus value of labor,” would add to the disparities between rich and poor, eventually leading to crises and social upheavals in which workers would overturn a minority’s control of capital. Ironically, the major characteristics of capitalism, private control and allocation of resources, depend heavily on the role of government. Many “free market” capitalists speak disparagingly about government, but without government laws and regulations defining who owns a resource, anarchy or dictatorial control would likely ensue. U.S. economic historians point to the excesses of the “robber baron” and American Industrial Revolution eras as examples of the extremes of capitalism, and they credit the UNION movement and expansion of government control of resources as balancing forces in the evolution of U.S. capitalism.