The word capital has roots in the trade and ownership of animals. The Latin root of the word is capitalis, from the proto-Indo-European kaput, which means "head", this being how wealth was measured. The more heads of cattle, the better. The terms chattel (meaning goods, animals, or slaves) and even cattle itself also derive from this same origin.
The lexical connections between animal trade and economics can also be seen in the names of many currencies and words about money: fee (faihu), rupee (rupya), buck (a deerskin), pecuniary (pecu), stock (livestock), and peso (pecu or pashu) all derive from animal-trade origins.
The first use of the word Kapitalist was in 1848 in the Communist Manifesto by Marx and Engels; however, "kapitalismus," the german word for "capitalism" was not used. The first use of the word capitalism is by novelist Thackeray in 1854, by which he meant ownership of a large amount of capital.
In 1867 Proudhon used the term capitalist to refer to owners of capital, and Marx and Engels refer to the "capitalist form of production" ("kapitalistische Produktionsform") and in Das Kapital to "Kapitalist", "capitalist" (meaning a private owner of capital). By the early 20th century the term had become widespread, as evidenced by Max Weber's use of the term in his The Protestant Ethic and the Spirit of Capitalism in 1904, and Werner Sombart's 1906 Modern Capitalism.
The Oxford English Dictionary cites the use of the term "private capitalism" by Karl Daniel Adolf Douai, German-American socialist and abolitionist in the late 19th century, in an 1877 work entitled "Better Times", and a citation by an unknown author in 1884 in the pages of Pall Mall magazine.
The definition of capitalism given in dictionaries has changed over time. For example, the 1909 Century Dictionary defined capitalism as:
- The state of having capital or property; possession of capital.
- The concentration or massing of capital in the hands of a few; also, the power or influence of large or combined capital.
The contemporary definition, however, refers to an economic system. For example, the Merriam-Webster Third International Unabridged Dictionary refers to capitalism as: " an economic system characterized by private or corporation ownership of capital goods, by investments that are determined by private decision rather than by state control, and by prices, production, and the distribution of goods that are determined mainly in a free market." Hence, "capitalism" today commonly refers to what was called laissez-faire and economic liberalism in the 18th and 19th centuries.
According to some left wing theories regarding ideology, a dominant economic class disseminates an ideology serving its class interests. Therefore the ideology of the capitalist class (previously known as the bourgeoisie) also came to be known as "capitalism", giving the word a meaning which is distinct, albeit closely related to, the economic system. This usage has been adopted outside of leftist circles, and many economic liberals describe themselves as "capitalists", even if they are not personally involved in business investment and/or the ownership of the means of production.