Discuss capitalism would not be complete when not discussing the ideas of Adam Smith, particularly his ideas contained in his famous book, An Inquiry Into the Nature and Causes of The Wealth of Nations. As has been explained by the quote above, Smith put the freedom, markets and individual interests as the basis for economic concept. Three key concepts that would in turn become the basis for capitalism. There are five basic principles of capitalism, namely:
1. Capitalism is the full recognition of the rights of individual property or an individual with no specific boundaries. Private property rights is the guarantee for the individual concerned to uphold freedom and independence. Individual freedom will become a reality when he justified his own to have a guaranteed without parties or other individuals sued.
2. Capitalism is a recognition of the right of individuals to conduct economic activities in order to enhance socio-economic status.
3. Capitalism implies recognition of a push or economic motivation in the form of the spirit to achieve maximum benefit (profite oriented).
4. Capitalism also includes the affirmation of freedom of competition with other individuals (freedom for competition).
5. Capitalism recognizes the legal validity of the free market economy or the market mechanism (Seda, 1996:272).
Fifth recognition is then a manifestation of the concept of Laissez-faire, Laissez-Passer which is the core of capitalism and liberalism. “Modern Industry never have evolved without any division of labor and capital accumulation both of which were based on self-interest” says Smith.