Capitalism is defined as a socioeconomic system in which goods and services are produced and traded in a free market. The means of production are predominantly held in private ownership. A labor force, working for wages, produces goods and services. The division of labor refers on the one hand to a functional subdivision of production into separate tasks, each of these performed by workers possessing relatively few skills, and on the other hand to a geographical phenomenon whereby the components of a product might be manufactured in widely dispersed locations and brought together only at the point of final assembly and distribution. Although trade and exchange have always existed, capitalism is regarded as a relatively recent phenomenon. Most scholars believe that it emerged as the old feudal system decayed in early post-Medieval England. In its first manifestation, as merchant capitalism, regulations and controls were a prominent feature of its operation. As merchant capitalism broadened into full industrial capitalism, unfettered trade and a liberal economic regime were increasingly favored. Governments have periodically attempted to manage the more adverse and extreme social and economic impacts of capitalism by adopting more or less interventionist policies. By the modern era, capitalism had spread to the entire world, engendering profound and far-reaching change. Despite facing strong ideological challenges, the global influence of capitalism has become all pervasive. This article comprises three main sections. First, theoretical explanations and conceptual ideas that have been advanced as a means of understanding capitalism and the division of labor are summarized and reviewed. Second, the origins and early history of capitalism are discussed in the context of debates about the shift from feudalism to merchant capitalism in Europe. The spread of mercantilism, mainly through colonialism, to other parts of the world, and the emergence of industrial capitalism are then considered. Third, an examination is made of geographies of modern capitalism that have been shaped by the growth of large (increasingly transnational) corporations and the adoption of Fordist approaches to production, and subjected to the shocks and challenges of the rise of communism, fascism, global conflict, world economic crises, the rise of post-Fordism, and the anti-globalization movement.