Words get thrown around a lot without any real thought to the meaning behind them. Socialist. Liberal. Fascist. Republican. Communist. Capitalist.

Whoa. Capitalist?

The idea of the “invisible hand of the free market,” an idea introduced by 18th-century Scottish social philosopher Adam Smith, manifested as a metaphor to describe the self-regulating nature of the marketplace. It has come to be a cry for the deregulation of the free market, a staple of “pure” capitalism.

But Smith never mentions capitalism in “The Theory of Moral Sentiments.”

We have come to view economic systems like those in the United States as pure capitalism and revolted against what is broadcast as pure socialism or pure communism. We even bristle at the idea that the slightest socialism might be creeping into our marketplace. (It’s part of the reason the new health care law is so highly debated.)

Capitalism, defined as, “an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, especially as contrasted to cooperatively or state-owned means of wealth” is lauded in the United States. Here, it is held up as the example of what a democratic society can do, as the pinnacle of freedom, being able to have complete control over “the means of production, distribution, and exchange of wealth.”

Socialism, on the other hand, is defined as “a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.” So what does that mean?

It means that, as a whole, as a community, the people decide what to make, what to fund and how to divide up what is made and funded. Generally this is taken to mean that the government has control, and while that might operationally be the case, it is not in principle. The government stands for, acts for, the people. The community as a whole.

Countries like Sweden and Norway are commonly defined as “socialist” because they have this strong central government. However, most of their industries are privately run, standing against the idea of a purely socialist society. Some countries, like Sri Lanka and Portugal, discuss socialism in their constitutions, but still others ascribe to various branches of socialism: democratic socialism, African socialism, Arab socialism.

Then there are those countries that identify as socialist in their constitutions but are seen as communist by the rest of the world. How does that happen?

Communism, which branches off socialism, is defined as “a theory or system of social organization based on the holding of all property in common, actual ownership being ascribed to the community as a whole or to the state.” Here, then, is where the state — not the people — makes decisions for the country.

Countries like China, Vietnam and Cuba officially describe themselves as communist, while other countries like North Korea are described externally as communist. (North Korea is an interesting example because, although it is state-run, its military class is elevated above the rest of the population, contradicting the communist idea of a classless society.)

These distinctions are important. Incredibly important. They illustrate the nuances that make economic systems so complex and resistant to the single labels “capitalism,” “communism” or “socialism.”

The United States, with our capitalist economic system, already has aspects of communism and socialism. We operate government-run prisons. We provide health care for soldiers and the elderly. We require drivers to have car insurance. We pay taxes to support national infrastructure. We have copyright and patent laws that limit what we can produce. We have labor laws that limit how we can produce.

The laws that we have now allow our market to work. They allow entrepreneurs to open new businesses, to expand and create jobs. They protect your great idea from getting stolen by me. They protect my land from getting taken by you. They create the opportunity for competition and creativity that would not happen if we relied solely on the concept of supply and demand.

We don’t have a free-market economy because we need government intervention to make any concept of a free market possible. The system that exists now, as flawed as it is, is a blend of the better parts of a myriad of systems. Whether the balance is the one we need (whether we need more capitalism or more socialism or more regulation or more monopolies) will always be up for debate. But it is only when we can understand the accurate definitions of such complicated systems that such a debate can even begin.