Defining Terms in Economics

To talk about economic matters, it is imperative to first define terms. So many people in the blogosphere and elsewhere are confused as to what certain words mean, and debate is thereby derailed and otherwise confused.
First, there are four main types of economic systems in the world: free market capitalism, mercantilism, fascism, and socialism. The first three are subtypes of capitalism, which itself is largely misunderstood.
Capitalism is the process whereby labor, resources, and monetary capital are combined to produce products and/or services, and render a profit.
Profit is created wealth, that is, wealth most commonly in the form of money which did not exist prior to the production of goods or services.
Labor is rather self-defining, the application of human time and energy that creates something hitherto non-existent.
Resources are material things on which labor is exerted to produce a good or service. Resources may be naturally occurring, such as iron ore - labor is applied to it to produce steel. Manufactured goods may be resources as well, such as computers; labor applied at a keyboard produces a writer's book, for instance.
Monetary capital is money which is used to fund the purchase of resources and labor to produce a good that is then sold or traded.

Free market capitalism is a system wherein individuals and corporations voluntarily produce goods and services without interference by a government other than the enforcement of law to prohibit theft and fraud. A free market depends on a strict application of the rule of law, so that property is safeguarded, and no one is coerced to buy or sell any good or service. Ownership of one's person, property, and ideas is primary to a free market, and if that ownership is compromised, then the whole system fails.
A free market is based on the voluntary exchange of labor, goods, services or money between interested parties, and is by nature equitable, as each party sees an advantage to himself in conducting the transaction.

Mercantilism is a capitalist system where certain goods and services are encouraged or discouraged by governments at the behest of producers who are influential in government. They lobby to promote their own products, and discourage competitors. The government may see particular producers and their products as beneficial to the country, its people, or to the government itself, and for that reason accedes to the demands of the producers. The government's actions may take the form of tariffs on competitive foreign goods, taxes on competitors, abolition of certain goods and services, licensing of particular services, subsidies to certain producers, and regulations defining or controlling the quality of goods.

Fascism is the government control and regulation of privately owned and operated industry and services. This differs from mercantilism in that control and regulation is applied equally to all industry, without favoritism to particular producers, though historically, there have always been certain producers who had more influence in fascist governments with the result of differentially promoting themselves.

Socialism is the system where government owns the labor, resources, and capital, and theoretically does not derive a profit from the production process. People are assigned jobs according to the government's estimation of the best use of their particular talents and abilities, without consideration of their aspirations. The lack of a profit means that no new wealth is created, thereby precluding expansion of production facilities. In addition, with no profit motive, individuals are in effect discouraged from invention and innovation, though the government may encourage said invention and innovation by appealing to national pride and other moral inducements. In practice, there may be rewards such as better housing, opportunities for the individual to change jobs, and other material inducements, though these are seen, rightly so, as capitalist distortions of true socialism. Furthermore, if profits are made, the government frequently siphons them off to be used for non-productive ends; this has the result of impoverishing the country.