What is the most distinctive characteristic of capitalism?

An emphasis on private ownership of property and freedom of trade and commerce.

Explanation:

Capitalism is built around the pursuit and protection of one's private property. Early ideas of capitalism began with thinkers like Adam Smith in the late 18th century. Smith set forth the basic principles of capitalism in an influential book published in 1776: An Inquiry into the Nature and Causes of the Wealth of Nations. The Nobel-prize winning 20th century economist Milton Friedman said: "The key insight of Adam Smith's Wealth of Nations is misleadingly simple: If an exchange between two parties is voluntary, it will not take place unless both believe they will benefit from it." Smith argued for such voluntary exchanges within a free market system. Smith saw that wealth was something that could be created and increased through voluntary exchange and free trade. Smith's ideas formed the basis for what we have come to know as capitalism.