From dictionary.reference.com comes the modern usage:
1. a person who has capital, esp. extensive capital, invested in business enterprises.
2. an advocate of capitalism.
3. a very wealthy person.
1785–95; capital + -ist
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, esp. as contrasted to cooperatively or state-owned means of wealth.
1850–55; capital + -ism
From the American College Encyclopedic Dictionary, 1955, we have:
capitalist, n. one who has capital, esp. extensive capital employed in business enterprises.
1. a system under which the means of production, distribution, and exchange are in large measure privately owned and directed.
2. the concentration of capital in the hands of a few, or the resulting power or influence.
3. a system favoring such concentration of wealth.
Here’s another older set of definitions from Webster’s Collegiate Dictionary, Fifth Edition, date unknown as the relevant page is missing, but the latest population information in the back of the book is from 1941:
capitalist, n. One who has capital; esp., a person of large property which is or may be employed in business
1. The state of having capital; the position of a capitalist.
2. An economic system in which capital and capitalists play the principal part; specif., the system of modern countries in which the ownership of land and natural wealth, the operation of the system itself, are effected by private enterprise and control under competitive conditions.
It’s packed up now, but my circa 1970s World Book Encyclopedia defines it in the modern sense — that is, by focusing on free trade and private ownership and contrasting it with socialism.
I don’t know how important it is to the economic debate overall, but it’s important to remember changing definitions when reading works from previous generations. Belloc and Chesterton both use the word in its older sense — here’s the opening paragraph on the chapter on the capitalist state in Belloc’s Economics for Helen:
The Capitalist State is that one in which though all men are free (that is, though no one is compelled to work for another by law, nor anyone compelled to support another), yet a few owners of the land and capital have working for them the great mass of the people who own little or nothing and receive a wage to keep them alive: that is, a part only of the wealth they produce, the rest going as rent and profit to the owners. (p. 96)
["Rent" is a technical term referring to one of the three divisions of wealth produced, the other two being Subsistence and Interest (or Profit).]
It seems that the current definition has arisen in reaction to the rise of socialism (which, I want to reiterate so there’s no misunderstanding, Chesterton and Belloc were both emphatically against), but it also seems to me that the older one reflects our current situation well. Even though statistics show modern Americans to be homeowners at unprecedented rates, it makes it easy to miss the fact that most “homeowners” don’t own the place free and clear, but have a mortgage. And most of us don’t use the property we do own (mortgaged or otherwise) to produce wealth, so it can’t properly be called “Land” or “Capital” in the economic sense of the words.