Capitolism is an ironic reference to an economy in which market forces are subsumed to political interests in Washington. The term is derived from Karl Marx's term for a private enterprise-based economy, Capitalism, and the name of the building in which the U.S. Congress meets, the Capitol.
Similar to crony capitalism, capitolism isn't capitalism and it isn't quite socialism, but combines some of the worst aspects of both systems. A business that makes decisions based on what will earn it subsidies from Washington, rather than supply and demand, is capitolist.
To avoid bankruptcy, General Motors must make business decisions based not on the market, but on the tens of billions of dollars in subsidies it seeks from Washington. Once a prominent example of capitalism it is now one of capitolism.