Free Enterprise

In the United States and most modern democratic nations the Free Enterprise System is used for economic activity. The Free Enterprise System can be best defined as the economic system that allows people to freely develop business ideas and to attempt to use those ideas to generate a profitable business. The Free Enterprise System encourages competition, which as a result, gives customers the opportunity to choose the best good or service for their needs. The competitive nature of the Free Enterprise System does not ensure success for all businesses, but this system does encourage innovation, competition, revenue for government policies, and a focus on the consumer.

The Free Enterprise System is based on the premise of profit motive. Businesses and individuals alike are motivated to acquire profit. As a result, businesses will operate as efficiently as possible along the production possibilities frontier. No business or individual is seeking to lose money intentionally. The consequence is that business operations are automatically streamlined because they are motivated to generate the highest possible profit.


For the Free Enterprise System to work efficiently there must be open opportunity. No businesses are restricted, within reason, in the United States. By having an open opportunity, businesses with new ideas, better pricing models, improved products, and innovative approaches are able to enter the market place because of open opportunity.

Because of the strong tradition of legal equality and open opportunity found in the United States today, business ideas are continually being entered into the marketplace. Imagine that only middle-aged white males were allowed to participate in business ventures. The available goods and services to a restricted and unequal marketplace would lack diversity, thus limiting the available choices for the consumer. By opening up the opportunities and providing legal equalities, all business ideas are tested in the marketplace, leaving only the most efficient goods and services for the consumer.

Tools such as the free contract and the right to voluntary exchange give the Free Enterprise System further advantages. Businesses and individuals in the Free Enterprise System are allowed to freely engage in contractual obligations without government interference. Furthermore, the right of voluntary exchange allows consumers to deny or accept goods or services. No one is required to buy anything from anyone, at anytime. You are free to choose which contracts to enter and you are free to refuse or accept a purchase or sale always.

The features found in the Free Enterprise System encourage economic growth in a variety of ways. The most fundamental aspects of the Free Enterprise System are the profit motive and the competitive nature of the laissez-faire economic model. When the economic system is free to operate, the consumer wins. By allowing open opportunity and legal equality, the consumer wins. Using free contracts and the right of voluntary exchange, the consumer wins. Thus, the focus of the Free Enterprise System is to provide an economic model that encourages successful business ventures and to guarantee that the consumer wins.