Free Enterprise produces:
- Hard work
- Earned success
- Ample charity
The U.S. economic system of free enterprise operates according to five main principles:
- the freedom to choose our businesses,
- the right to private property,
- the profit motive,
- competition,
- and consumer sovereignty.
Free enterprise: Freedom to Choose Our Businesses
In a free country run by free enterprise, you alone get to decide what kind of business (enterprise) to start and be in. What fees to charge and what hours to work are all decisions you freely get to make. While some public laws will prohibit you from cheating or harming consumers, in a free enterprise system you will generally be left alone by the government in order to run the business as you choose.
Free enterprise: Right to Private Property
In a free country run by free enterprise, an individual, a family, or a group is allowed to own private property such as a piece of land, a home, or an automobile. Private property differs from a public building, or public property, such as the city hall, a park, or a highway, all of which provide a government service for all citizens. In a free country run by a free enterprise economic system, the people’s right to buy and sell private property is guaranteed by law. The law does require people to use their property in safe and reasonable ways.
Free enterprise: Profit Motive
The objective to earn money is the biggest reason that any enterprising person would organize and make the effort to start a business, profitably. To have a profitable business one must earn more money than is spent to run the business. The amount of money remaining after subtracting the cost of business expenses from the total business income collected is the profit, a measure of success. In a free enterprise system, a business owner will work hard at keeping operating costs down while raising efforts to improve and increase money income from sales. Profits become higher as the free enterprise system of cost controls and increased sales become successful. These behavior efforts made by business owners in a free enterprise to earn the greatest profits is called the profit motive..
Free enterprise: Competition
In a free country with a free enterprise system, the dream available to everyone is the opportunity for anyone to become someone. With free enterprise, rivalry between sellers within like industries trying for consumers’ dollars is called competition. As one business proves to be profitable, it is common that other people will discover this and will enter the same business as a competitor with hopes of being successful too. They will be competing with all like businesses for the same customers. To win a share of the market, other sellers will try to offer more and better services, or products and services at reduced prices. A free enterprise system allows pressure of competition between businesses which compels each to constantly improve and deliver the best services with the best products at a price consumers are willing to pay.
Free enterprise: Consumer Sovereignty
Ultimately, with a free enterprise economic system, business customers, or consumers, always determine which businesses will succeed or fail. In a free country with a free enterprise economy, the consumer is said to have sovereignty, i.e. the power, freedom, and final choice. Consumers are free to spend their money for Product X or for Product Y. If they prefer Y over X, then the company making X may lose money, go out of business, or decide to manufacture something else (perhaps Product Z). Therefore, in a free enterprise system, the consumer’s sovereign choice about spending their dollars compels business enterprises of many types to produce specific goods and services the consumer is willing to buy.
Video submitted by Joseph Farris that won second prize in AEI’s 2012 video contest:
“Make the Moral Case for Free Enterprise.”
Please visit our gallery of featured videos: http://www.aei.org/videocontest.
Thrive and Flourish!
Government keeps growing — and freedom keeps shrinking — because we fail to make the moral case for free enterprise. Based on his best-selling book “The Road to Freedom,” AEI President Arthur C. Brooks explains how we can win the fight for free enterprise by articulating what’s written on our hearts.
Arthur says:
We have to see that we’re not in an economic battle for the future of America, we’re in a moral battle.
Read more at: http://arthurbrooks.aei.org