2. Definitions
• An economic system where few restrictions are placed on business activities and
ownership (investopedia.com)
• In this system, governments generally have minimal ownership of enterprises in
the market place. This system aims for limited restrictions on trade and minimal
government intervention
• Hence competition and the preferences and choices of consumers are the
primary restrictions on a business’s actions
• An economic and political doctrine holding that a capitalist economy
can regulate itself in a freely competitive market through the
relationship of supply and demand with a minimum of governmental
intervention and regulation (dictionary.com)
4. On the way to Free Enterprise
• On the one hand, advocates of Free Enterprise claim that the market is the
best way to regulate human behavior and equitably create and distribute
wealth. Consumers’ needs are then met by profit-motivated businesses
working to meet those needs rather than the government taking steps to
see that those needs are met (case of a socialist economy)
• On the other hand, critics of FE claim that corporate greed often
overshadows benefits to the consumer. Environmental disasters and
automobile recalls are examples of where free enterprise does not fully
protect consumers from the profit-seeking motives of business
• The break up of the telephone industry in the USA in the 1980’s is a recent
example of FE
5. Entrepreneurship in companies
• A person doesn’t have to own a business to live the Free Enterprise
• How to grow this entrepreneurship spirit within the company:
• Keep rules and guidelines to a bare minimum
• Allow employees to challenge things
• Plenty of problems to solve
• Eliminate the politics and consistently celebrate success
• Help employees turn ideas into concrete achievements
• Allow them to structure their workday
• …and allow them to fail
• Provide a real sense of purpose
Editor's Notes
In a free enterprise system, government’s function is to stay out of the way of commerce and instead, enforce the rules and keep everyone operating fairly.
Prior to the break up, the telephone industry was, generally speaking, a monopoly controlled by government regulation. But once the industry was de-regulated, consumers were given many more choices for the telephones they could buy and service providers to use. This resulted in more variety of telephones and reduced long distance rates, and is also attributed with spurring the multitude of sophisticated communications options we have today.