The Free Enterprise System

What is Free Enterprise? 

According to the dictionary:

“Free” = Having liberty; not controlled by others.

“Enterprise” = a) An undertaking or project, or b) Readiness for daring action.

So, Free Enterprise must mean: 

Being at liberty to undertake a daring action without being controlled by others.

The idea of individual freedom is paramount in a Free Enterprise, or Capitalistic, system, and is based on the view that the right of the individual to pursue his own self-interest will bring about the greatest benefit to society as a whole.

Rational Man

Let’s back up, however, and talk about how humans behave; some call this the “Rational Man Theory”.  Human behavior is based on the fact that humans:

• Prefer more to less.

• Want it sooner rather than later.

• Want it themselves rather than for somebody else to have it.

Pause for a moment and ask yourself how you honestly feel about these ideas, and try to remember that society attempts to harness what are considered “primitive” and “selfish” human urges by applying moral judgments to behaviors that are considered “bad”.  If left to our own devices, we would all act like toddlers and pursue our own selfish interests! 

Adam Smith

How can this type of behavior help society?  Read this web page about Adam Smith, who in 1776 wrote a book called AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS:  http://www.heartoscotland.com/Categories/adam-smith.htm. 

Adam Smith claimed that:

in a free enterprise system, individuals will be free to buy and sell what they want, where they want, for whatever price they want.  At the same time, other individuals will be free to decide whether or not they want to buy the products at the prices being offered.  These countervailing forces work to encourage efficiency and productivity so that an optimum amount of goods and services are available at the best possible prices for both buyer and seller.  Society, as a whole, has more goods and services available at the best possible prices.

Who would take away the freedom that Adam Smith says is essential to the betterment of society?  Government.

Adam Smith said that the role of government should be to ensure two things:

a)           Respect of property rights

b)           Freedom of choice

In this country are property rights secure?  Is what I own always mine under all circumstances?  What if I don’t pay my car tabs, or my property taxes?

Do we have complete freedom of choice? Can I set up a meth lab wherever I want?

Obviously, the role of government in our lives is important – government tries to protect us from being murdered, from having property stolen, from eating tainted beef.

But what about legislation that takes away property rights, such as wetlands restrictions?  Landowners cannot use their property as they wish, which may result in higher prices on some products because not all land can be utilized to produce the goods and services.  (We will be discussing the laws of demand and supply a little later – for now just assume that if less of something is available that prices will be higher.)

So am I saying that ALL government activity is hindering Free Enterprise?  No, but what I DO want you to ask yourself this:  When does government action no longer benefit society? Can government intervention hinder improvements that might have arisen as individuals sought to produce products that did not pollute or harm, knowing that by doing so they would pull business from those who were?

Go to the following link and take the “tour” for more information about the philosophy behind Capitalism.

http://www.capitalism.org/tour/index.htm