Section 1 Benefits of Free Enterprise
Preview
Objectives
After studying this section you will be able to:
- Describe the tradition of free enterprise in the United States and the constitutional protections that underlie it.
- Explain the basic principles of the U.S. free enterprise system.
- Identify the role of the consumer in the U.S. free enterprise system.
- Describe the role of the government in the U.S. free enterprise system.
Section Focus
American free enterprise is based on the principles of profit motive, voluntary exchange, private property rights, competition, and freedom for producers and consumers. The U.S. Constitution supports the free enterprise system by guaranteeing private property rights, the right to make contracts, and freedom from unfair taxation.
Key Terms
- profit motive
- open opportunity
- private property rights
- free contract
- voluntary exchange
- competition
- interest group
- public disclosure laws
- public interest
Some of the most famous Americans have not been politicians, sports figures, or actors. Do you recognize names like John D. Rockefeller, founder of Standard Oil of New Jersey, or Andrew Carnegie, who started Carnegie Steel Company, or Bill Gates, the founder of Microsoft? Each of these people started with an idea and through persistence, vision, and effort built that idea into a huge business success. They made themselves into the richest people of their time, helped fuel the economy, and contributed vast sums of money to programs and charities for the public good.
A Tradition of Free Enterprise
Today there are over 18 million unincorporated businesses in America, including about 3 million minority-owned businesses. Many of these were started by a single entrepreneur or a small group of friends or family members hoping to earn a living and, perhaps, become successful or even wealthy.
For centuries, people have considered America to be a “land of opportunity”—a place where anyone from any background could achieve success through hard work.
Although immigrants no longer expect to find streets paved with gold, this country does offer special opportunities that have allowed business people to be so successful and have contributed to our overall economic prosperity.
Why has America been such an economic success? Certainly the open land, natural resources, and uninterrupted flow of immigrants with different backgrounds and experiences all contribute. But a key factor has also been the American tradition of free enterprise—the social and political commitment to giving people the freedom and flexibility to try out their business ideas and compete in the marketplace.
How does this photo represent the American free enterprise system?
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