Free Enterprise

What is Free Enterprise? Encouraging private ownership and individual initiative (independently outside of influence or control)‏

Tradition of Free Enterprise America is considered the “land of opportunity” History of social and political commitment to entrepreneurship and competition in the marketplace. Examples: Rockefeller, Carnegie, Henry Ford

Basic Principles of Free Enterprise 1. Profit Motive Encourages Individuals to take the risk of investing in business Individuals make decisions that will maximize profits Requires financial discipline = individuals are responsible for success or failure Rewards innovation Allows creative companies to grow Improves productivity = higher profits to more efficient company

Basic Principles of Free Enterprise 2. Open Opportunity EVERYONE can compete in the marketplace

Basic Principles of Free Enterprise 3. Economic Rights - Legal equality = everyone has the same legal rights - Private property rights = you control your possessions as you wish. - Free contract - Voluntary exchange = you decide what and when to buy and sell

Role of Government 4. Copyrights – Grants an author exclusive rights to publish and sell their work. Piracy: Downloading of music, burning CD’s (Examples: Napster, Limewire etc.)‏ 5. Patent – Gives inventor exclusive right to produce and sell a product for 20 years.

What Economic Philosopher would agree with the free enterprise system What Economic Philosopher would agree with the free enterprise system? Why? How is a patent different than a copyright? What is the Number 1 motive people have to enter into the free market system? What risk do Entrepreneurs take to enter the free market?