According to the Oxford dictionary the definition of free enterprise is “an economic system in which private business operates in competition, and largely free from state control.” There are seven key characteristics of a free enterprise system including economic freedom, competition, binding contracts, property rights, profit motive, and equal opportunity. Let’s spend just a moment on this last point.
Today there is much debate about the nature and form of equal opportunity. In the context of economic freedom, equal opportunity means that there are no barriers to entry for labor and capital to participate fully and freely in an open economy. The government does not dictate the direction of the economy. That role is largely left to private enterprise.
Unfortunately, various barriers to full labor force participation have been erected over time. Some in the form of unconscionable discriminatory practices against marginalized communities, women, immigrants, the handicapped, and other groups. These practices limit participation and thus limit the full attainment of human potential. These barriers must be eradicated so that everyone has equal opportunity to participate in our economy. The need to have everyone participate in the economy fully and equally is more important than ever as business and talent competition are now both global phenomena.
But equal opportunity is not the same as equal outcomes. The American Free Enterprise system encourages innovation, industry, and risk taking. Some will be comfortable taking outsized risks for the chance of an outsized reward, while others will not. Some will seek wealth while others shun it. Some will use their God-given talents in other ways to participate by giving back. Whatever approach one chooses to take is purely personal. The beauty of our system is that it allows an individual to make the choice that is right for them in the context of their personal goals and aspirations.
Free enterprise is not just about economic opportunity. It is about the vitality of the human spirit. As my friend and mentor Bob Plaster was fond of saying; “Free enterprise is not just about commercial ventures. The entrepreneurial spirit is about building to a higher level and investing your life’s energy in that which is good and decent. It is about finding the best that is within you and giving it to the world in ways that benefit all.”
It was 1992 when James Carville, an election strategist for then Arkansas Governor Bill Clinton said, “It’s the economy, stupid!” I like to remind Americans that “It’s the system, stupid.” While the American free enterprise system is imperfect, and can create inequities, it is undeniable that it has lifted more people out of poverty than any other system created the world over.
As our presidents recite when they take the oath of office to “preserve, protect, and defend the Constitution of the United States,” let us work together in common cause to preserve, protect, and defend the American free enterprise system. It is a system worth protecting for future generations.