Free Enterprise

Posted in Finance, Accounting and Economics Terms, Total Reads: 815

Definition: Free Enterprise

It is an important aspect of economic system of any country which gives individuals the right to make their own economic decisions freely without any sort of intervention or sort of regulations by the government or any other regulating body.

In a free enterprise the ownership of any company are also not governed by any regulations or rules by the government. By the fact that no regulations are placed, it is, meant that basic restrictions are placed which are very few in number. With respect to trade also this system ensures there is limited intervention and limited regulations set by the government. So basically in such a system the trade is governed by the supply and demand factors and prices are allowed to reach their equilibrium without any government policies or regulations. Also regulations, restrictions and subsidies are kept to minimum and which doesn't affect the trade. Competition is an important factor which determines prices of goods and services.

Laissez-faire is a type of free market system, which is similar to free enterprise, but in which the role of government is only restricted to property rights.

In 1700 there were a lot of restrictions on people owning or starting any business without the permission of the government. So this pushed the community to push the government to follow free enterprise system and hence began the free enterprise movement. The movement basically wanted to lift any regulations or restrictions that were imposed by the government and which would impose any restrictions on free trade concept. This movement also wanted to remove restrictions on who people traded, so that businesses could trade with anyone without restrictions. The movement slowly grew and in current time many countries incorporate the free market system


Hence, this concludes the definition of Free Enterprise along with its overview.


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