A free enterprise system or free market system is basically an economic system where the market determines the price, product, and services. There’s little to no government intervention. This allows entrepreneurs to act of their free will without having to face government interference.
Main Idea Behind Free Enterprise System
However, in a free enterprise system, entrepreneurs usually make decisions that benefit them and their businesses. Only little is thought about the people. Although the constant competition in this system also makes it highly unlikely for businesses to charge high prices. Businesses might try to meet each market’s demands at an affordable price.
Similarly, Bill Gates created Microphones that provided consumers with what they needed at fairly affordable prices. Bill Gates created the company in 1976 and his historical software rejuvenated the way we looked at computers. Since its creation, Microsoft has been adopted worldwide by millions.
How Did Bill Gates Use The Free Enterprise System
However, it goes without saying that most of Microsoft’s and Bill Gates’ success is subject to the free enterprise system in the United States. It laid down a guarded environment for Bill Gates that allowed him to stay out of government interventions. For instance, laws and regulations.
Bill Gates is undoubtedly a skillful genius. Microsoft enabled Gates to become a billionaire. But apparently, he was still not done. Gates added another groundbreaking software in the market, Internet Explorer. Both software made him the richest person on Earth.
Nevertheless, a free enterprise system doesn’t absolutely rule the government out of the picture. The government is still responsible for restoring law and order by ensuring that all parties abide by the legal contracts. Gates just happened to have filled the world’s need at a fairly lower price and hence defeated the competitors with minimal government interference.
4 Key Characteristics Of Free Enterprise System
Economic freedom means that people have more freedom than ever whilst going about things. They have the freedom to decide their next job, career, employer, or job location. For businesses, it has other incentives. Businesses are free to produce the products they think will prove to be the most profitable. They can hire workers of their liking, make whatever they want, and sell wherever they want.
This is the most common characteristic of any market. Voluntary exchange is when the buyers and sellers freely make transactions. In simpler words, when both parties make purchases and sales and both get benefits.
There’s a constant stream of profit on the producer’s mind. So in order to achieve that goal, the producer endlessly offers his best products at a lower price.
In a free enterprise system, there is high-level competition because each producer is only producing what they think is the most profitable. The thriving competition guarantees that producers will always bring out better and newer products to win over their competitors.