The United States has only known the economic system of free enterprise since its development nearly 250 years ago. The nation has adapted the system so dramatically that it has been renamed the American Free Enterprise system. While it “provides individuals the opportunity to make their own economic decisions, free of government constraints,” capitalism, as it is also known, has consistently failed the people in other ways (Meyer 1994). Although the benefits of the American Free Enterprise system differs among individuals, it is still important to recognize its drawbacks for others.
Voluntary exchange, the act of consumers and businesses trading goods or services, is necessary for capitalist economies. The importance behind this aspect is that individuals and businesses make their own choices upon confrontation of the matters. This freedom is lost in otherwise socialist economic systems; however, through globalization, economies have implemented more aspects of capitalism, trade being one of them. Economic incentive is also necessary in the development of a nation.
…show more content…
Profits and losses are in proportion to the work put in (Meyer 1994). Life offers opportunities for the production of such work, even in simple things. Exhibiting work ethic helps businesses exemplify success, an aspect essential to the development of the American Free Enterprise system. Entrepreneurship, the act of forming a business and taking on the costs of it, is why businesses exist. These businesses are essential to government function simply because of resulting tax income. Consumers need places to engage in voluntary exchange and provide the government with their interests, so the formation of business is crucial in another way. Entrepreneurs have to be willing to face the financial costs of establishing a business or they would cease to exist. Together, work ethic and entrepreneurship are the backbone of the American Free Enterprise