Advantages of free enterprise

Answer 1

If you equate free enterprise with a competitive market (and this is far from being a given, since the objective of large corporations is to monopolize the market or handicap any competitors so severely that there is no competition), there are many advantages. A competitive market allows consumers to use their buying power to reward the producer which best meets their needs. At the same time, the producer and his competitors are on the same footing with respect to their employees, so the producer who treats his employees the best will get the best employees. A competitive market encourages innovation. Yet at the same time, it does not impair profitability. The market tends to balance out all these factors.

In an unbalanced market these advantages are lost. Where a huge retail chain like Wal-Mart dominates the market, suppliers are constrained to supply goods at the prices dictated by Wal-Mart. There is no competition and thus no choice. The suppliers' losses are passed down the line and ultimately are paid by the workers, who are fired and replaced by workers who will work for less. At the other end, the consumer is faced with little choice of product, since other retailers have been put out of business or forced to adopt Wal-Mart's business model to compete (and will in course be absorbed by the larger corporation). Finally, there is no encouragement of innovation, since change is expensive, and the dominant company will want to sail along making ever bigger profits.