What are the basic principles of the American free enterprise system?

Answer 1

One of the main principles of a free enterprise system is that the government has little or no participation in the market economy. The right to private property is another significant principle.

Answer 2

From a purely scientific point of view, there are no "principles of capitalism" as such because the term "capitalism" denotes an economic system and observed economic processes. However, various political ideologies that champion capitalist systems do, however, attribute values and principles to their respective visions of capitalism.

There are many different values people associate with capitalism, some negative and some positive. The principles listed here are a consensus of the principles of capitalism as expressed by supporters of capitalism. The dominant perspectives in favor of capitalism are listed below.

Classical liberalism is supportive of ideas of private property, markets that are free from undue interference (either by government or private cartels) alongside political ideals of liberalism such as equality under the law, the protection of property rights and the protection of civil liberties. This philosophy influenced more contemporary ideologies that favor capitalism, such as American Libertarianism and modern liberalism. Classical liberalism is usually associated with support for free-market capitalism under the belief that free markets weaken the power of private owners, state monopoly, and the cartels which characterized the Mercantile system that was dominant during the era in which classical liberalism emerged.

Contemporary liberalism (in the guise of "social liberalism" in the United States or "Ordoliberalism" in Western Europe) is based on the same premise of classical liberalism, but is inclusive of later developments in economics that demonstrate the instabilities of unregulated markets and the destabilizing effects social inequality has on social mobility. Therefore these variations of liberalism include values supportive of support social welfare provision to provide all individuals a chance to maximize their liberty and success in a capitalist economy.

Right-wing libertarianism combines belief in the morality of free-market capitalism with economic perspectives, most notably the Austrian school of economics which believes that free-market capitalism is not only the most efficient economic system, but any infringement upon market transactions or any state and political action constitutes an "intervention" in what is viewed as a natural spontaneous activity. From this perspective, respect for private ownership is paramount to the values of freedom and liberty. These are often connected with the following perspectives:

Individual Rights

The rights for individuals and private organizations to life, liberty, property and voluntary contractual exchange.

Limited Government

The limited role of government solely to the defense of the rights of individuals and private organizations. This typically encompasses limited government expenditures.

Equal Justice Under Law

Government must treat all individuals and organizations equally, refraining from giving any legal support to popular discriminatory practices. Government must also never succumb to the temptation to reward unsuccessful businesses and individuals with special benefits or heap additional burdens on successful business.

Spontaneous Order

The tendency for markets to order themselves naturally through the laws of supply and demand is one of the most familiar principles of free-market capitalism. From this perspective, when individual rights are respected, unregulated competition will naturally tend to reduce costs and increase the abundance of products that are in demand. This principle is also referred to as the invisible hand of the marketplace.

Private Ownership

The principle of private ownership is the capitalist belief that property that is owned by the state, or is cooperatively owned or held in the commons, is not respected or preserved as effectively as that property which is owned by private corporations . This principle is also commonly referred to as the tragedy of the commons.

Subsidiarity

Many free market organizations, such as the Acton Institute, believe the principle of subsidiarity is essential to keeping capitalist markets competitive and dynamic. Subsidiarity is the principle that authority should always be vested at the lowest, most local possible level, where local knowledge and concerns can best guide decisions. The natural tendency is often to pass the buck, expecting higher authority to take responsibility for too much.

The Golden Rule

The principle of fair treatment of others is considered a core principle of free-market capitalism by organizations such as the Heritage Foundation. Capitalism requires some level of mutual honesty to function best. We achieve this not only by dealing honestly with others, but by requiring honesty in return and holding those accountable who use misrepresentation or negotiate in bad faith.