The benefits of a free enterprise system include increased freedom, market efficiency, consumer rights, financial security and stability, and economic opportunities. In contrast, a government-run economy tends to impose restrictions and regulations on business activity.
Several government programs help businesses provide goods and services that people need. For example, the United States government provides infrastructure that allows companies to create and transport products. It also subsidizes vital goods such as agricultural products.
Competitiveness in a Free Enterprise System
The main regulator of a free enterprise system is competition. It drives quality and service, encourages innovation, and promotes efficient production practices that are beneficial to consumers.
It also helps to increase profits. Without competition, businesses might be unresponsive to the changing needs of consumers and would not grow or expand.
A business that does not meet the needs of its consumers may be driven out of a market and replaced with a competitor. This process is called "the survival of the fittest."
Free enterprise systems are sometimes criticized by those who believe that businesses do not compete with enough vigor and that they foster corrupt competition. This is because companies often externalize costs, such as by putting poisonous chemicals into the air or water, in order to make more profit.
Moreover, free enterprise systems are also known to lead to exploitation of people and other creatures. For example, a company that rushes to produce oil for a high profit margin will not pay attention to safety protocols and can cause a disastrous natural disaster like the 2010 Deepwater Horizon spill.