Summary
FREE ENTERPRISE means that individuals and businesses have the ability to produce and exchange goods and services with one another freely. Economic systems based on free enterprise (or composed of free markets) provide greater opportunities for innovation, entrepreneurism, and prosperity than other systems.
Free markets operate according to the laws of supply and demand. In simple terms, these laws dictate that businesses naturally produce or supply what consumers want and that prices are determined by how much it costs a business to produce or provide a good or service and how much a consumer is willing to pay for it.
In some cases, government regulates how businesses can operate and how consumers can obtain and use products and services. With every regulation, markets become less free and various consequences follow, intended or not.
For example, in most cases, an employee and an employer agree upon a wage depending on factors such as type of work, skills needed, and experience. The wage, or price of labor, usually ends up being somewhere in between the highest amount the employer is willing to pay and the lowest amount the employee is willing to work for, which is mutually beneficial to both the employer and employee. Sometimes, government enacts “minimum wage” laws that require employers to pay employees a minimum amount per hour or it might enact “wage cap” laws that prohibit businesses from paying above a specific amount. In either case, regulating wages disrupts the free market by forcing employers or employees to act in a way that they might not otherwise. As businesses and consumers adapt to required changes, various consequences – intended or not – ripple through the economy.
Government should allow markets to be as free as possible. It may need to intervene to discourage some practices, such as fraud or false advertising, and it should not necessarily allow every economic transaction to occur (e.g., prostitution, slavery, drugs). As policymakers decide whether or not to regulate markets, they should always err on the side of freedom.
*See also Private Property.
Quotes from the Brethren
D. Todd Christofferson–
In most of the world, we have been experiencing an extended and devastating economic recession. It was brought on by multiple causes, but one of the major causes was widespread dishonest and unethical conduct, particularly in the U.S. housing and financial markets. Reactions have focused on enacting more and stronger regulation. Perhaps that may dissuade some from unprincipled conduct, but others will simply get more creative in their circumvention. There could never be enough rules so finely crafted as to anticipate and cover every situation, and even if there were, enforcement would be impossibly expensive and burdensome. This approach leads to diminished freedom for everyone. In the memorable phrase of Bishop Fulton J. Sheen, “We would not accept the yoke of Christ; so now we must tremble at the yoke of Caesar.” (D. Todd Christofferson, “Moral Discipline,” Oct. 2009)
Ezra Taft Benson–
Communism introduced into the world a substitute for true religion. It is a counterfeit of the gospel plan. The false prophets of Communism predict a utopian society. This, they proclaim, will only be brought about as capitalism and free enterprise are overthrown, private property abolished, the family as a social unit eliminated, all classes abolished, all governments overthrown, and a communal ownership of property in a classless, stateless society established. (Ezra Taft Benson, “A Witness and a Warning,” Ensign, Nov. 1979)
N. Eldon Tanner–
Learn to distinguish between needs and wants. Consumer appetites are man-made. Our competitive free enterprise system produces unlimited goods and services to stimulate our desire to want more convenience and luxuries. I do not criticize the system or the availability of these goods or services. I am only concerned about our people using sound judgment in their purchases. We must learn that sacrifice is a vital part of our eternal discipline. (N. Eldon Tanner, “Constancy Amid Change,” Ensign, Nov. 1979)
Quotes from the Founders
Thomas Jefferson–
I think all the world would gain by setting commerce at perfect liberty. (Jefferson, Thomas letter to John Adams July 7, 1785)
James Madison–
I own myself the friend to a very free system of commerce, and hold it as a truth, that commercial shackles are generally unjust, oppressive and impolitic – it is also a truth, that if industry and labour are left to take their own course, they will generally be directed to those objects which are the most productive, and this in a more certain and direct manner than the wisdom of the most enlightened legislature could point out. (James Madison speech to the Congress April 9, 1789)
Speeches and Other Resources
- D. Todd Christofferson, “Moral Discipline,” Oct. 2009
- Ezra T. Benson, “A Vision and a Hope for the Youth of Zion,” Apr. 1977
- Marion G. Romney, “Socialism and the United Order Compared,” Apr. 1966
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