What is the American Enterprise System?

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Photo Credit: Leah Huang

By Leah Huang and Shriya Gandham

The American Enterprise System, more commonly known as the Free Enterprise System, is a doctrine of politics and economics that enables individuals to regulate their economic decisions in a free, competitive market based on supply and demand.

This system is built upon 5 pillars — profit motive, right to private property, right to private enterprise, competition, and consumer sovereignty.

In order to find success in the American Enterprise System, one must understand the rights they enjoy. It is every American citizen’s civic responsibility to understand this system. Therefore, with the aid of the FBLA chapter, progress will be made in educating each and every student at Williamsville East High School and Transit Middle School.

In order to pursue this mission of educating every student in business fluency, the Williamsville East FBLA community took inspiration from FBLA programs such as the BAA and competitive events to create this WEHS AEP program, Nurturing Young Minds. The pillars of this curriculum allowed us to thoroughly develop soft skills and aid students in discovering their inner talent for entrepreneurship and business. This program will continue to inspire rising Williamsville students for years to come.

On Wednesday, January 20th, Williamsville East High School ally groups participated in a survey regarding the American Enterprise System. FBLA’s American Enterprise Project members created the questionnaire to gain insight into the student body’s understanding of American economic principles. The vast majority, 62.4%, of students had not heard of the American Enterprise System prior to the survey. 2.9% had heard it mentioned, but were unclear on the meaning of the phrase — see diagram below.

Consequently, many students were unable to provide complete definitions of the American Enterprise system, penning simplistic terms such as “economic freedom”, “free business/trade”, and “personal /consumer rights”. 

A layman’s understanding of the principles of the American Enterprise System is present at Williamsville East; however, the lack of deeper understanding of the American economic system that acts as a backbone to our nation is evident. Therefore, it is the job of Williamsville East FBLA as well as the business department to educate rising students. 

To summarize the 5 main principles of the American Enterprise system; 

Photo credit: The Bija Company

Profit is the sum left over after subtracting expenses from your business income. Since the objective of a business is to earn the most profit possible to further their business, they must be diligent with marketing and selling their goods and services to earn that profit. The motivation to earn that profit is dubbed “profit motive”.

Private property is defined as personally or group owned goods separate from federal property. These can be vehicles, homes, or land. According to the Fifth Amendment, each citizen of the United States has a right to buy and sell that private property. This trading of money and goods becomes the basis for profit and business.

Private enterprise is any business or organization that is controlled by individuals rather than the state. The right to private enterprise, simply known as economic freedom, is right to run a business as personally fit. Sellers can choose what field to study or area to market in as well as wages and working hours for employees. However, these decisions must follow legal guidelines like the OSHA regulations to ensure safety.

Competition is seller rivalry in the same field; it’s the sole reason why business has survived. Competition prevents monopoly, or merging of an industry into one sole company that can charge however much they want for their goods. In turn, if your business is profitable, others will follow in your footsteps to become your competition. To rise above your competition, you must create the best goods or services and lowest prices to draw customers in.

Consumer sovereignty ensures that consumers have full authority over what and when to buy. This means they can decide the fate of a business by choosing which competitor to buy from, contributing to their profit. This drives the businesses to compete, forcing them to improve their costs and goods or services to surpass competition and earn the most profit.

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