Free Enterprise System Glossary

free enterprise system glossary

Capitalist: someone who owns and/or starts a business

Collectivism: belief in the focus on improvement of society as a whole, as opposed to focusing on freeing individuals to perform to the best of their abilities

Competition: allowing individuals to try to produce the best good or service

Communism: authoritarian, collectivist economic system based on property being held collectively i.e. in common

Cooperation: partnering that allows individuals to leverage their abilities

Crony Capitalism: an economic system that uses government intervention, through subsidies, bailouts, and special favors, to try to help businesses

Depression: deep, prolonged drop in economic output characterized by high unemployment, frequent bankruptcies, and financial instability

Embargo: ban on purchasing goods and services from another country- trade restriction

Equality:

  1. Of opportunity: allowing individuals to pursue success and prosperity to the best of their abilities, free from discrimination, exploitation, and force of any kind
  2. Of results: redistributing the wealth created by producers to society as a whole

Fascism: an economic/ political system that uses government intervention to try to help the state

Financial Institution: allocates capital to capitalists, investors, government, laborers

Fiscal Policy: stabilization of economy using government budget, helps to create positive business environment

Freedom:

  1. Of Production: right to produce according to one’s will and abilities
  2. Of Ownership: right to claim rewards for producing
  3. Of Exchange: right to buy and sell what one desires if one has the means to do so
  4. Of Thought: right to be able to create and improve ideas and then share them through speech, religion, press, peaceful assembly, petition

Free Enterprise: system based on individual freedoms to produce, own, exchange, and think- most effective economic system

Synonyms: capitalism, free market, private enterprise

Free Trade: the unrestricted purchase and sale of goods and services between nations

Globalization: increasing trade between nations

Government: necessary part of free enterprise, basic role is to provide a stable environment for individuals to be able to live without being subject to force

Individualism: belief in the ability of the individual and his or her right to exercise that ability

Investor: someone who allocates capital to a business, financial institution, government

Laborer: someone who works for a business, financial institution, government

Monetary Policy: stabilization of economy through control of interest rates and government bond trading

Money: any medium of exchange and store of value

  1. Commodity Currency: money with value derived from some tangible resource e.g. cattle
  2. Representative Currency: money with value backed by some tangible resource e.g. Gold Standard
  3. Fiat Currency: money with value derived from the authority of the government as well as the laws of supply and demand
  4. Cryptocurrency: decentralized money stored and exchanged digitally with value created by the laws of supply and demand

Monopoly: an entity with complete control over the sale of a good or service, obstructs the free market

Monopsony: an entity with complete control over the purchase of a good or service, obstructs the free market

Oligopoly: same as monopoly except that there are several entities instead of one

Oligopsony: same as monopsony except that there are several entities instead of one

Protectionism: the use of trade restrictions to try to defend one or more domestic industries, harmful over the long run

Quota: limit on the purchase of a specific good or service from a foreign country- trade restriction

Regulation: rules to keep economy working properly, part of free enterprise

Self-interest: the desire to increase one’s wealth by producing more to sell to others

Socialism: similar to communism, a system that uses government intervention to try to help society as a whole i.e. collectively

Subsidy: payment given to people using government funds to allow prices to lower- trade restriction

Taxation: money individuals pay to government to provide public goods and services