Preface: Foundations of Free Enterprise

The Foundations of Free Enterprise
by Allen, Armstrong, and Wolken

Inflation…Oil Prices…High Taxes…Government Spending. Look at the headlines of tonight’s newspaper. Chances are you will find economic issues represented as never before. Rampaging inflation coupled with relatively high unemployment has prompted tremendous public interest in economics.

For all of the media coverage given to economic affairs, however distressingly small numbers of Americans have a solid grasp of the essentials of their own economic system. Many who say they believe strongly in free enterprise retreat into embarrassed silence when asked to defend the unique strengths and attributes of the American economic system. Our objective here is to provide an introduction to the general areas of economics and, more specifically, to highlight the defining features of a free enterprise system.

Certainly people ought to know something about surviving as consumers in a market economy. So, too, a case can be made for providing them with insights into the real world of small business. But, in another sense, too much emphasis on such topics may detract from a necessary broad understanding of our economic system. Consumerism and the problems of small businessmen might well be regarded as small trees in the forest of free enterprise. Too much emphasis on these trees might result in people learning little, if anything, about the more important forest.

We believe an understanding of the forest ought to be the dominant objective of economic education programs. In other words, people need to understand our economic system as a system, not as a random collection of isolated parts. They must learn how something that affects one element of the system influences the operation of the entire system. Informed consumers of economic news need to have the tools to assess the implications of decisions that affect the operation of the free market systems. This discussion provides an introduction to these important matters.

We have written for a broad general audience and have attempted to keep sophisticated terminology to a minimum. It is hoped this material will profit teachers, students, and the interested general public. Ideas examined here might well serve as the framework for the development of courses, projects, or other more detailed explorations of these issues. Much of this material was introduced by John W. Allen in a 1975 guide, “Teaching the Free Enterprise System in Required Social Studies Courses,” published by the Texas Education Agency in Austin.