Capitalism and Free Enterprise Are Not the Same

Both the proponents and opponents of capitalism conflate it with free enterprise, hindering discussion and reform.

Capitalism is an economic system that has both passionate defenders and fierce critics. But both sides in the debates over capitalism’s beneficial and harmful affects tend to conflate capitalism with free enterprise. Much of the defense of capitalism takes the positives of free enterprise and incorrectly attributes them to capitalism and much of the condemnation of capitalism incorrectly includes free enterprise in that condemnation. To have a fruitful, honest discussion, we need to get past errors and propaganda — such as how capitalism has co-opted the term “entrepreneur” — and clear up how capitalism and free enterprise differ. When we do, we see that the opposite of capitalism is not “communism” (whatever version of that you have in mind).

Capitalism and free enterprise are different approaches to doing business. Both approaches produce goods and services but with different results and side effects. The easiest way to think about the differences is to ask these questions: In considering a store, ask who owns the store and where are they? In considering a product, ask who made this and what was their relationship to it? Because of their different…