How did the free enterprise system foster technological innovations in the late 1800s?

Expert Answers

An illustration of the letter 'A' in a speech bubbles

During the late nineteenth century, the United States government took a rather hands-off approach to its regulation of business and supported what is known as free enterprise. In some important ways this approach led to certain technological innovations. Without much government oversight or accountability, companies could take risks to develop new products and services that they may have been hesitant to do otherwise. Particularly, this led to the development of a nascent electrical grid as well as more electrically powered household goods. Other advancements in steam turbines, high-pressure furnaces, and the internal combustion engine made these products widespread by the end of the century. Today, these are all highly regulated products, particularly for reasons of safety and consumer protections. It is possible that their development and distribution may have been hampered if it were not for the free enterprise approach at the time.

Whether or not the rise of big businesses during this period was a good thing for the country is often a matter of opinion. On one hand, the economy of the United States grew by 4 percent between 1890 and 1910. More jobs in factories and in retail were available than ever before. However, these changes led to a concentration of wealth in the hands of just a few business owners and income disparity became a real concern. The lack of government regulations also led to the rise of monopolies which could squash competition and set prices that were not fair to the consumers.

Approved by eNotes Editorial
An illustration of the letter 'A' in a speech bubbles

The free enterprise system led to technological innovations in the late 1800s. Because there were few government rules and regulations at this time, a person could take risks by investing money in developing new inventions. If the invention was successful, the investor could make a lot of money knowing the government would not interfere in the process. This policy, called laissez-faire, meant the government would take a hands-off approach to business and economic activities.

When investors know there will be little government control or interference, they are more willing to take risks. They know the government won’t get too involved with the development of the new invention. When government becomes too involved, investors tend to be more hesitant to take risks.

Big business growth was good for the economy of the United States. It allowed our economy to grow and to meet the demands of the people. The expansion of businesses helped with the expansion of our country. With a hands-off policy by the government, our big business grew significantly at during this time. This helped the United States develop into an economic power.

See eNotes Ad-Free

Start your 48-hour free trial to get access to more than 30,000 additional guides and more than 350,000 Homework Help questions answered by our experts.

Get 48 Hours Free Access
Approved by eNotes Editorial