free enterprise Free enterprise is a type of economy where products, prices, and services are determined by the market, not the government. It’s capitalism, not communism. Things that are free are unconstrained, and a business is an enterprise. So, free enterprise refers to an economy where businesses are free from government control. In a free enterprise, prices go up and down because of supply and demand. If there's high demand, prices go up. If there's low demand, prices go down.