Private initiative, or individual initiative, is one of the fundamental laws on which the capitalist system is based. It is based on the predominance of the private sector, as well as the free market, over the public sector, as well as state interventionism.
The private initiative or individual initiative, therefore, is opposed to the public initiative. In other words, it defends the free market against state intervention, the private sector against the public sector, as well as free competition against price control.
And, in short, everything that has to do with State intervention in the economy. Thus, we talk about what the Scottish economist Adam Smith called the invisible hand, as well as the law that defends this theory.
It should be noted that this private initiative is not only based on profit. But, as we know, it also integrates social initiative. In this sense, we are talking about private initiatives that do not seek to obtain a profit. This is the case of non-governmental organizations, foundations, as well as other private institutions of a social nature.
Characteristics of the private initiative
Among the characteristics that define the principles defended by private initiative, the following should be highlighted:
- It is one of the elementary laws of the capitalist system.
- Predominance of the private sector over the public sector.
- Defense of the free market, against state interventionism.
- Defense of the free formation of prices, against their control.
- Predominance of private property, compared to public property.
- Defense of supply and demand, as market regulators.
Private initiative and the capitalist system
Thus, as has been said throughout the article, private initiative is part of the principles that govern the capitalist system.
This system, as defined in Economipedia, defends private property, as well as the free market, against public property and state interventionism. For this reason, private initiative plays a determining role in the capitalist system, since without it this system as we know it would not exist.
Examples of private initiative
Among the examples of private initiative that can be highlighted, it should be noted that many of these will be familiar to us, since, very probably, many readers are even employed in what we would call a private initiative.
In this sense, a company is a clear example of private initiative. An entrepreneur, with his capital and his knowledge, starts a company in order to develop an economic activity.
Another example, also mentioned in the article, could be the start-up of a foundation. That, with a social purpose, is created to, from the private sector, support a certain cause.
So, finally, another example of private initiative could be a self-employed worker. Well, with his knowledge, he develops an activity privately.
In short, private initiative, like public initiative, is very present in our life. Every company, every self-employed worker, every foundation or private institution is the product of this capitalist principle.