1 What is / are: Capitalism Socialism Feudalism Communism
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What is / are: Capitalism Socialism Feudalism Communism Democracy Mercantilism Totalitarianism 1. 2. 3. 4. How does each impact the individual What is the role of government How do they drive economic systems What is their concept of Profit? Changes in the Gini Index Example of a link between cultural measures and economic indicators Economic System Debates Ideology based Economic Systems Debates “Natural “rights” which only free choice can preserve (equates to state of nature) (John Locke) • • • • Utilitarian Perspective (Adam Smith) Liberty (including freedom of choice) Private Property Ownership of their own labor (and fruits) People free to organize to protect their interests Economic Systems Tradition-Based Only good for small, contained societies Examples?_______________________ Absent of Government Intervention Market competition drives self-interested behavior Weaknesses to this perspective? Free-Market” Serves Society Yields greater efficiencies Government intervention does not serve the public welfare Economic Systems Market Economy Private individuals Competition-oriented Examples?_____________________ Command (Controlled) Economy Controlled by government or other authority What is produced Who produces it Who received it Examples?_______________________ 1 Economic Systems Debates Self-Interest is stronger than drive for common good Basis of “contentment” Private Property is a “social-construct” Ability of individual producers to wield enough power to control prices Aggregate demand in 3 sectors ≠ supply Economic Systems Debases Social Darwinism Only the Strong survive Ignorance yields inconvenience, suffering, death Is this a callous perspective? What about society’s “marginal” persons? Is the “fittest” the “best” Natural fallacy Economic Systems Debates Arguments against Capitalism Sale of one’s Labor Ownership of means of production Exploitation of workers Alienation Products produces contrary to worker’s interests Forces people into dissatisfying work False perspective on desires Antagonistic and unequal social classes Absolute Advantage Production costs lower for one country than another Arguments for specialization & trade Comparative Advantage Opportunity costs (comparative efficiency) Strongly favors globalization WTO: Do free trade “rules” serve to disadvantage developing nations? Economic Systems Debates Two sources of income Utilitarian arguments in Trade Economic Systems Debates Government Business Household Government must intervene Efficiency – give little, get lots! Demand will expand to absorb supply Keynes Economic rationality All resources are used Production translates to personal income Human nature: Say’s Law Drive to reduce costs? Quarrels with division of ownership Economic Systems Debates Capitalism Inequality of Wealth Inequality of Power Therefore, private property is wrong since it promoted inequality Incentive for productivity? Natural human desire to be productive Natural desire to express ourselves through work 2 Government (per Marx) Economic substructure Materials used in production Relations of production Does “Justice” mean Government and ideologies Forces of production Materials and social controls of production Social superstructure Economic Ideology Debates Distributive principle Equality? Equal distribution of ….. Distribution according to need? Relies on “subjective” oversight. Distribution by contribution? Social controls used for production Business Systems “Newer” Issues “New” Resources Intellectual Property Technology Time Organization of Modern Corporations Economic systems (underlying ideologies) “normative” beliefs Market Free-Market Business Systems Keynesian Not the most efficient Penalties for incompetence and ignorance • Naturalistic fallacy Free-Trade (global market – based competition) Benefits of specialization and trade Comparative (rather than absolute) advantage • • Production costs are not constant Means of production is portable. All are free and equal Rights of freedom, property, and protection • Negative / positive rights? • Rights versus justice? • Individualistic assumption? Adam Smith’s (utilitarian) • Market competition serves society better than government • Unrealistic assumptions of perfect competition Command Survival of the fittest Social Darwinism John Locke’s (rights) • • Business Systems Free-markets alone are not enough Motivation? Basic purpose(s)? Function of society Marx’s economic substructure / social superstructure Exploitation of workers “surplus” Separation (alienation) of workers from product Subordination of government to ruling class’ interests State control is victimized by individuals Mixed Economy Retains Market and Private Property system Relies on governmental policies 3 Business Ethics Legal Responsibility Cell 1 Ethical Responsibility Business Ethics Cell X Cell 3 Legal Responsibility Ethical Responsibility Cell X Cell “X” Cell2 Profitable, Legal and Ethical Economic Responsibility Business Ethics EconomicProceed with enthusiasm! Responsibility Business Ethics Cell 1 and Ethical Legal Cell 1 Legal NotResponsibility Profitable: Ethical Responsibility Seek Profitable alternatives Ethical Responsibility Cell 2 Profitable and Legal Proceed cautiously Economic Responsibility Legal Responsibility Cell2 Economic Responsibility Business Ethics Cell 3 Legal Ethical ethical Responsibility Responsibility Profitable and Likely, also legal; Proceed cautiously Cell 3 Economic Responsibility 4
