...Thesis Capitalism has been the subject of ethical criticism since it was first introduced into society. I defend the morality of capitalism because it gives people incentive to work, establishes a web of trust between them, satisfies their material well-being, and generates a wide spectrum of prosperity. Exposition As citizens of the United States, we are members of the leading capitalist economy in the world. Our production and distribution is mostly done privately and we operate in a “profit” or “market” system. The capitalist system has been a target for criticism throughout the last three hundred years and is being discussed now more than ever due to the recent recession and financial crisis (Shaw and Barry n.d., 1). Its effects, structure, varieties, and possibilities provide for a large field of study and writers from several different disciplines have provided their input to the debate. Most fundamental is the question of whether our capitalist system is a morally justifiable one. This question can’t be answered by reviewing the efficiency and productivity capitalism provides, but instead requires a thorough analysis of ethics. A capitalist society is characterized by the private ownership of property and a free market that grants citizens the right to use their resources for their own benefit. Private property is the ownership of productive resources like companies, stocks, and bonds and should not be confused with personal property. Personal property consists...
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...Smith argued that an economy should be measured by Gross National Product. This idea of GDP was a revolutionary idea at the time because most economists believed that a nation should just use gold and silver to measure the strength of their economy. In his book, he also theorized with an idea of division of labor. The idea of division of labor is that if you were to specialize labor forces, the overall productivity, or GDP, of an economy would bolster greatly. These ideas, though very well known, are probably not as well known as the idea of the Invisible Hand. The idea of the Invisible Hand really has two different ways of thinking, first, Smith argued that the reason that we would get the items we needed (food, materials, etc.) is because everyone acted in their own self-interest. He believed that this was an economic reality that held true for most political economies. Many people do seem to think that the idea of the Invisible Hand is a radical one that has many negative effects on the economy as well. Smith would also agree with you, as he warned that pure self-interest can brood greed and can make it harder for others...
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...Invisible Hand in the Vietnamese context Introduction Adam Smith is an infamous political economist in the UK and around the world. He has many valuable arguments among which this essay will refer to the theory of "invisible hand" which was coined in The Wealth of Nations. The invisible hand is essentially a natural phenomenon that guides free markets and capitalism through competition for scarce resources by maintaining equilibrium between the supply and demand of resources. Also, as market participants compete, driven by their own needs and wants, they involuntarily benefit society at large without the help of goverment. This essay will examine the core theoretical ideas behind Adam Smith’s invisible hand theory, focusing on the negative aspects, and show that the negative aspects are more prominent when applied to the article ‘Power trader accused of abusing monopoly position’ Understanding of theory Adam Smith's invisible hand theory sets the foundation for laissez-faire economic philosophy, which describe the self-regulating behavior and minimize the role of government intervention and taxation in the free markets .Smith argued the most crucial variable in the market is the price and its functions is providing information telling people what to do and presenting incentive for them to act on this information. Both companies and workers are guided, as if by an invisible hand, to produce the goods and services that are most desired by consumers, which occurs when all of...
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...philosopher. These men have together been placed in the school of classical economics, signaling that there are similarities in their ideology. Politically, however, these men differ greatly. This essay intends to study some of their most poignant theories to compare fundamental differences. Karl Marx became famous for his revolutionary ideas and as one of the originators of communist theories. He is renowned for his book on economic theory, Das Kapital. As members of the Communist League, Marx and his friend Friedrich Engels authored the Communist Manifesto—which discussed the class struggle and the need for a revolution of the proletariat.[3] Common Sense dictates that without production, consumption would not be possible. capitalism can be broken down into two essential parts: production and consumption. Without the production portion,...
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...Discuss some important aspects of the free enterprise system or capitalism. Three essential principles of capitalism are: production is organized for the market, the means of production are privately owned, and investment is privately controlled, and the people who use those means of production to produce goods and services, that is workers, are hired on a labor market to work in firms as employees. Capitalism is a form of market economy in which production and investment are privately controlled, and the work of production is performed by employees, hired from free labor markets. Capitalism is essential to the function of society due to the opportunities that it creates and the augmentation of an individual’s vitality. Individuals can decide which economic decisions they deem most appropriate. Many aspects of capitalism ring a bell of liberty, the positive aspects of freedom and choice, and the hope that is prevalent and the everlasting lure of riches keep the engine going. For example, you may be employed right for $9.25 an hour, but tomorrow you could become a sales person and control your income by your commissions. This mere fact, a potential exits, is inspiring and motivational and keeps the free agents content. A Scottish economist Adam Smith, laid out the foundation for free enterprise in The Wealth of Nations (1776). Smith maintained that a government should not interfere with a nation's economy but instead should let individuals act as "free agents" who pursue their...
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...Capitalism can be defined ideally as an economic system in which the major portion of production and distribution is in private hands, operating under what is termed a “profit” or “market” system. Socialism is an economic system characterized by public ownership of property and a planned economy. Capital, as an economic concept, is closely related to private property. When traditional restraints are removed from the sale of goods and from wages and when all individuals have equal access to raw materials and markets the doctrine of laissez faire, from the French meaning “to let people do as they choose”. Oligopolies—a concentration of property and resources, and thus economic power, in the hands of a few. Corporation—an artificial being, Invisible, intangible, and existing only in the contemplation of law. Limited liability is a key feature of the modern corporation. Consumer sovereignty: the idea that consumers should and do control the market through their purchases. Dependence effect: as a society becomes increasingly affluent, wants are increasingly created by the process by which they are satisfied. Moral vegetarians are people who reject the eating of meat on moral grounds. 2 In my opinion, Wal-Mart is an example of a morally bad corporation. There are three reasons to improve that: (1) Unfair competition. Our textbook describe it like this: “Some critics of capitalism maintain that capitalism breeds oligopolies that eliminate competition and concentrate...
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...Capitalism vs. Communism Throughout history, there have been many systems developed in order to have a better society. Two of the most analyzed, and debated systems that have tired to change an economy for the best are communism, and capitalism. Communism, and capitalism have been compared on many levels, such as why they will or will not work, and which one works better. Throughout this essay I will concentrate on the differences, and similarities of how each operates, along with the benefits, and problems that each of them produces. Both of these economic systems theories came about around the same time, in the late 17th to mid18th centuries. One of the main contributor for capitalism was Adam Smith, writing The Wealth of a Nation in 1776, and Karl Marx for communism publishing the Communist Manifesto in 1848. These both were looked as a manual or guide for achieving such advancements. Communism called for the people to not be selfish and work for the benefits of the community rather for their well being. It asks them to see that what benefits the whole, benefits themselves. Capitalism on the other hand is focused on working for individual growth, and personal ownership to provide wealth for one's self. Communism plans to have a higher power or government control the economy to create a better way of living, by which all goods are equally distributed. As capitalism wants the government to not play a big role in the system, but instead wants it to be up to private ownership...
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...Discussion Questions for Smith vs. Marx (October 8, 2013 pp. 134-165) An Essay on the Background of Business Ethics: Ethics, Economics, Law and the Corporation 1. What is philosophy? A conversation. 2. What is "philosophical ethics"? A conversation about conduct, the doing of good, and the avoiding of evil. 3. What is "business ethics"? A conversation about right and wrong conduct in the business world. 4. Business ethics was once known as “the world’s most famous oxymoron” until about thirty years ago. What happened to change that view? Newspaper headlines of foreign bribes, Wall Street scandals, exploding cars, whistleblower conflicts and civil rights in the workplace allowed the view that value questions are never absent from business decisions to come into play and that moral responsibility is the first requirement of a manager in any business. From then on, it has become the general consensus that a thorough grounding in ethical reasoning is essential preparation for a career in business. 5. How was the “ruling class” defined in the seventeenth century according to Karl Marx? The ruling class in every age is the group that owns the means of production of the age’s product. In the 17th century, the product was almost exclusively agricultural and the means of production was almost exclusively agricultural land; landowners were the aristocrats and rulers. With the coming of commerce and industry, the owners of the factories joined the ruling class...
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...their material well-being. Capitalism believes in competition within in the markets to endorse the public interest. In a capitalist system it encourages three major factors that effect the market and people. First, that it would lead to satisfaction of nations and individuals. Second, being in a competitive state it would force others to compete by drawing down prices and output would be at the highest due to the continuous competition. The most important factor in capitalism is that it creates innovations that are useful to society. Conservatives believe that buyers and sellers will react positive to innovations that benefit the society, while those that fall behind will be knocked out of competition. In order for this to work conservatives believe there has to be minimum interference with the market, also know as laissez-faire. No interference means no big government, no powerful unions, and no conspiring in trade. Conservative model isn’t a society without government, but a model that protects unnatural interference in the marketplace. To protect unnatural intrusion within business, the state should take such actions as deregulating industries, privatization of state-owned enterprises, and lower tax burdens. There should be minimal government to maintain law, assure national defense, protect property, coin money, and enforce contracts. There is no need for government hand in markets because the markets are self regulating due to the “invisible hand”. Austrian Friedrich A. Hayek...
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...CRITIQUE In the article, “The Invisible Gnomes and the Invisible Hand: South Park and Libertarian Philosophy”, Paul Cantor argues for the libertarian approach, a style of thinking which maximizes individual liberty and minimizes intervention by the state. They strongly believe in the capitalism of life. Cantor compares and contrasts the key concepts of liberatarianism to the slapstick TV comedy, South Park, and explains how the show has been instrumental in breaking boundaries in humor; redefining the way we think about issues that were previously considered taboo. An American literary critic, the author Paul Cantor, is a strong believer in the austrian theorist of economy. He holds a degree from Harvard, he has acquired his teaching skills from his many years at the University of Virginia, USA. Cantor is the author of several books, the content spanning a diverse range of topics. The libertarian approach is in which people must exercise the free market organization associated with minimal government intervention. Libertarians are strong supporters of the free market capitalism, a social system in which people encourage the ownership and control of private businesses, with few regulatory bodies. Libertarianism has become a crucial part of the society which has led to increased number of privately owned businesses. The number of people adopting and believing in the ideas of libertarianism is increasing and thereby this topic is extremely relevant in the prevalent...
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...validity of his illness and the consequences he would endure. A tobacco and nicotine addiction has the same effect as one with alcohol addiction. Smokers would say, “I can quit anytime,” and other smokers would say, “oh, I only smoke just to calm my nerves." When one knows that he or she has a problem, only that time can one fix it. Tobacco Industry In the world today, the tobacco industry is capitalizing on the consumers’ addiction. Consumers, having the right to purchase tobacco, the risk, of developing a life threating illness, such as lung cancer, seems of no concern to the industry. Meanwhile, non-smokers are very concerned about the risk of second-hand smoke and the effect it could have on their lives. This paper gives supporting insight on reasons for these and other concerns of the consumers. Explain the role capitalism plays in the corporate decision-making. Meanwhile, clearly state if it’s believably possible for the tobacco industries to cater to both its best interest and the consumers or if one has to be the victor. Major Reasons Why I Support the Consumer Instead of the Tobacco Industry Reasons for my supporting the consumers, the “Frank...
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...philosopher by trade, wrote the book to upend the mercantilist system. Mercantilism held that wealth was fixed and finite, and that the only way to prosper was to hoard gold and tariff products from abroad. This meant that nations should sell their goods to other countries while buying nothing in return. Predictably, nations fell into rounds of retaliatory tariffs that choked off international trade. (For related reading, see The Basics Of Tariffs And Trade Barriers.) The Invisible Hand The core of Smith's thesis was that man's natural tendency toward self-interest - in modern terms, looking out for No.1 - results in prosperity. By giving everyone freedom to produce and exchange goods as they pleased (free trade) and opening all markets to competition (international as well as domestic - Smith lived in the age of government chartered monopolies), people's natural self-interest would bring about universal opulence with very little effort from a nation's government. This free-market force became known as the invisible hand, but it needed support to bring about its magic. (For more insight on free market theories, see Free Markets: What's The Cost?) Boiling his principles down to essentials, Smith believed...
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...Capitalism acts to constrain the forces of production. The notion of free and competitive market penalizes inefficiency and redistributes the surplus to the more efficient enterprises. Adam Smith’s idea of invisible hand promotes rivalries. Therefore the majority of petty owners is pushed out of the market and forced to sell labor power. The surplus value is derived from exploiting these workers. The rate of exploitation is surplus value divided by the labor value. Laborers produce a use value but get paid only for their labor value. The left-over surplus value becomes profit for the capitalist. This wealth can be use for investment, mechanization, research development, management and etc. Industrial enterprises spend money on capital and labor to produce a product. Rate of profit is calculated from surplus value divided by capital and labor cost. Therefore the rate has an inverse relationship with labor and capital cost. As they fall, rate of profit rise. The average cost is total spent divided by output. By mechanizing, it allows companies to produce more resulting in cheaper price per unit For example, say three companies produce the same amount of goods using identical labor and capital cost structure. When one company mechanizes, it can produce more goods by only increasing capital and not labor cost. It can also produce more merchandise with same amount of capital and labor. These two scenarios are both forms of increase efficiency. They also are forms of labor exploitation...
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...STUDY QUESTIONS “ADAM SMITH’S INVISIBLE HAND ARGUMENT> JOHN D. BISHOP 1. Briefly state the “invisible hand” theory in your own words. The “invisible hand” is a term used by Adam Smith to describe the natural force that guides free market capitalism through competition for scarce resources. The theory of the Invisible Hand states that if each consumer is allowed to choose freely what to buy and each producer is allowed to choose freely what to sell and how to produce it, the market will settle on a product distribution and prices that are beneficial to all the individual members of a community. 2. Two advocates of the “invisible hand” theory who are quoted in the article encourage a “deliberate amorality” in the executive suite. How do they justify this? They contend that this results in systemic morality due to the action of the invisible hand. 3. What does Milton Friedman see as the social responsibility of corporations? Milton Friedman is quoted saying, "There is one and only one social responsibility of business -- to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud." Friedman argues that corporations have no social responsibility, only a responsibility toward their customers and shareholders to maximize profits. 4. According to Bishop, what does Adam Smith say about laws or regulations proposed by...
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...Chapter 3 - ''Laissez-Faire, Laissez-passer''. Liberalism suffers from something of a personality disorder. The term means different things in different contexts. In the United States today, for example, a liberal is general regarded as one who believes in an active role for the state in society such as helping the poor and funding programs to address social problems. For economic liberals (also referred to as neoliberals and sometimes as neocon1 the state should play a limited, knot constricted, role in the economy and society. In other relatives ), words, today's economic liberals have much in common with people who are usually referred to as ''conservatives'' in the United States and many other countries. ROOTS OF THE ECONOMIC LIBERAL The liberal perspective today reveals many insights about political economy that mercantilists miss or do not address. Although liberals believe that people are fundamentally self-interested, they do not see this as a disadvantage because broad areas of society are set up in such a way that competing interests can engage one another. Today's economic liberalism is rooted in reactions to important trends and events in Europe in the seventeenth and eighteenth centuries. Fratxois Quesnay (1694-1774) led a group of French philosophers called the Physiocrats or Qs economist's. Quesnay condemned government interference in the market, holding that, with few exceptions, it brought harm to society. PERSPECTIVE For the laissez-faire world...
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