Adam Smith, the ‘father’ of capitalism

Question 1

who was he

Answer 1

-economist+philospher
-he argued when ppl follow their rational self interest competing in free market, result is economic prosperity which benefits society +general happiness
-ppl gain money by providing product or service that others r willing to pay for
-competition encourages productivity+innovation result in economic growth
-Free market capitalism harnesses self-interest for societal gain, as if guided by an ‘invisible hand’.
-orgin of view is gd business decisions have positive social results + link to gd ethics

Question 2

Utilitarianism on capitalism & business ethics

Answer 2

-bentham was influence by adam
-B+M agreed w his reasoning, accepting in general happiness is maximised by leaving markets free
-but they thought restrcitions needed to be placed on market in some cases to direct it towards maximising happiness where it failed to
-B thought gov should gaurantee employement + impose a minimum wage
-M thought gov should step in to aid in cases of market failure by providng own products or service like education , to encourage competition if the market failed to
-Util view is csr is good + if globalisation detracts from CSR then it is generally bad.

Question 3

Kant on capitalism & business ethics

Answer 3

-he was influenced by adam+ agreed division of labour was important for progress
-capitalism is based on autonomous market interactions + contracts between employers and employees: involves indivuals pursuing rational self interest
-k ethics accords w this as decipits rational indivual as centre of moral responsibility
-When contractual arrangements and market interactions involve the treatment of people by each other as ends, they are good.
-BUT, when business practicves or macro effects of capitalism result in ppl treated as means or violate duty= he would think it immoral even if profit was good
-his view is csr is r duty + globalisation undermines csr=wrong

Question 4

M. Friedman vs Kant & Utilitarianism on CSR and globalisation

Answer 4

-only responsibility of business is to “make as much money for their stockholders as possible”.
-he rejects approach of k+u. he wouldnt accept restrciting markets/businesses is acceptable
-Free market capitalism is the result of freedom, voluntary co-operation
-attempt to control markets requires force+power
-he argues no one is good enough to wield that power wout becoming corrupt
-only escape from extreme poverty=capitalism+free trade
-evidence support= it dropped from 70% in 1960 to 17% in 2012
-FMC= best for economic growth. reduce profits only reduces incentitive to innovate
-evidence=N.europe might be more equal than usa but less innovative. reason silicon valley is in us

Question 5

problem for Freidman

Answer 5

-thinks freedom is good yet it leads to monoplies especially under globalisation
-they end up undermining innovation+freedom
-only way to ensure market remains free is gov intervention+control
-he accpets this but in doing so he has to accept giving gov power

Question 6

problem for Freidman: free market inherently unstable

Answer 6

-money is power
-succesul corporatiosn will use money to rig market in favour
-only way to prevent govs from corruption is preventing bsuinesses from having power to corrupt govs
-adams arguements made more sense in his time when capitalism was begining. macro effects of globalised capitalism r disatstrous for enviroment + free market
- so kant +util r right that some restrictions should be placed on markets.