Chapter 2- Ethics and Capitalism Flashcards
8 Elements of Theory of Capitalism
- Right of private property
- Equality of opportunity
- Competition
- Individualism and economic freedom
- Profits
- Work ethic
- Consumer sovereignty
- Role of government
Right to Private Property
The legal right to own and use economic goods, for example, land and buildings
Ethical implications:
➢ Uneven distribution of wealth
➢ Use of taxation to redistribute wealth
Equality and Opportunity
Assumption that all individuals or groups have an even chance at responding to some condition in society
- Ethical implications:
➢Difficult to achieve in capitalistic system
➢Wealth created not distributed equally
➢Gap between the poor and the rich
➢Male versus female income disparity
➢How to increase equity and fairness in business
system?
Competition
Condition in a market system in which many rival sellers
seek to provide goods and services to many buyers
➢ Ensures corporations provide goods and services desired
by society
Ethical implications:
➢ Oligopolies or monopolies can be created
➢ More difficult for some firms to enter certain industries
➢ Corporations might engage in anti-competitive activity
Individualism and Economic Freedom
The individual, and not society or a collective, is paramount decision maker in society.
Economic freedoms → exist when the business system operates with few restrictions on its activities.
Ethical implications:
➢ Is communitarianism more important?
➢ Consider unions and co-ops
➢ To what extent should economic freedoms exist?
Profits
Excess of revenues over expenses; closely associated
with competition
Corporations compete for profits
Ethical implications:
➢Profits sometimes viewed with disdain or as immoral
➢Taxation of excessive profits and the rates of inflation
redistribute profits
Work Ethic
A code of values, or a body of moral principles, claiming that work is desirable, a natural activity, and good in and of itself
Ethical implications:
➢Government programs and society’s expectations
have influenced individuals’ attitudes toward work
➢Individuals now expect that more will be done for
them, by governments and corporations
Consumer Sovereignty
Consumers have and exercise power over producers through the decisions they make in purchasing the goods and services provided by corporations
Ethical implications:
➢Consumers not always aware of alternative products
available
➢Consumers’ preferences are shaped by advertising
➢Producers have power to ignore consumer wishes
Role of Government
Laissez-faire approach (“leave us alone”) → minimal involvement of government
- Ethical implications:
➢Government now an influential stakeholder in
business
➢Governments restrict capital movements and natural
resource sales, impose product standards, prevent
businesses from shutting down plants
➢Legislation governs treatment of employees
Enterprises must still pay taxes. Defense and Security in hands of GOV>
Intellectual Property
umbrella term for patents, copyrights, trademarks, industrial designs, etc.
Market Power
when the consumer alone can’t control the market. Present in Monopoly examples.
What are the advantages of competition?
Quality will be better
Diversity of Products to stand out
Prices- cheaper so more likely to purchase.
Consumer Capitalism
Consumers have power over the markets.
government involvement is limited, open borders and profit mentality exists
Producer Capitalism
emphasizes production,
employment and statist policies
Social Market Economy
regulated capitalist market with generous social welfare
