market failure approach to business ethics; joseph heath Flashcards
what is joseph heath’s opinion about profit-maximization?
that it should be understood as an obligation rather than an expression of self-interest
according to joseph, what is business ethics best understood as?
as a set of additional constraints precent legally permissible, but not normatively justifiable, profit-maximization strategies
moral justification =
when there is a straightforward conflict between our self-interest and out moral obligation, the moral obligations win, at least from the moral point of view.
moral dilemma =
when available choices and obligations do not allow for moral outcomes. in such instance, a choice or action is anticipated or required
according to stark, was conventional business ethics relevant or irrelevant for most managers?
irrelevant
limited liability =
the ability to insulate private resources from those of the corporation, so that they can not be pursued by creditors in the event of default
what is the problem with the lockean view?
corporations are not individuals. they are highly artificial constructs, creating a corporation is seen as a privilege not a right
what is the price mechanism valued for?
its efficiency effects; it allows us to minimize waste
explain the invisible hand thereom / the first fundamental theory of welfare economics (FFT)
it suggests that the outcome of a perfectly competitive market economy will be pareto optimal
explain pareto optimal outcome
it is not possible to improve anyone’s condition without worsening someone else’s.
according to friedman what is the social responsibility of business?
to increase its profits
managers are in the position to
what is the comparison that friedman makes?
as the lawyer is expected to advance the interest of its client, not his own
does joseph heath agree with friedman or not? why (not)?
no, he says the manager is not the personal servant os the shareholder and is not obligated to do what the shareholder wants.
in a free economy, what is the one social responsibility for business?
to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.
what is the problem with deception?
it violates one of the conditions needed for the economy to achieve an efficient outcome
constraints that must be satisfied in order for the pareto conditions to obtain is
that information must be symmetric
how should an ethical corporation behave in a deontically perfect world in which everyone could be counted to comply with all moral requirements?
The firm should behave as though market conditions were perfectly competitive, even though they may not in fact be
5 types of market failures are:
- asymmetric information
- concentrated market power (monopoly)
- externalities
- public goods
- de-merit goods
according to joseph heath, how would it be possible to make the case for any further social responsibility?
by charging consumers the full price that production of their goods imposes upon society
what is the second best theorem
while perfect competition generates a perfectly efficient outcome, a situation as close as possible to perfect competition will not generate an outcome that is as close as possible to perfect efficiency.
