Exam 2 Flashcards
(40 cards)
Capitalism
Production and distribution that is in private hands and the operations are funded by profits
Strength: allows new products and businesses, free market, provides social services, customer driven, competition gives variety
Weakness: allows top 1% to get all the wealth, classes are spread out, lowers work ethic and want for american dream
Socialism
Production and distribution that is in public hands and the operations are funded by profits; value made belongs in hands of society
*Difference between capitalism and socialism
public vs. private hands
5 historical components of capitalism
-Mercantile
Based on mutual dependency between state and commercial interest.
-Industrial
Large scale industry
-Financial
Characterized by trust, banks, money
-State welfare
Provides welfare services to employees
-Globalized
Transcends national borders
4 elements/functions of capitalism
-Companies
Promotes creation of companies or business organizations that exists
-Competition
Makes individual pursuit of self interest socially beneficial
-Profit motive
Lies in the motive that the company is which to make a profit
-Private property
Capitalism requires private ownership of the means of production
Keynes (British)
Government regulated capitalism
Spend money to spread economic growth
FDR and Obama
Most accepted/popular in early 20th century
Specifically during Roosevelt’s new deal time period
Giving 300-400 dollars to families to spend
Government bailouts
F. A. Hayek (Austria in the early to mid part of the 20th century)
free market capitalism
Save money to help economic growth
Friedman and Reagan
Milton Friedman (relates to Nozick)
Move towards socialism
Barbara Thaten as prime minister in Britain
Monopolies
single seller
Ex: apple owns phone and laptop.. They can buy out Nike and sell computers
Oligopolies
market shared by a small number of producers
Ex: Apple buying Nike and Patagonia but keeping their products but owning them
Karl Marx
workers taking power could be a problem
No one should have power over another majority of wealth
Broader view
Goodpaster and Matthews
Business has social responsibility to stakeholders, consumers, environment, workers
Donaldson’s social contract theory
business owes society because it allows for the business to exist
Multiple stakeholders argument
other stakes in business besides profit
Velasquez’s argument
companies are about moral ethics
Employment at will
either party may fire/quit and hire/apply without reasoning
Narrow
Friedman
Business has no social responsibility except to maximize profit
Fiduciary responsibility
get most amount of money for the shareholder as possible
Maximize profits through shareholders
Adam Smith invisible hand
if people were left to pursue their own interests they would unknowingly create the most good and benefit
Visible hand
“let government do it” government has the resources and ability to hold the responsibility they should
Government has everything they need in order to appeal to social responsibility which is why they should do it and not businesses
Inept
businesses are like a custodian trying to handle a responsibility “government doesn’t know what to do”
Economic efficiency
hating broad view; wrong bc it’s inefficient and does not maximize shareholders values
Materialization of society
if social responsibility is imposed it will increase materialization in society
Ex: clean up ocean to get in newspaper
Compatibility of self interest and social responsibility
if companies are to put their shareholders first that they will automatically be fair to workers and society
