Capitalism and Shareholder

Capitalism

An economic system in which indivisuals or organizations (not govt) produce and sell goods and services, those products, prices, and distribution are determined mainly by competition in a free market (not by government)

capital

wealth and money, thats used to produce more wealth

What is Milton Friedman's view on the economy?

He approved of a free market and laissez-faire.

According to Milton Friedman, who should be free to operate without government interference?

Businesses and individuals.

How are prices for goods and services determined in Milton Friedman's economic view?

By competition between businesses, not by the government.

free market/laissez faire

an economic system with little or no government control that allows the market to operate freely based on the law of supply and demand set by individuals and businesses (not by government) "let it be"

Who coined the term 'invisible hand'?

Adam Smith

What does the 'invisible hand' metaphor describe?

The unseen forces of self-interest that impact the free market.

How can people pursuing their own self-interest benefit society?

They can unintentionally benefit society as a whole.

caveat emptor

buyer beware

What is Freedman's view on individual autonomy?

Supported an individual's freedom and economic liberty.

According to Freedman, what should people be free to do?

Make their own economic decisions and engage in business transactions of their choosing.

What does Freedman believe about ethics?

Ethics is a private matter and there are no universal ethical standards that everyone must follow.

What does Freedman advocate regarding external pressures on individuals?

People should have the freedom to make their own choices without being subjected to external pressures from others.

What is Friedman's view on a business's social responsibility?

A business is not obligated to any social responsibility unless the owners (shareholders) decide otherwise.

Who do corporate executives work for according to Friedman?

Corporate executives work for the shareholders of the company.

What should be prioritized when allocating company resources according to Friedman?

Priority should only be given to activities that are central to maximizing shareholder value (profits).

Who must approve the use of a company's resources for activities like investing or donating?

The shareholders must approve the use of a company's resources.

externalities

unattended consequences of busniess activity that affect other parties who were not part of the business decision and or who did not choose to be involved in the activity

friedmans view of externalities

externalize costs of negative externalities- not the responsibility of business

explain what Friedman meant by "maximize shareholder value"

a companys primary responsibility is to increase the wealth of ots shareholders.

explain what friedman meant by no taxation without representation

he advocated for tax systems that are transparent, accountable and closely tied to the services and benefits citizens recieve.