Business Ethics Chapter 4

What is capitalism?

Capitalism can be defined as an economic system that operates on the basis of profit and market exchange and in which the major means of production and distribution are in private hands.

What is socialism?

Socialism is an economic system characterized by public ownership of property and a planned economy. Under socialism, a society’s productive equipment is owned not by individuals (capitalists) but by public bodies. Socialism depends primarily on centralized planning rather than on a market system for both its overall allocation of resources and its distribution of income; crucial economic decisions are made not by individuals but by government.

Who is Hans Fugger?

German weaver, created profit motive

What is Mercantile Capitalism

First stage of capitalism, capitalism that is based on mutual dependence between state and commercial interests. Central to mercantile capitalism is the belief that the economic health of a nation is determined by the bullion (precious metals, gold, and silver) it possesses and that therefore government should regulate production and trade with the goal of encouraging exports while keeping out imports, thus building up the nation’s bullion reserves.

What is industrial capitalism?

Second stage of capitalism, industrial capitalism is associated with large-scale industry. Industrials replaced merchants as the dominant power in capitalism economy.

What is financial capitalism?

Third stage of capitalism, characterized by pools, trusts, holding companies, and the interpenetration of banking, insurance, and industrial interests.

What is state welfare capitalism?

Fourth stage of capitalism, government plays an active role in the economy, attempting to smooth out the boom and-bust pattern of the business cycle through its fiscal and monetary policies.

What is globalized capitalism?

A new stage or level of capitalist development. Capitalism has always involved international trade, but today—thanks to the computer, the Internet, satellites, cell phones, and other technological advances—the economies of most countries are becoming more and more integrated, a process labeled globalization.

What are companies

A key feature of capitalism. Capitalism permits the creation of companies or business organizations that exist separately from the people associated with them. We take the existence of companies for granted, but some experts believe that it is not church or state but the company that is “the most important organization in the world.

What is a profit motive?

Second characteristic of capitalism. It assumes that economic self interest motivates human beings.

What is competition?

Third characteristic of capitalism, the regulator that keeps a community activated only by self-interest from degenerating into a mob of ruthless profiteers. Competition makes individual pursuit of self-interest socially beneficial.

What is one argument for capitalism?

One argument for capitalism is that it reflects people’s natural right to property. Utilitarians deny the existence of such rights; other critics doubt that this right entitles one to have a system of property rules and regulations identical to the one we now have in the United States.

What is the second argument for capitalism?

Second argument for capitalism is that it is the most efficient and productive economic system. This is basically a utilitarian consideration. Smith argues that when people are left to pursue their own interests, they will, without intending it, produce the greatest good for all. Each person’s individual and private pursuit of wealth results—as if guided (in Smith’s famous words) by an invisible hand—in the most beneficial overall organization and distribution of economic resources.

What is criticism of capitalism?

Critics argue that poverty and inequality challenge the fairness of capitalism and its claim to advance the interests of all. Disparity in income wealth.

What is another criticism of capitalism?

Critics contend that capitalism is belied by oligopoly and corporate welfare. Some also challenge the belief that competitions is desirable and beneficial.

What are oligopolies?

A concentration of property and resources, and thus economic power, in the hands of a few.

What did Karl Marx argue about capitalism?

Karl Marx argued that as the means of production become concentrated in the hands of the few, the balance of power between capitalists (bourgeoisie) and laborers (proletariat) tips further in favor of the bourgeoisie. Because workers have nothing to sell but their labor, said Marx, the bourgeoisie is able to exploit them by paying them less than the true value created by their labor.

What did Karl Marx argue about workers in capitalism?

Workers are exploited and alienated. The worker is related to the product of his labor as to an alien object. The alienation of the worker in his product means not only that his labor becomes an object, assumes an external existence, but that it exists independently, outside himself, and alien to him, and that it stands opposed to him as an autonomous power. It is not the satisfaction of a need, but only a means for satisfying other needs.

What is the human nature of capitalism?

There are self interested people, value is what we own and reinforces capitalism. It doesn’t offer sense of human purpose, assumes the more well off the happier we will be.