Slide- CH 2

• Eight fundamentals of a capitalist business system:

  • Right of private property
  • Equality of opportunity
  • Competition
  • Individualism and economic freedom
  • Profits
  • Work ethic
  • Consumer sovereignty
  • Role of government
• The right of private property:

  • Legal right to own and use economic goods like land and buildings
  • Ethical implications include uneven wealth distribution, use of taxation to redistribute wealth, and intellectual property (patents, copyrights, trademarks)
• Individualism and economic freedom:

  • The individual, not society, is the paramount decision-maker
  • Economic freedoms exist when the business system operates with few restrictions
  • Ethical implications include considerations of communitarianism, unions, co-ops, and the extent of economic freedoms
• Equality of opportunity:

  • Assumption that all individuals or groups have an even chance at responding to societal conditions
  • Ethical implications include challenges in achieving equality, wealth distribution, income disparities, and increasing equity and fairness in the business system
• Competition:

  • Condition in a market system where many rival sellers provide goods and services to buyers
  • Ensures corporations provide desired goods and services
  • Ethical implications include the creation of oligopolies or monopolies, barriers for firms to enter industries, and potential anti-competitive activities
• Profits:

  • Excess of revenues over expenses closely associated with competition
  • Ethical implications include varying views on profits, taxation of excessive profits, and redistribution of profits through inflation rates
• The work ethic:

  • A code of values claiming work is desirable and good
  • Ethical implications include influences of government programs and society's expectations on work attitudes, better working conditions, fringe benefits, salaries, and the desire to consume
• Consumer sovereignty:

  • Consumers have power over producers through purchasing decisions
  • Ethical implications include consumer awareness of alternative products, shaping of consumer preferences by advertising, and producers' power to ignore consumer wishes
• Role of government:

  • Laissez-faire approach with minimal government involvement
  • Ethical implications include government as an influential stakeholder in business, restrictions on capital movements, natural resource sales, product standards, prevention of business shutdowns, and legislation governing employee treatment
• Challenges to the ethics of capitalism:

  • Greed
  • Economic downturns
  • Business failures
  • Income and wealth inequality
  • Corporate crime and wrongdoing
  • Stagnant incomes vs. increasing CEO salaries
  • Damage to the environment
  • Reliance on a market system that seldom works perfectly
• Pros of capitalism:

  • Produces wealth, promotes prosperity, and provides greater human well-being
  • Allows creative and productive forces to operate
  • Encourages cooperation despite competition
  • Respects freedoms, including the pursuit of happiness
  • Assumes moral individuals operate the business system
• Forms of capitalism:

  • Consumer capitalism (e.g., Canada, Britain)
  • Producer capitalism (e.g., France, Japan)
  • Social market economy (e.g., Germany)
  • Family capitalism (e.g., Thailand, Indonesia)
  • Frontier capitalism (e.g., Russia, China)
  • State capitalism (government manipulation of market outcomes for political and social purposes)
• Summary:

  • Eight elements of Canadian capitalism
  • Challenges and pros of capitalism
  • Different forms of capitalism exist worldwide