Unit #4 - Textbook Notes

• Socialism

  • an economic system characterized by public ownership of property and a planned economy
  • isn't owned by individuals (capitalists), but by public bodies
• Worker Control Socialism

  • a hybrid, market-oriented form of socialism
• Mercantile Capitalism

  • capitalism that's based on mutual dependence between state and commercial interests
• Industrial Capitalism

  • associated with large-scale industry
• State Welfare Capitalism

  • the 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
• The 4 Characteristic Features of Capitalism

  1. The Existence of Companies
  2. Profit Motive
  3. Competition
  4. Private Property
• Free Competition

  • Adam Smith states that free competition is the regulator that keeps a self-interested community from degenerating into a mob of ruthless profiteers (ripping people off)
• Laissez Faire

  • to let people do as they choose
• Oligopolies

  • a concentration of property and resources, and thus economic power, in the hands of a few
  • Karl Marx argues that capitalism leads to oligopolies
• Alienation

  • the separation of individuals from the objects they create
  • this results in one's separation from other people, oneself, and ultimately from human nature
• What was Karl Marx's thoughts on Capitalism?

  • He believed that only through exploitation that capitalists are able to make a profit and increase their capital and the more capital they make, the more they can exploit workers
  • Under capitalism he believes that people are alienated
• Social Entity/Stakeholder Model

  • the view that a corporation has obligations not only to its stockholders but also to stakeholders
• 3 Arguments that Support the Narrow View of Corporate Responsibility

  1. The Invisible Hand
  2. Let the Government Do It
  3. Business Can't Handle It
• Let the Government Do It

  • argue that the strong hand of government, through a system of laws and incentives, can and should bring corporations to obey
• Business Can't Handle It

  • argue that corporations are the wrong group to be entrusted with broad responsibility for promoting the well-being of society for 2 reasons:

  1. they lack the necessary expertise

  • corporate executives lack the moral and social expertise to make other than economic decisions
  • 2. they inevitably impose their own materialistic values on the rest of society, when addressing noneconomic matters
  • So, broadening corporate responsibility will thus "materialize" society instead of "moralizing" corporate activity