THE BUSINESS SYSTEM – Markets, Government and International Trade Saturday, Nov 29 2008 

ECONOMIC SYSTEM:

The system a society uses to provide the goods and services it needs to survive and flourish.

GLOBALIZATION:

The process by which the economic and social systems of nations are connected together so that goods, services, capital, and knowledge move freely between nations.

TRADITION BASED SOCIETIES:

Societies that rely on traditional communal roles and customs to carry out basic economic tasks.

In Locke’s State of Nature:

  • All are free and equal
  • Each person owns his body and labour, and whatever he mixes his labour into
  • People agree to form a government to protect their right to freedom and property

Lockean Rights:

  • The right to life, liberty and property.

Weaknesses of Lockean Rights:

  • Assumption that individuals have neutral rights
  • Conflict between positive and negative rights
  • Conflict between Lockean rights and principles of Justice.
  • Locke’s individualistic assumptions

INVISIBLE HAND : Arguments of Adam Smith

  • According to Adam Smith, the market competition that drives self interested individuals to act in ways that serve society.
  • Market Competition ensures that the pursuit of self interest in markets advances of public’s welfare.
  • Govenment interference in markets does not advance the public’s welfare.

Criticisms of Smith’s Argument:

  • Rests on unrealistic assumptions
  • False assumption that all relevant costs are paid by manufacturer
  • False assumption that human beings are solely motivated by self interested desire for profit.
  • Some degree of economic planning is possible and desirable.
  • Keynes’s claim that government can affect unemployment.

SAY’S LAW:

In an economy all available resources are used and demand always expands to absorb the supply of commodities made from them.

AGGREGATE DEMAND:

According to John Maynard Keynes, the sum of the demand of the 3 sectors of the econonmy; households,businesses and government.

KEYNESIAN ECONOMIES:

The theory of John Maynard Keynes that free markets alone are not necessarily the most efficient means for co-ordinating the use of society’s resources.

SOCIAL DARWINISM:

Belief that economic competition produces human progress.

SURVIVAL OF THE FITTEST:

Charles Darwin’s term for the process of natural selection.

NATURALISTIC FALLACY:

The assumption that whatever happens naturally is always for the best.

ABSOLUTE ADVANTAGE:

A situation where the production costs (costs in terms of the resoueces consumed in producing the good) of making a commodity are lower for one country than for another.

COMPARATIVE ADVANTAGE:

A situation where the opportunity costs (costs in terms of other goods given up) of making a commodity are lower for one country than for another.

FREE TRADE:

  • Advocated by Smith with the idea of Absolut advantage.
  • Advocated by Ricardo with idea of Comparative Advantage.
  • Favours Gloablization.

Difficulties in Applying Ricardo’s Theory Today:

  • Easy movement of capital by companies
  • False assumption that a country’s prodcution costs are constant.
  • Influence of International rule setters.

MEANS OF PRODUCTION:

The buildings, machinery, land and raw materials used in the production of goods and services.

ALIENATION:

In Marx’s view not allowing the lower working classes to develop their productive potential, satisy their real human needs, or form satisfying human relationships.

ECONOMIC SUBSTRUCTURE:

The materials and social controls that society uses to produce its economic goods.

SOCIAL SUPERSTRUCTURE:

A society’s government and its populare ideologies.

FORCES OF PRODUCTION:

The materials- land, labour,natural resources,machinery,energy,technology used in production.

RELATIONS OF PRODUCTION:

The social controls used in producing goods i.e. the social controls by which society organizes and controls its workers.

HISTORICAL MATERIALISM:

The Marxist view of history as determined by changes in the economic methods by which humanity produces the materials on which it must live.

MARX’S PRINCIPLE Claims of Injustice in Capitalism:

  • Exploitation of workers whose “surplus” is taken by owners as “profit”.
  • Alienation of workers from product, work,self and others.
  • Subordination of government to interests of ruling economic class.
  • Immiseration of Workers.

IMMISERATION:

The combined effects of increased concentration, cyclic crises, rising unemployment, decliining relative compensation.

INTELLECTUAL PROPERTY:

Property that consists of an abstract and nonphysical object.

COPYRIGHT:

A grant that indicated that a particular expression of an idea is the private property of an individual or a company.

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ETHICAL PRINCIPLES IN BUSINESS – Various Definitions Saturday, Nov 29 2008 

ETHIC OF CARE:

An ethic that emphasizes cring for the concrete well being of those near to us.

ETHIC OF VIRTUE:

An ethic based on evaluations of the moral character of persons or groups.

UTILITARIANISM:

A general term for any view that holds that actions and policies should be evaluated on the basis of the benefits and costs they will impose on society.

UTILITY:

The inclusive term used to refer to any net benefits produced by an action.

UTILITARIANISM:

  • Advocates maximising utility.
  • Matches well with moral evaluations of public policies
  • Appears intuitive to many people
  • Helps Explain why some actions are generally wrong and others are generally light.
  • Influenced Economics

COST BENEFIT ANALYSIS:

A type of analysis used to determine the desirability of investing in a project by figuring whether its present and future economic benefits outweight its present and future economic costs.

EFFICIENCY:

Operating in such a way that one produces a desired output with the lowest resource input.

NONECONOMIC GOODS:

Goods such as life, love, freedom,equality, health, beauty, whose value is such that no quantity of any economic good is equal in value to the value of the noneconomic good.

INSTRUMENTAL GOODS:

Things that are considered valuable because they lead to other good things.

INTRINSIC GOODS:

Things that are desirable independent of any other benefits they may produce.

JUSTICE:

Distributing benefits and burdens fairly among people.

RIGHTS:

Individual entitlements to freedom of choice and well being.

EVALUATING UTILITARIANISM:

  • Critics say not all values can be measured.
  • Utilitarians respond that monetary and commonsensee mesures can measure everything.
  • Critics say utilitarianism fails with rights and justice.
  • Utilitarians respond that rule – utilitariansim can deal with rights and justice.

LEGAL RIGHT:

An entitlement that derives from a legal system that permits or empowers a person to act in a specified way or that requires others to act in certain ways toward that person.

MORAL RIGHTS:

Rights that human beings of every nationality possess to an equal extent simply virtue of being human beings.

CHARACTERISTICS OF RIGHTS:

  • A right is an individual’s entitlement to something.
  • Rights derieved from legal systems are limited by jurisdiction
  • Moral or human rights are based on moral norms and are not limited by jurisdiction.

SUMMARY OF MORAL RIGHTS:

  • Tigthly correlated with duties.
  • Provide individuals with autonomy and equality in the free pursuit of their interests.
  • Provide a basis for justifying one’s actions and for invoking the protection or aid of thers.

NEGATIVE RIGHTS:

Duties others have to not interfere in certain activities of the person who holds the right.

POSITIVE RIGHTS:

Duties of other agent to provide the holder of the right with whatever he or she needs to freely pursue his or her interests.

KINDS OF MORAL RIGHTS:

  • Negative rights require others leave us alone
  • Positive rights require others help us
  • Contractual or special rights require other to keep agreements.

CATEGORICAL IMPERATIVE:

The requirement that everyone should be treated as a free person equal to everyone else.

MAXIM:

The reason a person in a certain situation has for doing what he or she plans to do. 

UNIVERSALIZABILITY:

The person’s reasons for acting must be reasons that everyone could act on atleast in principle.

REVERSABILITY:

The person’s reasons for acting must be reasons that he or she would be willing to have all others use, even as a basis of how they treat him or her.

KANT’S CATEGORICAL IMPERATIVE FORMULAS:

  • Never do something unless you are willing to have everyone do it.
  • Never use people merely as means, but always respect and develop their ability to choose for themselves.

CRITICISMS OF KANT:

  • Categorical Imperatives are unclear
  • Kant’s rights can conflict
  • Kant’s theory implies some mistaken moral conclusions

LIBERTARIAN PHILOSOPHERS:

  • Believe that freedom from human constraint is necessarily good ¬†and that all constraints imposed by others are necessarily evil except when needed to prevent the imposition of greater human constraints.

TYPES OF JUSTICE:

  • Distributive Justice: Just distribution of benefits and burdens
  • Retributive Justice: Just imposition of punishments and penalities.
  • Compensatory Justice: Just compensation for wrongs or injuries.

DISTRIBUTIVE JUSTICE:

Distributive society’s benefits and burdens fairly.

RETRIBUTIVE JUSTICE:

Blaming or punishing persons fairly for doing wrong.

COMPENSATORY JUSTICE:

Restoring to a person what the person lost when he or she was wronged by someone.

EGALITARIANISM:

Every person should be given exactly equal shares of a society’s or a group’s benefits and burdens.

POLITICAL EQUALITY:

Equal participation in, and treatment by, the political system.

ECONOMIC EQUALITY:

Equality of income, wealth and opportunity.

PURITAN ETHIC:

The view that every individual has a religious obligation to work hard at his calling (the career to which God summons each individual).

WORK ETHIC:

The view that values individual effort and believes that hard work does and should lead to success.

PRODUCTIVITY:

The amount a person produces.

PRINCIPLE OF EQUAL LIBERTY:

The claim that each citizen’s liberties must be protected from invasion by others and must be equal to those of others.

DIFFERENCE PRINCIPLE:

The claim that a productive society will incorporate inequalities, but takes steps to improve the position of the most needy members of society.

PRINCIPLE OF FAIR EQUALITY OF OPPORTUNITY:

The claim that everyone should be given an equal opportunity to qualify for the more privileged positions in society’s institutions.

ORIGINAL POSITION:

An imaginary meeting of rational self interested persons who must choose the principles of justice by which their society will be governed.

VEIL OF IGNORANCE:

The requirement that persons in the original position must not know particulars about themselves which might bias their choices such as their sex,race,religino,income,social status etc.,

PRINCIPLES OF DISTRIBUTIVE JUSTICE:

  • Fundamental: Distributive benefits and burdens equally to equals and unequally to unequals.
  • Egalitarian: Distribute equally to everyone.
  • Capitalist: Distribute by Contribution
  • Socialist: Distribute by need and ability.
  • Libertarian: Distribute by Free Choices
  • Rawls: Distribute by equal liberty, equal opportunity, and needs of disadvantaged.

ETHIC OF CARE:

An ethic that emphasizes caring for the concrete well being of those near to us.

  • Claims ethics need to be impartial.
  • Emphasizes preserving and nurturing concrete valuable relationships.
  • Says we should care for those dependent on and related to us.

COMMUNITARIAN ETHIC:

An ethic that sees concrete communities and communal relationships as having a fundamental value that should be preserved and maintained.

Objection to Care Approach to Ethics:

  • Charge: Ethic of care can degenerate into favoritism.
  • Response: Conflicting moral demands are an inherent characteristic of moral choices.
  • Charge: Ethic of care can lead to “burnout”
  • Response: Adequate understanding of ethic of care will address the need to care for the caregiver.

The Basis of Moral Judgements:

  • Evaluations of social costs and benefits.
  • Respect for individual rights.
  • Just ditribution of benefits and burdens.
  • Caring for those in concrete relationships.

MORAL VIRTUE:

An acquired disposition that is valued as part of th character of morality good human being and that is exhibited in the person’s habitual behaviour.

THEORIES OF MORAL VIRTUE:

  • Aristotle: Habits that enable a person to live according to reason.
  • Aquinas: Habits that enable a person to live responsibly in this world and be united with God in the next life.
  • MacIntyre: Disposition that enables a person to achieve the good at which human”practices” aim.
  • Pincoff: Dispositions we use when choosing between persons or potential future selves.

VIRTUE THEORY:

The theory that the aim of the moral life is to develop those general dispositions called moral virtues, and to exercise and exhibit them in the many situations that human life sets before us.

VIRTUE THEORY CLAIMS:

  • We should exercise, exhibit, and develop the virtues.
  • We should avoid exercising, exhibiting, and developing vices.
  • Institutions should instill virtues not vices.