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TRANSCRIPT
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Reviewer in CSR
1.1 The Nature of Business Ethics
Ethics
The principles of conduct governing
an individual or group.
Study of morality.
*Although ethics deals with morality, it is
not quite the same as morality.
Ethics is a kind of investigation - and
includes both the activity of investing as
well as the results of that investigation
while morality is the subject that ethics
investigates.
Morality
The standards that an individual or a
group has about what is right or
wrong, good or evil.
2 aspects of Moral Standards
1. Norms we have about the kinds of actions
we believe that are morally right or
wrong.
2. Values we place on kinds of objects that
we believe that are morally good or
wrong.
*Typically, a persons moral standards are
first absorbed as a child from family, friends,
and various influences such as churches,
school, media etc.
Some will be discarded and some will
retain as we mature; thus, people
develop standards that are more
intellectually and applicable to situations.
Moral standards can be contrasted withNon-moral standards.
Ex. Of Non-moral standards:
a. Standards of etiquette
b. Law
c. Standard of language
d. Athletic standards
*Sometimes, we choose the non-mora
standards moral standards.
Five characteristics that help pin down
moral standards
A. Deals with matters that can seriously
injure or benefit human beings.
B. Not established or changed by decisionsof authoritative body.
Validity of moral standards rests on
adequacy of reasons.
C. Preferred to other values- including self
interest.
D. Based on impartial consideration.
*Moral POV a POV that does not evaluate
standards according to whether or not they
advance the interests of a particular
individual or group.
E. Associated with special emotions and a
special vocabulary.
Ethics is the activity of examining ones
moral standards or the moral standards of a
society, and asking how these standards are
reasonable or unreasonable, that is, whether
they are supported by good reasons or poor
ones.
Ultimate aim of Ethics = to develop a
body of moral standards that we feel are
reasonable to hold.
Ethics vs. Social Science
Ethics is a normative study of morality, while
social science is a descriptive study o
morality.
Normative Study attempts toreach normative conclusions, that is
conclusions about what things o
actions are good or about.
Descriptive Study attempts todescribe or explain the world without
reaching any conclusions about
whether the world is as it ought to be.
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Purpose of Ethics = To determine as
far as possible whether a given moral
standard is more or less correct.
Business Ethics
Specialized study of moral right or wrong.
Concentrates on moral standards as the
apply particularly to business policies,institutions, and behavior.
*A society consists of people who have
common ends and whose activities are
organized by a system of institutions
designed to achieve these ends.
Five types of institutions
a. Familial
b. Economic
c. Legal
d. Political
e. Educational
Economic situations are the most influential
institution.
Designed to achieve two ends:
1) Production of goods and services.
2) Distribution of goods and services.
Business Enterprise primary economic
institution.
Provide the fundamental structures
within which the members of society
combine their scarce resources and
provide channels for distribution of
goods.
*Corporations are the most significant kind of
business enterprise.
Developed during 16th century as joint
stock company.
Characteristics: Immortal fictitious
person, can sue and be sued, and can
own a property.
Stakeholders of Corporation
1. Stockholders owners of the corporation.
2. Directors and Officers administers corp
assets and operations.
3. Employees provide labor and do the
basic work related directly to the
production of goods and services.
Kinds of issues Business Ethicsinvestigates
a. Systemic ethical questions raised about
the economic, political, legal, and othe
social systems the business operate.
b. Corporate ethical questions raised
about a particular company.
c. Individual ethical questions raised for a
particular individual/s within a company.
Do moral standards apply to
Corporation or only to individual
a) First View Corporations act as
individuals and that they have
intended objectives for wha
they do, thus they are morally
responsible for their actions like
human beings do.
b) Second View Business
organizations are the same asmachines whose members must
blindly and undeviatingly conform
to formal rules that have nothing
to do with morality.
*Human individuals are responsible for what
the corporation actions flow wholly out o
their choices and behaviors.
- it makes perfectly good sense to say
that corporations has moral duties and
moral responsibilities if its members has amoral duty and moral responsibility as
well.
*Corporate policies, corporate culture,
corporate norms, and corporate design
have an enormous influence on the
choices, beliefs, and behaviors of
employees.
Multinationals firm that maintains
operations in many different countries.
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People at the later stages have the
ability to see things from a wider
and fuller perspective.
People at the later stages have
better ways of justifying their
decisions to others.
Criticisms against Kohlberg
A. It claims that higher stages are better
than the lower stages.
B. It failed to account patterns of moral
thinking of women.
Two approaches to moral issues
Male approach (By Kohlberg)
Male tends to deal with moral issues
in terms of impersonal, impartial, andabstract moral rules.
Female Approach (By Gilligan)
Female tend to see themselves as
part of web of relationships; they are
concerned on keeping these
relationships intact.
Gilligans Stages of Moral Development
(Womens Version)
A. Pre-conventional Level
Caring only for oneself.
B. Conventional Level
Internalizes conventional norms about
caring for others and come to neglect
themselves.
C. Post Conventional Level
Become critical of the conventionalnorms they had earlier accepted, and
they come to achieve a balance
between caring for others and for
oneself.
Moral Reasoning reasoning process
by which human behaviors, institutions,
or policies are judged to be in accordance
with or on violation moral standards.
Two essential components of Moral
Reasoning
I. Understanding of what standards
require, value, or condemn.
II. Evidence that shows that
something was required. Valued
or condemned by the standards.
*The reason that moral standards are often
not made explicit is that they are generally
presumed to be obvious.
Analyzing Moral Reasoning
Criteria to evaluate the adequacy of
moral reasoning
1) Moral reasoning must be logical.
2) Factual evidence must be accurate
relevant and complete.
3) Moral standards must be consistent.
*Consistency refers to the requirement that
one must be willing to accept the
consequences of applying ones mora
standards consistently to all persons in
similar circumstances.
1.3 Arguments for and Against Business
Ethics
Three objections to Business Ethics
1. In perfectly competitive free marketspursuit of profits will by itself ensure
that the members of society are
served in the most socially beneficia
ways.
2. Managers should single-mindedly
pursue the interests of their firms and
should ignore ethical considerations.
3. To be ethical, it is enough for business
people merely obey the law.
*It is wrong to see law and ethics as
identical. But law and morality do not
always coincide; this does not mean
that ethics has nothing to do with
following the law.
1.4 Moral Responsibility and Blame
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*Moral reasoning is sometimes directed at a
related but different kind of judgment:
determining whether a person is morally
responsible, or culpable, for having done
something wrong or for having wrongfully
injured someone.
*People are not always morally responsible
for their wrongful or injurious acts.
A person is morally responsible only for those
acts and their foreseen injurious effects.
One can also be held morally
responsible for failing to act or failing
to prevent an injury if ones omission
is free and knowledgeable and if one
could and should have acted, or could
and should have prevented the injury.
Types of Excusing conditions
1. Ignorance
2. Inability
*Ignorance ad inability do not always excuse
a person.
A person may be ignorant of relevant facts or
relevant moral standards.
Ignorance of fact: eliminates moral
responsibility completely for thesimple reason that a person cannot
be obliged to do something over
which he or she has no control.
Ignorance of moral standards:removes moral responsibility because
a person is not responsible for failing
to meet obligations of whose
existence he or she is genuinely
ignorant.
*Inability can be internal or external. Iteliminates responsibility because a person
cannot have any moral obligation to do
something over which the person has no
control.
Mitigating factors that lessen a
persons moral responsibility
1. Circumstances that leave a person
uncertain but not altogether unsure
about what he or she is doing.
2. Circumstances that make it difficult
but not impossible for the person to
avoid doing it.
3. Circumstances that minimizes but do
not completely remove a personsinvolvement in an act.
4. Seriousness of the wrongful act.
Corporate Responsibility
*Responsibility for a corporate act is
often distributed among a number o
cooperating parties.
- Corporate acts normally are brought
about by several actions or omissions omany different people all cooperating
together so that their linked actions and
omissions jointly produce the corporate act.
*Those who knowingly and freely did
what was necessary to produce the
corporate act each morally responsible.
Criticisms of Corporate Responsibility
I. The corporate group and not theindividuals who make up the group must
be held responsible for the act.
II. The more seriously wrong a corporate
act is, the less responsibility is mitigated
by uncertainty, pressures, and minima
involvement.
Subordinates Responsibility
*People sometimes suggest that when a
subordinate acts on the orders of alegitimate superior, the subordinate is
absolved of all responsibility for that act
Only the superior is morally responsible for
the wrongful act even though the
subordinate was the agent who carried it out
It is clearly mistaken to think that an
employee who freely and knowingly does
something wrong is absolved of al
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responsibility when he or she is following
orders.
Chapter 2
Moral Principles in Business
a) Utilitarian Moral Principle/Utilitarianism
b) Rights Moral Principle
c) Distributive Justice Moral Principle
d) Ethics of Care Moral Principle
UTILITARIANISM
A general term for any view that holds that
actions and policies should be evaluated on
the basis of the benefits and costs theywill impose on society.
The right of action or policy is the one
that will produce the greatest net benefits or
the lowest net costs.
Utility - The inclusive term used to
refer to the net benefits of any sort produced
by action.
*The name utilitarian for any theory that
advocates selection of that action or policythat maximizes benefits or minimizes costs.
Best way of evaluating the ethical
propriety of business decision = relying
on utilitarian cost-benefit analysis.
Traditional Utilitarianism
Jeremy Bentham (1748-1832) is generally
considered the founder of traditional
utilitarianism.
He sought an objective basis for
making value judgments that would provide
a common and publicly acceptable norm for
determining a social policy and social
legislation.
Most promising way = looking at the
various policies a legislature could enact and
comparing the beneficial and harmful
consequences of each.
The utilitarian principle holds that: Anaction is right from an ethical point of
view if and only if the sum total of
utilities produced by that act is
greater than the sum total of
utilities produced by any other act
the agent could have performed in its
place.
EXAMPLE: FORD PINTO CASE
Costs: $11x 12 million autos= 137M
Benefits: (180 deaths x 200,000)+ (180
injuries x $67,000)+(2100 vehicles x $700)=
$49.15 M
The utilitarian principle assumes that we can
somehow measure and add the quantities of
benefits produced by an action and subtract
from them the measured quantities of harm
the action will have, and thereby determine
which action produces the greatest tota
benefits or the lowest costs.
Thus, it assumes that all benefits and
costs of an action can be measured on a
common numerical scales then added or
subtracted from each other.
*right action does not mean the one
that produces the most utility for the
person performing it but rather for al
persons affected.
*In the final analysis, only one action
is right: the one whose net benefits
exceeded the net benefits of othe
alternatives.
Three steps performed:
1. Determine what alternative actions or
policies are available to me on that
occasion.
2. For each alternative action, estimate the
direct and indirect benefits and costs
that the action would produce for each and
every person affected by the action in the
foreseeable future.
3. The alternative that produces the
greatest sum total of utility must be
chosen as the ethically appropriate course of
action.
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Why is utilitarian theory attractive?
Advocates maximizing utility.
Matches well with moral evaluations
of public policies
Appears intuitive to many people
Helps explain why some actions aregenerally wrong and others are
generally right.
Influenced Economics
Utilitarian fits with the concept of
efficiency
Problems with Utilitarianism
1. Difficulties encountered measuring.
2. Some benefits and costs seem intractable
to measurement (health).
3. Because many of the benefits and costs of
an action cannot easily be predicted, they
also cannot be adequately measured.
4. It is unclear exactly what is to count as a
benefit and what is to count as a cost.
5. The assumption that all goods are
measurable implies that all goods can be
traded for equivalents of each other.
Utilitarian critics contend that thesemeasurement problems undercut
whatever claims utilitarian theory makes
to providing an objective basis for
determining normative issues.
Replies to the Problems of
Utilitarianism
A. Requirement for quantifiable
measurements of all costs and benefitscan be relaxed when such measurements
are impossible.
*Several common-sense criteria
can be used to determine the relative
values that should be given to various
categories of goods.
Intrinsic vs Instrumental goods
Instrumental goods are things that are
considered valuable only because they
lead to other good things. Intrinsic
goods, however, are things that are
desirable independent of any other
benefits they may produce.
You can weigh goods between needs and
wants
B. Use the monetary equivalent of such cost
or benefit.
This implies that the value of thing is the
price a person is willing to pay for it.
If the monetary costs or benefits are only
probable and not certain, then thei
expected values can be computed by
multiplying the monetary costs o
benefits by the appropriate probability
factor.
C. If market prices are incapable of
providing such quantitative date, othe
measurements can be used
Problems with Rights and Justice
1. .Utilitarian Theory is unable to deal with
two kinds of moral issues: rights and
justice.
Utilitarian would lead us to approve
actions that would deprive a person right
and justice.
2. Utilitarian can also go wrong dealing with
situations that involves social justice.
Utilitarian looks at how much is produced
by society and fails to account how utility
is distributed.
*Thus, utilitarian seems to ignore certain
important aspects of ethics.
Utilitarian replies to Objections to
Rights and Justice
I. Utilitarian proposed an alternative
version called Rule Utilitarianism.
Rule Utilitarianism limits utilitarian analysis
to the evaluations of moral rules.
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When trying to determine whether
an action is ethical, one must look
if the said action is required by
correct moral rules followed by
everyone.
In identifying what are those
correct moral rules, one must look
to the maximizing utility principle.
Two parts of Rule Utilitarianism
a. An action is right from an
ethical POV if and only if the
action would be required by
those moral rules that are
correct.
b. A moral rule is correct if and
only if the sum total of utilities
produced (if everyone were to
follow that rule) is greater than
the sum of total utilities
produced (if everyone were to
follow some alternative).
*The ploy of rule utilitarianism has not
satisfied the critics of utilitarianism. They
pointed out that rule utilitarianism is just the
traditional utilitarianism in disguise.
2.2 Rights
Concept of right
Right is an individuals entitlement to
something. A person has a right when that
person is entitled to act in a certain way or is
entitled to have others act in a certain way
toward him or her.
Types of Rights
Legal right the entitlement derived from
a legal system that permits the person to
act in specified way or others to act in
certain ways toward that person.
Moral Right the entitlement derived
from the system of moral standards
independent of any particular legal
system.
Contractual Rights entitlement derived
when a person enters an agreement with
another person; sometimes called as
special rights and duties or specia
obligations.
Common connotation to rights
Absence of Prohibition
Authorization or Empowerment
Existence of Prohibitions o
Requirements
Three Important Features of Moral
Right
1) Tight correlation with duties.
2) Provide individuals with autonomy and
equality in the force pursuit of theirinterests.
3) Provides a basis for justifying ones action
and for invoking the protection or aid of
others.
Rights Theory versus Utilitarian Theory
*Because moral rights have these three
features, these provide bases for making
moral judgments that differ from utilitarian
standards.
Rights Utilitarian
Express therequirements ofmorality fromPOV of anindividual.
Express therequirements omorality fromPOV of society.
Limit the validityof appeals tosocial benefitsand to numbers.
Does not limit theappeals of societyto the benefitsand costs
received.
Negative and Positive Rights
Negative Rights distinguished by the
fact that its members can be defined
wholly in terms of the duties others
have to not interfere in certain
activities of the person who holds a
given right.
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Positive Rights imply that some
other agents have the positive duty of
providing the holder of the right with
whatever he or she needs to freely
pursue his or her interests.
*Positive Rights were not emphasized until
20th century. Negative Rights were often
employed in the 17th and 18th centuries by
writers of manifestos, who were anxious to
protect individuals against the
encroachments of monarchial governments.
Contractual Rights and Duties vs. Other
rights
1) They attach to specific individuals and
are imposed only on other specific
individuals.
2) Arise out of a specific transaction
between particular individuals.
3) Depend on publicly accepted systems of
rules that define the transactions that
give rise to those rights and duties.
*Without the institution of contracts and
the rights and duties it can create,
modern business societies could not
operate.
*Provides basis for special duties or
obligations that people acquire whenthey accept a position or a role within a
legitimate social institution or an
organization.
Moral constraints of contractual rights
and duties
a) Both parties must have full knowledge of
the agreement.
b) Neither must intentionally misrepresent
the facts of the agreement.
c) Neither must be forced to enter the
agreement.
d) Must not bind the parties into immoral
act.
A basis for moral rights: Kant
Utilitarian suggests that people have moral
rights because possession of such maximizes
utility.
Immanuel Kant developed a theory about
the basis of moral rights.
Based his theory on amoral principle called categorical imperative
that requires everyone should be treated as
a free person equal to everyone else.
The first formulation of Kants
Categorical Imperative
*This version states thatAn action is morally
right for a person in certain situation if and
only if the persons reason for carrying out
the action is a reason that he or she would
be willing to have every person act in any
similar situation.
*Kant points out that sometimes it is no
even possible to conceive of having everyone
act on a certain reason, much less be willing
to have everyone act on that reason.
Two criteria for determining moral right
or wrong
Universalizability: The persons
reason for acting must be reasons
that everyone could act on at
least in principle.
Reversibility: The persons reasons
for acting mus.t be reasons the he
or she would be willing to have al
others use even as a basis of how
they treat him or her.
Why Kants categorical imperative is
attractive?
*It focuses on a persons interior motivations
and not on the consequences of onesexternal actions.
- A persons action has moral worth
only to the degree that it is also motivated
by a sense of duty, that is, belief that it is
right way for all people to behave.
The second formulation of Kants
Categorical Imperative
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*An action is morally right for a person if,
and only if in performing the action, the
person does not use others merely as a
means for advancing his or her own
interests, but also both respects and develop
their capacity to choose freely for
themselves.
Treating humanity as an end means two
things for Kant:
Respecting each persons freedom by
treating people only as they have
freely consented to be treated
beforehand.
Developing each persons capacity to
freely choose for him or herself the
aims he or she will pursue.
*This version of categorical imperative
implies that human beings each have an
equal dignity that sets them apart from
things and that is incompatible with their
being manipulated, deceived, or otherwise
unwillingly exploited to satisfy the self-
interests of another.
The second formulation is really equivalent
to the first.
Kantian Rights
*Moral rights identify interests thatindividuals must be left free to pursue as
they autonomously choose and whose free
pursuit must not be subordinated to our own
interests.
- Categorical imperative cannot by
itself tell us what particular moral rights
human beings have.
Problems with Kant
Kants theory is not precise enough tobe useful.
There is a substantial disagreement
concerning what the limits of each the
moral rights are and concerning how
each of these rights should be
balanced against other conflicting
rights.
There are counter-examples that
shows that the theory sometimes
goes wrong.
The Libertarian Objection: Nozick
Some important views on rights that are
different from the ones we sketched have
been proposed recently by severa
Libertarian philosophers.
Libertarian philosophers go beyond the
general presumption that freedom from
human constraint is usually good, to
claim that such freedom is necessarily
good and that all constraints imposed butothers are necessarily evil except when
needed to prevent the imposition o
greater human constraints.
Robert Nozick claims that the only basic
right that every individual possesses is the
negative right to be free from the coercion of
other human beings.
*According to Nozick, prohibiting
people from coercing others
constitutes a legitimate moraconstraints that rests on the
underlying Kantian principle tha
individuals are ends and not merely
means; they may not be sacrificed or
used for achieving of other ends
without their consent.
*Because there are many differen
kinds of freedoms, the freedom one
group of agents is given to pursue
some its interests will usually restrict
the freedom other agents have to
pursue other conflicting interests.
This means that we cannot argue in favo
of a certain kind of freedom by simply
claiming that constraints are always evi
and must always be replaced by freedom
Government coercion is legitimate
wherever it I necessary to ensure that the
dignity of citizens is being respected or
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when it is needed to secure the full
development of peoples capacity to
choose.
2.3Justice and Fairness
Disputes among individuals in
business are often interlaced withreference to justice and fairness.
Justice and fairness are essentially
comparative.
They are concerned with the comparative
treatment given to the members of a
group when benefits and burdens are
distributed, when rules and laws are
administered, when members of a group
cooperate or compete within each other,
and when people are punished for thewrong they have suffered.
*Standards of justice are generally taken
to be more important than utilitarian
considerations. Greater benefits for
some cannot justify injustices for others.
- but the standards of justice does not
override the moral rights of individuals.
(Justice is based on individual moral rights.)
*The moral rights of some individuals cannotbe sacrificed in order to secure a somewhat
better distribution of benefits for others.
Types of Justice
a) Distributive Justice concerned with the
fair distribution of societys benefits and
burdens.
b) Retributive Justice refers to the just
imposition of punishments and penalties
upon those who do wrong.
c) Compensatory Justice concerns the just
way of compensating people for what
they lost when they were wronged by
others.
Distributive Justice
Individuals who are similar in all
respects relevant to the kind of
treatment in question should be
given similar benefits and burdens,
even if they are dissimilar and
irrelevant respects: and individuals
who are dissimilar in a relevant
respect ought be treated
dissimilarly, in proposed to the
dissimilarity.
*When peoples desires and aversions
exceed the adequacy of their resources, they
are forced to develop principles for allocating
scarce benefits and undesirable burdens in
ways that are just and that resolve the
conflicts in fair way.
Material principle of justice gives specific
content to the fundamental principle o
distributive justice.
Principle of Justice
a) Justice as Equality: Egalitarianism
b) Justice based on contribution: Capita
Justice
c) Justice a Freedom: Libertarianism
d) Justice based on needs and abilities
Socialism
e) Justice as Fairness: Rawls
Egalitarianism
Holds that there are no relevant
difference among people that can justify
unequal treatment.
Every person should be given exactly
equal shares of a societys or a groups
benefits and burdens.
Equality as a principle of justice not only
for the entire society but also for the
smaller organizations.
Criticisms to Egalitarianism
There is no quality that all human
beings possess in precisely the same
degrees.
Egalitarian ignores some
characteristics that should be taken
into account in distributing goods
both in society and in smaller groups.
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o Lazy persons will get as much
as the industrious ones.
o The sick will get only as much
as the healthy.
o The handicapped will do as
much as the able persons.
o Thus, everyone will have noincentives to exert greater
effort.
Replies to criticisms
They distinguished two types of
equality: political, economic.
o Political Equality equal
participation in the means of
controlling and directing the
political system.
o Economic Equality equality of
income and wealth, and
equality of opportunity.
Every person has a right to minimum
standard of living and that income
and wealth should be distributed
equally until this standard is achieved
for everyone.
o Its major difficulty isdetermining the minimum
standard of living.
Capital Justice
The more a person contributes to a
societys pool of economic goods, the
more that person is entitled to take
from that pool.
Benefits should be distributed
according to the value of thecontribution the individual makes to a
society, a task, a group, or an
exchange.
The most widely used principle of
fairness used to establish salaries and
wages in American companies.
Traditional measurement of the
value of contribution
1) Work effort the more effort put into
their work, the greater the share of
benefits to which they are entitled.
Rewarding through efforts ad
not productivity induces
incompetence and
inefficiently.
Using work effort as basis
allows the highly productive
people to receive a little
incentive.
2) Productivity the better the quality
the greater the benefit receive.
Ignores peoples needs.
Difficulty to assign value on a
persons product.
3) Market Force of supply and demand.
Socialism
The dictum proposed first by Louis
Blanc and then Karl Marx and
Nikolai Lenin is traditionally taken
to represent the socialist views on
distribution.
Work burdens should be
distributed according to peoplesabilities, and benefits should be
distributed according to peoples
needs.
Based on:
a. That people realize thei
human potential by
exercising their abilities in
productive work.
b. Benefits produced throughwork should be used to
promote human happiness
and well-being.
Least acknowledged in business.
Criticisms to Socialism
a. There is no relation between the amount
of effort a worker puts forth and the
amount of remuneration received
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(Result: stagnating economy with
declining productivity.)
b. If socialist principle were enforced, it
would obliterate individual freedom.
Libertarianism
No particular way of distributing
goods can be said to be just orunjust apart from the free choices
individuals make.
From each according to what he
chooses to do, to each according
to what he makes for himself and
hat others choose to do for him
and choose to give him of what
theyve been given previously and
havent yet expanded or
transferred.
o People should be allowed
to keep everything they
make and everything they
are freely given,
Based on the claim that every
person has a right to freedom
from coercion that takes priority
over all other rights and values.
Criticisms to libertarians
A. Other forms of freedom must also
be secured such as freedom from
ignorance, and freedom from
hunger.
B. Libertarian principle of distributive
justice will generate unjust
treatment of the disadvantaged.
o If people through no fault
of their own happen to be
unable to care forthemselves, their survival
should no depend on the
outside chance that others
will provide them with what
they need.
Rawls
John Rawls provides one approach to
distributive justice that at least
approximates this ideal of a
comprehensive theory.
Based on the assumption that
conflicts involving justice should be
settled by first devising a fair method for
choosing the principles by which theconflicts will be resolved.
Considerations in distribution of
societys benefits and burdens
a) Political and economic quality
b) Minimum standard of living
c) Needs
d) Ability
e) Effort
f) Freedom
Two basic principles created by Rawls
I. Principle of equal liberty each person
has an equal right to the most extensive
basic liberties compatible with similar
liberties for all.
Each citizens liberties must be
protected from invasion by othersand must be equal to others.
These basic liberties are: right to
vote, freedom of speech and
conscience and other civi
liberties, right to own, writ o
habeas corpus.
Prohibits the use of force, fraud, or
deception in contractua
transactions and requires that just
contracts be honored.
II. Social and economic inequalities are
arranged so that they are both:
a) To the greatest benefit of the least
advantaged person. (Difference
Principle)
Assumes that productive society
will incorporate inequalities but
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steps should be taken to improve
the position of the most needy
members of society.
More productive society would be
able to provide for its least
advantaged members.
b) Attached to offices an positions open
to all under conditions of fair equalityof opportunity. (Principle of fair
equality of opportunity.)
Everyone should be given equal
opportunity to qualify for more
privileged positions on societys
institutions.
*Rawls proposed a general method of
evaluating the adequacy of moral principles.
It consists of determining whatprinciples a group of rational
self-interested people would
choose to live if they knew
they would live in a society
governed by those principles
but they did not yet know what
each of them would turn out to
be in that society.
Imaginary group of rational
people = original position.
Their ignorance of any
particulars about themselves
= veil of ignorance.
Criticisms to Rawls
A. Original position is not adequate method
in choosing moral principles.
B. The parties to the original position would
not choose Rawls principle at all.
C. Rawls principles are mistaken.
D. Opposed to our basic convictions
Concerning about justice.
Advantages of Rawls Theory
The theory preserves the basic values
that has become embedded in our
moral beliefs: freedom, equality o
opportunity, and concern for the
disadvantaged.
The theory fits easily into the basic
economic institutions of western
societies.
The theory takes into account the
criteria of need, ability, effort, and
contribution.
There is moral justification that the
original position provides.
Retributive Justice
*Concerns the justice of blaming or punishing
persons for doing wrong.
Conditions whether it is just to punish a
person for wrong doings.
1st kind: Ignorance and Inability.
2nd kind: Certitude that the personbeing punished actually did
wrong.
3rd kind: they must be consistentand proportioned to wrong deed.
Compensatory Justice
Concerned with the justice o
restoring to a person his lost thing
when he was wronged by
someone else.
Justice seems to require that the
wrongdoer as far as possible that
the amount of restitution should
be equal to the loss the wrongdoe
knowingly inflicted on the victim.
Traditional moralists have argued that aperson has a moral obligation to
compensate an injured party only if the
3 conditions are met:
I. The action that inflicted the injury as
wrong or negligent.
II. The persons action was the rea
cause of the injury.
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III. The person inflicted the injury
voluntarily.
The most controversial forms of
compensation undoubtedly are the
preferential treatment programs that
attempt to remedy past injustices
against groups.
2.4 Ethics of Care
Partiality and Care
The approaches to ethics that we have
seen, then, all assume that ethics
should be impartial and that,
consequently, any special
relationships that one may have with
particular individuals should be set
aside when determining what one
ought to do.
Key concept: we have an obligation toexercise special care toward those
particular persons with whom we
have close valuable relationship,
particularly relationship of
dependency.
According to Carol Gilligan, a morality of
care rests on understanding of
relationships as response to another
in their terms.
Two moral demands the ethic of care
emphasizes:
I. E each exist in a web of relationships
and should preserve and nurture those
concrete and valuable relationships we
have with specific persons.
II. We each should exercise special carefor those with whom we are concretely
related by attending to their particular
needs, values, desires, and concrete well-
being as seen from their own personal
perspective, and by responding positively
to these needs, values, desires, and
concrete well-being, particularly to those
who are vulnerable and dependent on our
care.
It is important not to restrict the
notion of concrete relationship to
relationships between two individuals
or to relationships between an
individual and a specific group.
o Communitarian ethic an ethic
that sees concrete
communities and communa
relationships as having a
fundamental value that should
be preserved and maintained.
o The concrete relationships that
make up a particular
community, then, should be
preserved and nurtured just as
much as the more
interpersonal relationships that
spring up between people.
3 kinds of care
a. Caring about something.
b. Caring after someone
c. Caring for someone (demanded byethic of care.)
Two additional issues about ethic care
i. Not all relationships have value and
so not all would generate the duties of
care.
ii. Important to recognize that thedemands of caring are sometimes in
conflict with the demands of justice.
But although no fixed rule can resolve al
conflicts between the demands of caring and
the requirements of justice, nevertheless
some guidelines can be helpful in resolving
such conflicts.
The care approach originated in the claim
of Carl Gilligan that women and men
approach moral issues from two differenperspectives.
Objections to care
The care approach to ethics has been
criticized on several grounds.
a) Ethic of care can degenerate into
unjust favoritism.
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Morality consists of a widespectrum of moral considerations
that can conflict with each other:
Utilitarian considerations can
conflict with considerations of
justice, and these can conflict with
moral rights.
b) Its demands can lead to burnout.
Advantages of ethic of care
Forces us to focus on the moral valueof being partial toward those concrete
persons with whom we have special
and valuable relationships, and moral
importance of responding to such
persons as particular individuals with
characteristics that demand a
response to them that we do not
extend to others.
2.5 Integrating Utility, Rights, Justice,
and Caring
Utilitarian standards must be usedwhen we do not have the resources
for attaining everyones objectives, so
we are forced to consider the net
social benefits and social costs
consequent on the actions by which
we can attain these objectives.
Our moral objectives are also partiallybased on standards that specify how
individuals must be treated or
respected. It forces us to consider
whether the behavior is consistent
with ones agreements and special
duties.
The moral reasoning on which such
judgments are based will incorporate
considerations concerning whether
the behavior distributes benefits andburdens equally or in accordance with
needs, abilities, contributions, and
free choices of the people as well as
with extent of their wrongdoing.
Our moral judgments are also based on
standards of caring that indicate the
kind of care that is owed toward those
with whom we have special concrete
relationships
o The moral standards that
invokes standard of care wil
incorporate considerations
concerning the particular
characteristics and needs o
those persons with whom one
has a concrete relationship
the ones relationships with
those persons; and the formsof caring and partiality that are
called for by those
relationships and that are
needed to sustain those kinds
of relationships.
2.6 A alternative to moral principles:
Virtue Ethics
Many ethicists have criticized theassumption that actions are the
fundamental subject matter of ethics.
An agent-based focus on what one ought
to be, in contrast to an action-based
focus on how one ought to act would look
carefully at a persons moral character
exhibits virtue or vice.
Nature of Virtue
Moral Virtue is an acquired disposition that is
valued as part of character of a morally
good human and being that is exhibited inthe persons habitual behavior.
A moral virtue must be acquired and not
merely a natural characteristic.
Moral Virtue
The most significant and influentia
theory of virtue was that proposed by the
Greek philosopher Aristotle who argued
that a moral virtue is a habit that enables
a human being to act in accordance withthe specific purpose of human beings.
Moral virtues are habits that enable a
person to live according to reason.
o A person lives according to reason
when the person knows ad
chooses the reasonable middle
ground between going too far and
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not going far enough in his
actions, emotions, and desires.
Virtues are habits of dealing with onesactions, emotions, and desires in a
manner that seeks the reasonable middle
ground and avoids unreasonable
extremes. While vices are habits of going
to the extreme of either excess ordeficiency. Prudence is the virtue that
enables one to know what is reasonable
in a given situation.
St. Thomas Aquinas followed Aristotlethat the moral virtues enable people to
follow reason in dealing with their
desires, emotions, and actions, and in
accepting that the four pivotal or
cardinal moral virtues: Courage,
Temperance, Justice, and Prudence.
Aquinas added theological virtues:Faith, Hope, and Charity.
Alasdair MacIntyre has claimed that avirtue is any human disposition that is
praised because it enables a person to
achieve the good at which human
practices aim.
o Critics argued that MacIntyre does
not seem to quite get things right.
Edmund Pincoffs criticizes MacIntyre forclaiming that virtue include only those
traits required by some set of social
practices.
o He suggests that virtue include all those
dispositions to act, feel and think in
certain ways, that we use as the basis
for choosing between persons or
between potential future selves.
*Because the human situation often requires
concerted effort. Pincoffs theory of virtueseems more adequate than a theory which
confines virtue to traits connected with
practices.
Virtues, Actions, and Institutions
Criticisms:
It fails to provide us with guidance on
how we are to act.
Although virtue is the foundation of virtuetheory, this does not mean that virtue
theory can provide no guidance fo
action.
Virtue theory argues that the aim of the
moral life is to develop those genera
dispositions we call the moral virtues, and
to exercise and exhibit them in many
situations that human life sets before us.
o Key action-guiding implication of virtue
theory: An action is morally right
if in carrying out the action the
agent exercises, exhibits, or
develops a morally virtuous
character, and it is morally wrong
to the extent that by carrying outthe action the agent exercises,
exhibits, or develops a morally
vicious character.
The wrongfulness of an action can bedetermined by examining the kind o
character the action tends to produce or
the kind of character that tends to
produce the action. However, if the
decision to engage such actions tends to
make people more self-centered, more
irresponsible, more dishonest, more
careless, more selfish, then such actions
are morally wrong.
There is no simple way in classifying al
the virtues.
Pincoff suggest that some dispositions
can be classified as instrumental since
they enable people to pursue their goals
effectively as individuals while some are
non-instrumental because they are
desirable for their own sake.
Virtues and Principles
Relationship between theory of virtues
and theories of ethics that we have
considered: some virtues enable
people to do moral principles even
when fear of consequences tempts us
to do otherwise.
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There is no conflict between theories of
ethics that are based on principles,
and theories of ethics based on
virtues.
A theory of virtue differs from an ethicof principles, in perspective from
which it approaches moral
evaluations.
Theory of Virtue Ethic of principle
Judge actions
Judges
dispositions in
terms of the
actions
associated with
thosedispositions.
Dispositions are
primary
Actions are
primary.
Look at moral
life in terms of
the kind of
person morality
obligates us to
be.
Look at moral
life in terms of
the actions that
morality
obligates us to
be.
*Ethic of virtue is not the 5th kind of moral
principle instead, it fills out and adds to
the four kinds of moral principle by
looking not at the actions people are
required to perform, but at the character
they are required to have.
2.7 Morality in international context
Common practices may differ fromnation to nation.
The cultural practices of nations may
differ so radically that the same may
mean something very different in two
different cultures.
When operating in a less developed
countries, multinationals from a more
developed countries should always
follow those practices prevalent in a
more developed country which se
higher standards.
Others have on the above statements
total opposite.
CHAPTER THREE
This chapter examines the ethical aspects of
the market system itselfhow it is justified
and what the strengths and weaknesses of
the system are from the point of view o
ethics. It begins by discussing the economic
conditions in the U.S. at the close of the 20th
century, when proponents of industrial policy
were urging the government to help
declining industries and their workers to
adjust to new economic conditions. Others
urged caution, advising the government to
"avoid the pitfalls of protectionism." This
dichotomy illustrates the difference between
two opposite ideologies,
those who believe that unregulatedmarket systems (free market) aredefective because they cannot deal withthe problems recession, inflationensuring national security.
those who advocate that regulation(planned economy) is defective becauseit violates the right to freedom and leadsto an inefficient allocation of resources.
Ideology a system of normative beliefs
shared by members of some social groups.
These two ideologies take different positionson some very basic issues:
What is human nature really like?
What is the purpose of sociainstitutions?
How does society function?
What values should it try to protect?
In general, two important ideological camps
the individualistic and communitarian
viewpoints, characterize modern societies.
Individualistic societies
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- promote a limited government whose
primary purpose is to protect property,
contract rights, and open marketplaces.
- government and business were separated;
it only intervenes when national health and
safety are involved.
Communitarian societies
-in contrast, define the needs of the
community first and then define the rights
and duties of community membership to
ensure that those needs are met.
- government is prestigious and
authoritarian.
These two camps face the problem of
coordinating the economic activities of their
members in two distinct ways.
Communitarian systems use a command
system, in which a single authority decides
what to produce, who will produce it, and
who will get it.
Free market systems are characteristic of
individualistic societies. Incorporating ideas
from thinkers like John Locke and Adam
Smith, they allow individual firms to make
their own decisions about what to produce
and how to do so.
Free market systems have two maincomponents:
a private property system
voluntary exchange system
Pure free market systems would haveabsolutely no constraints on what one canown and what one can do with it. Since suchsystems would allow things like slavery andprostitution, however, there are no puremarket systems.
3.1 Free Markets and Rights: John Locke
John Locke (1632-1704), an English political
philosopher, is generally credited with
developing the idea that human beings have
a
"natural right" to liberty
"natural right" to private property.
Locke argued that if there were no
governments, human beings would find
themselves in a state of nature.
state of nature
-each man would be the political equal of al
others
-would be perfectly free of any constraints
other than the law ofnature
law of nature
-the moral principles that God gave to
humanity
-and that each man can discover by the use
of his own God-given reason.
As he puts it, in a state of nature, all men
would be in:
A state of perfect freedom to order
their actions and dispose of their
possessions and persons as they think
fit, within the bounds of the law of
nature, without asking leave, or
depending upon the will of any other
man. A state of equality, wherein all
the power and jurisdiction is reciprocal,
no one having more than another...
without subordination or subjection [to
another].... But... the state of nature
has a law of nature to govern it, which
obliges everyone: and reason, which is
that law, teaches all mankind, who willbut consult it, that being all equal and
independent, no one ought to harm
another in his life, health, liberty, or
possessions.
Thus, according to Locke, the law of nature
teaches us that we have a natural right to
liberty. But because the state of nature is so
dangerous, says Locke, individuals organize
themselves into a political body to protect
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their lives and property. The power of
government is limited, however, extending
only far enough to protect these very basic
rights.
Locke's views on property rights have been
very influential in America. The Fifth
Amendment to the U.S. Constitution even
quotes Locke directly. In this view,government does not grant or create
property rights. Rather, nature does, and
government must therefore respect and
protect these rights. Locke's view that labor
creates property rights has also been
influential in the U.S.
Although Locke never explicitly used his
theory of natural rights to argue for free
markets, several 20th-century authors have
employed his theory for this
purpose.19Friedrich A. Hayek,
Murray Rothbard,
Gottfried Dietze,
Eric Mack, andmany others
-have claimed that each person has the right
to liberty and property that Locke credited to
every human being and consequently,
government must leave individuals free to
exchange their labor and their property as
they voluntarily choose.
Only a free private enterprise exchange
economy, in which government stays out of
the market and in which government
protects the property rights of private
individuals, allows for such voluntary
exchanges.
Criticisms on Lockean Rights
The existence of the Lockean rights to
liberty and property, then, implies that
societies should incorporate private property
institutions and free markets.
It is also important to note that Locke's views
on the right to private property have had a
significant influence on American institutions
of property even in today's computer society.
*First, and most important, throughout most
of its early history, American law has held to
the theory that individuals have an almost
absolute right to do whatever they want with
their property and that government has no
right to interfere with or confiscate an
individual's private property even for the
good of society. Second, underlying many
American laws regarding property andownership is Locke's view that when a
person expends his or her labor and effort to
create or improve a thing, he or she acquires
property rights over that thing.
Locke's critics focus on four weaknesses in
his argument:
The assumption that individuals have
natural rights: This assumption is unproven
and assumes that the rights to liberty and
property should take precedence over alother rights. If humans do not have the
overriding rights to liberty and property, then
the fact that free markets would preserve the
rights does not mean a great deal.
The conflict between natural (negative)
rights and positive rights: Why should
negative rights such as liberty take
precedence over positive rights? Critics
argue, in fact, that we have no reason to
believe that the rights to liberty and property
are overriding.
The conflict between natural rights and
justice: Free markets create unjust
inequalities, and people who have no
property or who are unable to work will not
be able to live. As a result, without
government intervention, the gap between
the richest and poorest will widen until large
disparities of wealth emerge. Unless
government intervenes to adjust the
distribution of property that results from freemarkets, large groups of citizens will remain
at a subsistence level while others grow eve
wealthier.
Individualistic assumptions and their
conflicts with the ethics of caring: Locke
assumes that people are individuals first
independent of their communities. But
humans are born dependent on others, and
without caring relationships, no human could
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survive. The degree of liberty a person has
depends on what the person can do. The less
a person can do, the less he is free to do. But
a person's abilities depend on what he learns
from those who care for him as well as on
what others care to help him to do or allow
him to do.
Market vs. Command Economy
There are two polar opposite approaches toan economy's operation.
Command Economy
-is the top-down, centrally-planned economyof socialism.
Market Economy
-is the decentralized economy of the freemarket.
The most fundamental distinction between thetwo is the existence of prvate property in thefree market and the absence of privateproperty in thecommandeconomy.
The alleged virtue of the command economyis that it is planned in contrast to theunplanned market economy. The error in thisview is that the market economy is actuallyvery rationally planned by means of consumerdemand through the Price system.
Additionally, for four reasons the commandeconomy will be deficient.
1. an attempt to plan an entireeconomy by a central committee isbound to be inefficient just because thetask is so large.
There is no way that a committee of say, 300
planners can know the needs, conditions ofresourc eavailability, and localized knowledgespread throughout an economy.
2. The command economy ultimatelyrests on coercion as it means ofmotivation.
Socialists will typically claim that the resort tocoercion (the Berlin Wall, Russian gulags, etc.)
is not part of their system, but only anunfortunate bad choice in political leaders andthat socialism only attempts to control theeconomy, not people's individual libertiesBut, of course the main element in aneconomic systemis in fact people; thereforecontrolling an economy is first and foremostcontrol of peoplethe Berlin Wall was nopeculiar misfortune. Suffice it to say furthe
that human motivation is diminished whencoerced.
3. The command economy is acollectivized system.
All work for the benefit of their quotal share oftotal production. Individual incentives are
absent. As an example, with 100 workers inan economy each will receive 1/100 of totaproduction. If one worker shirks, his loss isonly 1/100 of the production he otherwisewould have generated. (Imagine theincentives when this system is broadened to anation of 200 million!) Each ends upattempting to live at the expense of othersand total production plummets.
4. the incentive of production is to
please the political authorities who havelife and death control over the workers.
In contrast to the market, where productionis predicated on consumer demand, theconsumer is the forgotten being in acommand economy.
3.2 The utility of free markets: Adam
Smith
*The second major defense of unregulated
markets rests on the utilitarian argumenthat unregulated markets and private
property will produce greater benefit than
any amount of regulation could.
- Thus, the free market, coupled with
private property ensures that the economy is
producing what consumers want, that prices
are the lowest levels possible, and tha
resources are efficiently used.
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Adam Smith Father of Modern Economics
and the originator of this utilitarian
movement.
When private individuals are left free
to seek their own interests in free
markets, they will inevitably be led to
further the public welfare by an
invisible hand.
Invisible hand = market competition
*In a competitive market, a multiplicity of
such private businesses must all compete
with each other for the same buyers.
- The competition produced by
multiplicity of self-interested private sellers,
then, serves to lower prices, conserve
resources and make producers respond to
consumer desires. (Motivated by self-
interest, private businesses are led to servesociety.)
A system of competitive markets will
allocate resources efficiently among the
various industries of a society.
When a certain commodity is low,consumers will bid the price of such
higher until it rises above the natural
price, thus producers of such commodity
will reap higher profits and induce other
to produce the same. Thus, shortage is
eliminated. (Reverse effect will happen if
there is surplus of commodity.)
Natural price price that just covers the
costs of producing the commodity including
the going rate of profit obtainable in other
markets.
*The fluctuating prices of commodities in a
system of competitive markets forces
producers to allocate or withdraw their
resources from their current industries.
Best policy of government when this
happens = do nothing.
Ludwig von Mises and Friedrich Hayek
Supplemented Smiths market theories.
They argued that free markets and
private ownership serve to allocate
resources efficiently, but it is impossible
for government and human to allocate
human resources with same efficiency.
*The market allocates resources efficiently
from day to day through the pricing
mechanism.
Criticisms of Adam Smith
Smiths argument rests on unrealistic
assumptions.
A. Smith argue that the impersona
forces of supply and demand wil
force prices down to their lowest
levels because sellers are so
numerous and each enterprise is so
small no one can control the prices.
It is true in Smiths days; however, today
many industries and markets arecompletely or partially monopolized and
small firms is no longer in the rule.
B. Smiths arguments assume that al
the resources used to produce a
product will be paid for by the
manufacturer will try to reduce these
costs in order to maximize his profits.
This was proved false when the
manufacturer of a product consumes
resources for which he or she does nothave to pay and on which he or she
therefore, does not try to economize.
Smith failed to account the externa
effects that business activities often have
on their surrounding environment.
C. Smiths analysis wrongly assumes
that every human being is motivated
only by a natural and self-interested
desire for profit. Human nature
follows the rule of economic
rationality: Give away as little as you
can in return for as much as you can
get.
This is clearly false because:
o Human shows a concern
for the good of others and
constrain their self-interest
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for the sake of the rights of
others.
o It is not necessarily rational
to follow such rule. In fact,
everyone can be better off
when it shows concern for
others.
o Human just behave likerational economic men
because of the influence of
free market.
*A major defect in society built around
competitive markets is that within such
societies this natural benevolent tendency
toward virtue is gradually replaced by self-
interested tendencies toward vice.
Oskar Lange
Answered the assumptions of Mises and
Hayek.
He stated the central planning board
could efficiently allocate goods in an
economy without engaging in impossibly
elaborate calculations. (all that is
necessary is to receive reports on sizes
on inventories and price.)
Keynesian Criticisms
*he most influential criticism of Adam
Smiths assumption came from John Maynard
Keynes.
*Smith assumed that without any help from
government, the automatic play of market
forces would ensure the full employment of
all economic resources. (Thus, all available
resources will be used and demand will
always expand to absorb the supply of
commodities made from them a.k.a Says
Law).
1. Total demand for goods and services
is the sum of the demand of three
sectors: households, businesses, and
government.
When aggregate demand is less than
the aggregate supply, result will be
contraction of supply. Businesses will
cut production and employment.
Household income falls together with
their willingness to save money
Economy will get back to its
equilibrium.
2. Government intervention in the
economy is necessary instrument fo
maximizing societys utility.
Ways how government can influencemans propensity to save.
I. Prevent excess savings through
interest rates and money supply.
II. Influence the amount of a money
households can hold by plying
with tax.
*The standard Keynesian analysis would
have made us believe that increase in
government spending and increaseunemployment should not occur together.
- Proven false during 1970s.
John Hicks
Proponent of post Keynesian school.
Suggested that in many industries today
prices and wages were no longer
determined by competitive markets but
by agreements and unions.
The utility of survival of the fittest
*Darwinists argued that economic
competition produces human progress
However the preservation or abundance of
one individual relies on his capacity to adapt
and to survive in its environment.
*Those individuals whose aggressive
business dealings enable them to succeed in
the competitive world of business are the
fittest and therefore the best.
- Government must not be allowed to
interfere and should not lend economic aid to
those who fall behind economic competition
for survival. if they survive, they will just
pass their inferior qualities and human race
will decline.
*Economic competition ensures that the best
business firms survive.
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The basic problem underlying the views
of the social Darwinist is the
fundamental normative assumption
that Survival of the Fittest means
Survival of the Best.
3.3 Marxist Criticisms
Karl Marx the hardest and most influential
critic of the inequities that private propertyinstitutions and free markets are accused
creating.
Eyewitness of wrenching and exploitative
effects of industrialization had on
laboring class of England and Europe.
Claimed that worker exploitation were
merely symptoms of the underlying
extremes of inequality that capitalism
necessarily produces.
Two sources of income offered by
Capitalism
I. Sale of ones own labor.
II. Ownership of the means of
production.
*Workers sell their labor to the
owners of means of production. The
owners in turn does not pay the
workers the full value of their labor.The residual stays with the owner and
accounted for as their profits.
Capitalism promotes injustice
and undermines communal
relationships.
Alienation
Marx held that human beings should be
enabled to realize their human nature
by freely developing their potential for
self-expression and by satisfying their
real human needs.
Capitalism alienated the lower ranking
working classes by neither allowing them
to develop their productive potential nor
satisfy their real human needs.
Four forms of alienated in workers
a) Capitalist societies give control of the
workers products to others.
The objects that the workers are taken
away by the capitalist employer and used
for purposes that are antagonistic
workers own interests.
b) Capitalism alienates the worker from
ones own activity.
Labor markets force people into earning
their living by accepting work that they
find dissatisfying, unfulfilling, and that is
controlled by someone elses choices.
c) Capitalists alienates people from
themselves by instilling in them false
views of what their real human needs
and desires are.
d) Capitalists societies alienates humanbeings from each other by separating
them into antagonistic and unequa
social classes that break community
and caring relationships.
Capitalism divides humanity into:
Bourgeois class of owners and employers
Proletariat laboring class.
The Real Purpose of Government
*Historically, the actual function tha
governments have is to protect the interest
of ruling economic class.
Two components of Society
I. Economic Substructure materials
used in production (Factors of
Production)
II. Social Superstructure
Relations of Production social controls used
in producing goods.
Two types of Relations of Production
a. Control based on ownership of factors
of production
b. Control based on authority to
command.
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Marx: The kinds of relations ofproduction a society adopts depends on
the kinds of forces of production that
society has.
The methods a society uses to
produce goods determine the way
that society organizes and
controls its workers.
Social Superstructure = Government
+ Its ideologies
Marx: Ruling class created by theeconomic substructure will inevitably
control government and ensure that it
uses its force to protect their privileged
position; and at the same time, they will
popularize those ideologies that justify
their position of privilege.
A societys government and its
ideologies are designed to protect
the interests of its ruling economic
classes.
These classes are created
by societys underlying
relations of production, and
these are determined by
the underlying forces of
production.
Economic or material forces
determine the course of history, as
they determine the functions of
government.
Immiseration of Workers
As long as production in modern
economies is not planned but is left to
depend on private ownership and
unrestrained free markets, the result
could only be a series of related disastersthat would all tend to harm the working
class.
Two Basic Features of Modern
Capitalism
1. In modern Capitalist System,
productive assets are privately controlled
by self-interested who seek to increase
their assets by competing in free markets
against other self-interested owners.
2. In modern Capitalist system
commodities are mass produced in
factories by highly organized group o
laborers who must work on the modern
factory assembly lines controlled by self-
seeking owners.
Three tendencies that collectively leave
the workers in a miserable state
A. Increasing concentration of industria
power in a relatively few hands.
Only few large firms will come
to control the bulk of societys
markets and assets.
(The rich will get
richer)
B. Capitalist societies will experience
repeated cycles of economic downturns
or crises.
Owners, as self-interested and
competitive as they were, will produce as
much as their firms can without
coordinating with other owners.
(Oversupply of goods which
floods the market and in turn will leadto recession.)
C. The position of the worker in capitalist
societies will gradually worsen.
This will result from the self
interested desire of capitalis
owners to increase their assets at
the expense of their workers. Self-
interest will also keep owners from
increasing their workers
compensation in proportion to theincrease in productivity that
mechanization makes possible.
Collective ownership of societys productive
assets and the use of central planning to
replace unregulated markets is the only
viable solution. (Karl Marx)
The Replies
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Free market have traditionally answeredcriticisms that free market generate
injustices by arguing that the criticisms
wrongly assume that justice means either
equality or distribution according to need.
i. There are too many difficulties in the
way of establishing acceptable
principles of justice.
Any attempt to replace free
markets with some distributive
principle will be an imposition
of someones subjective
preferences on other members
of society.
ii. Justice can be given a clear meaning
but one which supports free markets.
When markets are free and
functioning competitively, they
will pay each worker the value
of his contribution because
each persons wage will be
determined by what the
person adds to the output of
the economy.
iii. Although inequalities may be endemicto private ownership and free
markets, the benefits that private
ownership and free markets make aremore important.
iv. Free markets are based on the idea
that the preferences of those in
government should not determine the
relationships of the citizen.
The freedom that underlies
free markets provides the
opportunity to freely form
plural communities.
III.4 Conclusion: Mixed Economy
Mixed economy retains a market and
private property system but relies heavily
on government policies to remedy their
deficiencies.
Government transfers are used
to get rid of the worst aspects
money from wealthy in the
form of welfare.
The desirability of the policies of mixedeconomy also continues to be subject to
the same debates that swirl around the
concepts of free markets, private
property, and government intervention.