reviewer in csr

7/29/2019 Reviewer in CSR

1/26

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.


2/26

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.


3/26


4/26

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


5/26

*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


6/26

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.


7/26

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.


8/26

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.


9/26

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


10/26

*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


11/26

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.


12/26

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


13/26

(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


14/26

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.


15/26

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.


16/26

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


17/26

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.


18/26

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


19/26

- 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


20/26

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


21/26

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.


22/26

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


23/26

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.


24/26

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.


25/26

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


26/26

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.

reviewer in csr

Documents