bus 101-exam 3
Terms
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- capitalism
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Free market economy
- Assembly line: (industrial revolution)
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Increase product, increase competition
- Adam Smith-wealth of nations
- invisible hand and trickle down
- invisible hand
- competition self corrects (regulates)the market
- trickle down
- pursuit of financial gain benefits society
- theoretical tennt of capitalism
- people are good. if individuals maximize their personal wealth, they will share and society will benefit,. Individual welfare/wealth=societal wealth/welfare
- problems with capitalism
- uneven distribution of wealth, icnrease profit by decreasing expenses, pay workers less, greed, people are not inherentl good, industrialization=sweatshops=government regulation
- industrialization
- sweat shops, government regulation... government intervens on behalf of stakeholders, planned economy
- mixed economy
- system that incorporates components of pure capitalism and a planned economy
- John Mackey"conscious capitalism
- today worl is complex system of interdependencies. capitalism(theory of firm) is outdated, entrepreneurs:purpose is not profit, profit=by product of interdependence of stakeholders, non-profits(good altruistic) v. corporations (max profits=selfish)
- political philosophy
- virtues of a free market economic system without government intervention, government hinders invisible hand
- social responsbility does not belong in business
- social conscience=pure capitalisnm
- socialism
- redistribution of wealth by government
- political rather then market mechanisms to determine allocation of scarce resources
- people have respnsibilities not businesses
- business social responsibility helpes to strengthen the already too prevelent view that the pursuit of profits is wicked and immoral and must be controlled by external forces
- k
- CEO=agent of owner
- social responsibilit is not in the best interest of the owner,corporate philanthropy=tax to shareholders, only responsibility is to maximize profit for owner(all other stakeholders are secondary_,owners deserve profit becaue they put their own money at risk
- cloak of social responsibility
- philanthropy that benefits a companys profit in the long run. goodwill is own self-interest, deceit/fraug
- political principle underlying market mechanism:unanimity
- all cooperation is voultary,no social responsibilities
- political prinicple underlying political mechanism:conformity
- individual must serve general social interest, if overruled, must conform, social responsibility=subversive document
- freeman
- stakeholder theory of firm
- managerial capitalism
- act in interest of stockholders
- attack on managerial capitalism
- legal argument AND economic argument
- legal argument
-
law has evolved to effectively constrain the pursuit of stockholder interests at the expense of other claimants of the firm"
-caveat venditor: consumers
-NLRA,CRA:employees
-Clean air and water acts: community - economic argument
- invisible hand cannot work. real markets involve challenges: monopoly power, externalities, free riders, moral hazads
- stakeholder theory of the firm premise
- implementation of stakeholder management in the long run mitigates the need for an increased role of government intervention and regulation
- role of management
- ceo must mangage the relationships between different stakeholders: balance multiple clains of conflicting stakeholders, there will be times when one stakeholder benefits at the expense of another
- reason for paying returns to owners is not that they own the firmm but that their support is necessary for the tfirms survival.
- freeman
- the functions of the law:hoebel
- define relationships among society(accepted behavior), allocation of authority(restrain power), disposition of trouble cases(Set standards/protocol), maintain adaptability/oreder(redefine relationsips as conditions change)
- law derives its working principle in culture
- law sets ecpectations;individual to individual, group to group
- the ideal of legality:selznick
- legality(rule of law): necessary to have an organized collective society, retraint of offical power by rational principles of civic order, legality:how policies are made and applie, not content of rules, legality imposes envirnoment of constraint, arbitrary elements should be minimized in legal norms to maintain fair decision making
- law enforcement
- judically and administrively
- voluntary compliance
- laws depend on citizens complying
- law sets the floor to behavior,not the ceiling
- legal doesnt equal right, sets a social standard
- the morality that makes laws possible:fuller
- society needs laws that are consistant and understandable, creating/maintaing a system of law may fail in the following ways: 1. failure to achieve rules at all, failure to publicize rules, use of retroactive laws,failure to make rules understanable, contradictory rules,rules that require conduct beyond ones control, changing rules too frequently, failure to administer rules as announces
- laws
- standards set by the government and society in the form of either legislation or custom
- judicuary(court systems)
- branch of government charged with settleing disputes among parties through the application laws: Trial courts, ppellate courts, us supreme courts