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bus303 everything midterm

Terms

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Rules of the game
arguments for csr
Violates capitalist justice Monopolist can charge whatever price they want Inefficiency Because of high prices, there is less demand and less is produced Excess profits of producer are not used to produce goods that consumers want
morality of monopoly 1
Regulations Anti-trust laws Limited patent life Lowering of global trade barriers Pressure from world bodies, media etc
pressure on monopoly
Choosing to operate at a higher ethical level than the law requires Making civic and charitable contributions Providing extra benefits to employees beyond economic and legal requirements Using corporate resources to address a major social problem
types of social responsibility
Establishes negative rights Buyers and sellers are free to enter and exit the market All exchanges are completely voluntary No buyer or seller is dominant, so no one has to accept the terms or do without the good
morality of free market rights
Benefits should be made based on the value of contribution an individual makes to the society Hard work leads to success and should be rewarded Contributions should be measured in terms of productivity and the market But how do you place value on the needs of the disadvantaged? How do you measure what arts and health care and education are worth?
Capitalist Justice
A person is morally responsible for a wrong if The person caused or helped cause it, or failed to prevent it when he could or should have The person did so knowingly The person did so of his of her free will
Moral responsibility
Involved with serious issues, injuries or benefits Not established by law or legislature Should be preferred to other values including self-interest Based on impartial consideration Associated with special emotions and vocabulary Examples: Slavery, child abuse, murder etc
Moral standards
A right is a person's entitlement to something; one has a right to something when one is entitled to act a certain way or to have others act in a certain way towards oneself. If the entitlement derives from a legal system, it is a legal right. It is limited to its particular jurisdiction If the entitlement derives from standards independent of a legal system, it is called a moral right.
Rights
Concentration is aggravated by product differentiation and advertising. Market entry is difficult and so does not reduce excess profits There is oligopolistic coordination by signaling through press releases or other means. So, break large corporations into smaller units resulting in higher competition. This will lead to lower prices for consumers, more innovation, less explicit and tacit collusion
antitrust view 2
Negative rights are defined entirely in terms of the duties others have not to interfere with you. For example, free speech, freedom of religion, property rights Positive rights imply that others have a duty not only to refrain from interference, but also to provide you with what you need to pursue your interests . For example, right to food, right to health care, right to education etc Meanings can change over time. For example: the 'right to life'
Negative & Positive Rights
An economic system based primarily on private individuals making the main decisions about what they will produce
market economy
Few significant sellers Difficulty of entering the market Often formed by mergers of smaller firms Pharmaceuticals, aircraft, automobiles, soft drinks
conditions of oligopoly
DO NOTHING APPROACH! Power of oligopolies is not as large as it appears Competition between industries with substitutable products Other countervailing forces, like other corporate groups, unions, government In face of global competition, bigger is better!
oligopoly, monopoly and public policy approahces1
Limit utilitarianism to the evaluation of moral rules The correct moral rules are the ones following which would produce the greatest amount of utility if everyone follows them
The Utilitarian response to Rights and Justice issues- Rule Utilitarianism
I know what is morally right, so if you do not follow it, then you are morally wrong. My values and practices are superior to your values, they are not 'equally valid'. If you believe that the earth is flat or that disease is caused by bad karma, you are misinformed; you are not holding a valid alternative belief.
Relativism vs. Absolutism
Julie is traveling in France on summer vacation from college with her brother Mark. One night they decide that it would be interesting and fun if they tried making love. Julie was already taking birth-control pills, but Mark uses a condom, too, just to be safe. They both enjoy the sex but decide not to do it again. They keep the night as a special secret, which makes them feel closer to each other. What do you think about that — was it O.K. for them to make love?
Moral Question
Labour exploitation during Industrial Revolution Capitalist system has two classes: Owners of means of production (bourgeoisie) Owners of labour (workers/proletariat) Private property is the reason behind the unjust society The role of government historically has been to protect the interest of the ruling economic class (the owners of property)
critics of karl marx on free trade
Ethics governs all voluntary human activities, and so should govern business as well. Business is a cooperative activity whose success depends on adherence to at least minimum ethical standards Ethics is good business- some highly ethical companies are also very profitable In the long run, being ethical is good overall for everyone.
The case for business ethics
Minimalist Self-interested Social contract Stakeholder - Management Stakeholder - Stewardship
5 csr debate positions
Sanctity of individual Fairness Reciprocity Rights of self & others Justice Objective Impartial Universalistic
Kohlberg
Pre-Conventional Level Punishment and obedience orientation Instrumental and relative orientation Conventional Level Interpersonal concordance orientation Law and order orientation Postconventional Level Social Contract orientation Universal orientation
kohlbergs model
One Seller High barriers to entry Prices set above the equilibrium point Quantity supplied is below equilibrium point Can extract monopoly profit
conditions of monopoly
Everyone should be treated as a free person equal to everyone else. Universalizability Reversibility Similar to the golden-rule "Do unto others as you would have them do unto you" Categorical Imperative
Immanuel Kant (1724 - 1804)
a system of normative beliefts shared by members of some social group
ideology
Punishment and Obedience Orientation - At this stage, the physical consequences of an act wholly determine the goodness or badness of that act. The child's reasons for doing the right thing are to avoid punishment or defer to the superior physical power of authorities. There is little awareness that others have needs similar to one's own. Instrument and Relativity Orientation- At this stage, right actions become those that can serve as instruments for satisfying the child's own needs or the needs of those for whom the child cares.
Pre-Conventional Level
Study of moral standards in business as they apply to System issues: institutions and their environment. Corporate issues: organizations, and their structure and activities Individual issues: behaviour and decisions of one or a group of individuals We will be spending a lot of time in this course talking about different corporations, so lets take a closer look.....
What is Business Ethics?
Price fixing - monopoly and oligopoly Payment for resources pollution, public goods, welfare, etc. Rational self-interested economic man Some degree of social planning is desirable
critics of adam smith
Natural Right' to liberty and private property State of nature Each person owns his body and labor Government's role: preservation of natural rights by consent
john locke theory
The reasoning process by which human behaviors, institutions or policies are judged to be in accordance with, or in violation of moral standards. Moral reasoning has two essential components: an understanding of what reasonable moral standards require, evidence or information concerning whether a particular policy, person, institution, or behavior has the features of these moral standards. People often fail to make their moral standards explicit when they make a moral judgment, mainly because they assume them to be obvious
Moral Reasoning
Corporate executives are agents of stockholders, and must act in their best interests Involves spending of someone else
arguments against csr
Anti-competitive practices are business practices that prevent and/or reduce competition in a market For e.g., Dumping, price fixing, exclusive dealing, entry barriers etc. Under perfect competition, no buyer or seller has the power to significantly affect the prices at which goods are being exchanged.
what is anti competitive behaviour
Robert Nozick (1938 - 2002) Freedom from human constraint is necessarily good and that all constraints imposed by others are necessarily evil except when needed to impose greater human constraints. Negative right to be free from coercion
Libertarianism
Any group or individual who can affect or is affected by the achievement of the organization
stakeholder management
Rights are based on the individual, whereas utilitarianism is based on society as a whole. Rights limit the validity of preferring numbers and social benefits to the individual. However, although rights generally override utilitarian standards, they do not always do so. In times of war, for example, civil rights are commonly restricted for the public good.
Rights v Utilitarianism
Utilitarian standards - must be used when we do not have the resources to attain everyone's objectives, so we are forced to consider the net social benefits and social costs consequent on the actions (or policies or institutions) by which we can attain these objectives. Standards that specify how individuals must be treated - must be employed when our actions and policies will substantially affect the welfare and freedom of specifiable individuals. Moral reasoning of this type forces consideration of whether the behavior respects the basic rights of the individuals involved and whether the behavior is consistent with one's agreements and special duties.
Integrating Utility, Rights, Justice, and Caring1
These rights attach only to specific individuals, and the duties they give rise to attach only to specific individuals. In addition, they arise out of specific transactions between parties and depend upon a pre-existing public system of rules. Without the institution of contracts, modern businesses could not exist. Ethical rules governing contracts: 1. Both parties to a contract must have full knowledge of the nature of the agreement. 2. Neither party must intentionally misrepresent the facts. 3. Neither party must be forced to enter the contract. 4. The contract must not bind the parties to an immoral act.
Special cases: Contractual Rights
Ethics is the discipline that examines one's moral standards, or the moral standards of a society..... ......which leads to the next question...what is morality and what are moral standards? Morality is defined as the standards that tell us what is right and wrong or what is good or evil. Moral standards are absorbed from family, friends, church, society etc.
Ethics
dens should be distributed among the members of a group. These sorts of standards must be employed when evaluating actions whose distributive effects differ in important ways. Standards of caring - indicate the kind of care that is owed to those with whom we have special concrete relationships. Standards of caring are essential when moral questions arise that involve persons embedded in a web of relationships, particularly persons with whom one has close relationships, especially those of dependency. Integrating Utility, Rights, Justice, and Caring2
Standards of justice - indicate how benefits and bur
Mergers Patents Government support High start up costs Long term contracts
causes of oligopoly
Free markets maximize utility for all Shift resources to where demand is high and away from where demand is low Minimize costs by minimizing resources used, encourage investment in new technology Distribute commodities efficiently among consumers
morality of free market utilitarian
Equality for all The driving force behind the elimination of slavery, discrimination and property requirements. But should the lazy man get the same compensation as the industrious man? Political equality (Equal participation and treatment in political system) Economical equality ( Equality of income, wealth and opportunity)
Egalitarian Justice
Started from Aristotle A moral virtue is an acquired disposition that is a valuable part of a morally good person, exhibited in the person's habitual behavior. Virtue theory says that the aim of the moral life is to develop the dispositions that we call virtues, and to exercise them as well. The key action guiding implication of virtue theory, then, can be summed up in the claim that: "An action is morally right if, in carrying out the action, the agent exercises, exhibits, or develops a morally virtuous character, ..."
Virtue Ethics1
Measurements should be quantifiable, but that can be relaxed if it is impossible Instrumental and intrinsic goods Needs and wants Price system Expert opinion
The Utilitarian Response
An ethic of virtue, then, is not a fifth kind of moral principle that should take its place alongside the principles of utilitarianism, rights, justice, and caring. Instead, an ethics of virtue fills out and adds to utilitarianism, rights, justice, and caring by looking not at the actions people are required to perform, but at the character they are required to have.
Virtue Ethics2
No justice for people outside the market, so no justice based on needs No establishment of positive rights No care for others No bar on accumulation of excessive wealth Does maximization of individual utility lead to utilization of society
criticism of free market morality
The process by which economic and social systems of countries are connected together by the free movement of goods, services, capital and knowledge between countries, Characterized by open borders, free trade and international institutions
globlization
Multiplicity of small participants Free and immediate entry or exit for all Perfect knowledge of prices, quantities, and quality for all No distinction between products
conditions of free market 1
An economic system based on a government authority making the economic decision as to what is produced, who will produce it, and who will get it
command economy
Complete costs and benefits of products reflected in price Utility maximization: Everyone tries to get as much as possible for as little as possible No external parties, such as government restrict price, quantity, or quality
conditions of free market 2
In capitalist societies, the products that the worker produces by his or her labor are taken away by the capitalist employer and used for purposes that are antagonistic to the workerIn capitalist societies, the products that the worker produces by his or her labor are taken away by the capitalist employer and used for purposes that are antagonistic to the worker's own interests. Capitalism forces people into work that they find dissatisfying, unfulfilling, and that is controlled by someone else. Capitalism alienates people from themselves by instilling in them false views of what their real human needs and desires are. Capitalist societies alienate human beings from each other by separating them into antagonistic and unequal social classes that break down community
major injustices by karl marx
Psychologist Lawrence Kohlberg, a pioneer in the field, concluded that there are 6 identifiable stages in a person's ability to deal with moral issues. He grouped these stages into 3 levels, each containing two stages The second stage at a given level is a more advanced and organized form of the first stage
kohlbergs model introduction
The idea that no ethical values are absolutely true and universal; they can not be applied to the companies and peoples of all societies. When in Rome, do as the Romans Do we have the right to impose our moral values on other people?
Ethical relativism
Globalization of Adam Smith's concept Benefits of global trade and specialization Free trade is beneficial if both parties have either absolute or comparative advantage
ricardo
The right action provides the greatest utility for all people affected by the action, not just the person making the decision. The right action provides more net benefits than all its alternatives In making the decision, all current and future costs and benefits must be taken into account.
Utilitarianism Conditions
Patents Alcoa (Patents till 1909) Pharmaceuticals Mergers Standard Oil Government support BC Hydro, Telus, Teresan Gas
causes of monopoly
The corporation is not only an economic person, but also a moral person If a firm has rights, it also has responsibilities. With more power comes more responsibility A moral corporation is responsible for all its contracts, both explicit and implicit Legal solutions are necessary, but not sufficient. Business is a force for change, while the law reacts to change. For example, passing laws about pollution and product safety
social contract csr
An action 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." The right action is the one that brings the greatest net benefits compared to the net benefits of all its alternatives The greatest good for the greatest number'
Utilitarianism
At the post conventional stages, the person no longer simply accepts the values and norms of the groups to which he or she belongs. Instead, the person now tries to see situations from a point of view that impartially takes everyone's interests into account. The person questions the laws and values that society has adopted and redefines them in terms of self-chosen moral principles that can be justified in rational terms. Most adults fall in stages 3 and 4
postconventional level 2
Do individuals really have "natural rights"? Why should negative rights take precedence over positive rights? Rights and justice: Free markets create inequalities, and without government intervention, inequalities will increase Individual first and community later?
critics of locke
Social Contract Orientation - At this first post-conventional stage, the person becomes aware that people hold a variety of conflicting personal views and opinions and emphasizes fair ways of reaching consensus by agreement, contract, and due process. Universal Ethical Principles Orientation - At this final stage, right action comes to be defined in terms of moral principles chosen because of their logical comprehensiveness, universality, and consistency. Ethical principles are not concrete, like the Ten Commandments, but abstract general principles
Postconventional Level 1
Justice is based on the free choices individuals make. Any other distribution is unjust. Freedom from coercion takes priority over all other coercions But then, is freedom superior to all other values? For example, should I be forced to share my surplus food with a starving neighbour
Libertarian Justice
Can lead to favoritism and partiality Can lead to 'burnout'
Problems with Ethics of Care
the right to life, liberty and property
lockean rights
A middle ground between the other two Do not wish to lose the economies of scale offered by large corporations, but also wish to ensure that large firms do not harm the consumers Setting up regulatory agencies and legislation to control the activities of large corporations In extreme cases, government takes operation of firms - nationalization
regulation view
Web of relationships Care Harmony Responsibility for self & others Non-violence Feeling Inductive Contextual
Gilligan
Only two countries making only two products Immobility of resources - but MNCs can easily move resources Constant employment Constant costs International bodies (World Bank, WTO)
criticism of ricardo
How do we measure individual utility? We can not get under each other's skin! How do we measure the value of things like life and health? How do we measure things that can not be easily predicted? (for example, research) What are costs and benefits exactly? Can all goods be traded for one another? (freedom, love, beauty etc)
Problems with Utilitarianism-Measurements
The highest form of economic freedom provides an absolute right of property ownership, fully realized freedoms of movement for labor, capital, and goods, and an absolute absence of coercion or constraint of economic liberty beyond the extent necessary for citizens to protect and maintain liberty itself. In other words, individuals are free to work, produce, consume, and invest in any way they please, and that freedom is both protected by the state and unconstrained by the state
economic freedom
Standards of justice - indicate how benefits and burdens should be distributed among the members of a group. These sorts of standards must be employed when evaluating actions whose distributive effects differ in important ways. Standards of caring - indicate the kind of care that is owed to those with whom we have special concrete relationships. Standards of caring are essential when moral questions arise that involve persons embedded in a web of relationships, particularly persons with whom one has close relationships, especially those of dependency
Integrating Utility, Rights, Justice, and Caring2
Similar to minimalist CSR, but takes it one step further CSR when it furthers the organization's long term goals CSR is one of the tools in a managers kit For example, by giving away money to open a public library, a corporation gets free publicity, a good public image, tax benefits and helps improve literacy among its potential employees
self interested csr
Interpersonal Concordance Orientation - Good behavior at this early conventional stage is living to the expectations of those for whom one feels loyalty, affection, and trust, such as family and friends. Right action is conformity to what is generally expected in one\\
Conventional Level
To evaluate the adequacy of moral reasoning, ethicists employ three main criteria: Moral reasoning must be logical. Factual evidence must be accurate, relevant, and complete. Moral standards must be consistent
Evaluating moral reasoning
Free market to trade/bargain
adam smith
Idealistic, serve those who might not otherwise be served Hold as trust, 'servant leadership', Move firm beyond laws and self interest Devote resources to help tertiary stakeholders as well
stakeholder stewardship
Work should be distributed according to people's abilities, and benefits should be distributed according to their needs. Match individuals to occupations they are suited for. But, why should I work harder then? And who decides what my occupation is going to be?
Socialist Justice
Firing an ethnic employee Breaking a business contract Terminal patient's suicide attempt
Examples of categorical imperative
Globalization is the worldwide process by which the economic and social systems of the world have become connected, so that goods, services, capital, knowledge and people can move across national borders at an increasing rate. MNCs, with operations in a number of countries, are driving this trend. Benefits- Jobs, skills, technologies, low prices, rising standards of living Problems-Rising inequality, race to the bottom, job losses,
Ethics and the challenge of globalization
Traditional stockholder model or classical, advocated by Milton Freidman "....there is only one social responsibility of business-to use its resources and engage in activities designed to increase profits so long as it stays within the rules of the game that is, engages in free and open competition without deception or fraud" (1970). Individualism, competition and primacy of the law Basically, make money without breaking the law Government will over regulate business if left to itself But, should the corporation be responsible only to its stockholders?
minimalist
A corporation is a legal entity which has a legal personality distinct from those of its members. The defining legal rights and obligations of a corporation consist of the capacities (i) to sue and to be sued, (ii) to have assets, (iii) to employ agents, (iv) to engage in contracts, and (v) to make by laws governing its internal affairs
What exactly is a corporation?
Does justice mean equality/ equal distribution? The benefits of private ownership and free markets outweigh the costs of inequality Government should not interfere in the business relationships of people
criticism of marx
"In the long run, we are all dead" Free market is not necessarily efficient Government should act to ensure full employment in the economy Cutting interest rates Investing in infrastructure Tax policy
keynesian criticism
If an industry has few competitors, there is likely to be some control over prices. Concentration results in recognized interdependence among companies Concentration is due mostly to mergers. A high degree of concentration is unnecessary.
antitrust view 1
John Rawls (1921 - 2002) The principle of equal liberty for all Each person has an equal right to the most extensive basic liberties compatible with similar liberties for all Social and economic inequalities are arranged so that: They are to the greatest benefit of the disadvantaged Offices and positions are open to all under conditions of equality of opportunity Uses Kantian principles of reversibility and universalizability
Justice as Fairness
Profit Motive Firms produce only what society wants, and this promotes the highest level of efficiency. Increasing profits is always socially beneficial However, is this always so? (pollution, price fixing, bribery etc) By producing what the buying public wants, all wants are being met. What about the poor and disadvantaged? Loyal agent Protecting the best interests of the company and its owners Minimalist Just follow the law
Arguments against Business Ethics
Consistency refers not only to the fact that one
The consistency argument
Only one seller, with 100% market share Barriers to entry (Eg, patents, high set up costs) Classic Examples: Standard Oil, AT&T Modern Examples: BC Hydro, Terasen Gas, Drug patents Microsoft?
what is monopoly
The mere absence of prohibitions against pursuing some interest or activity. Second, we sometimes use the term right to indicate that a person is authorized or empowered to do something either to secure the interests of others or to secure one's interests. Third, the term right is sometimes used to indicate the existence of prohibitions or requirements on others that enable the individual to pursue certain interests or activities
Rights can mean
Retail Price Maintenance Agreements Manufacturer sells to retailer on condition that they agree to a certain price, price floor or/and price ceiling - Retail industry Price Discrimination Legal as long as based on differences in volume bought or production cost differences - Student fares
problems with oligopoly 2
Rights - Do people have some inviolable rights? Justice - Should people be treated fairly all the time ? How do we distribute benefits and burdens in society?
Problems with Utilitarianism
An ethic that emphasizes caring for the well being of those near us. Feminist ethicists such as Carol Gilligan Other theories are too male oriented and impartial We exist in a web of relation with others We have to care for those related to us in some way Communities and communal relationships have a fundamental value that should be preserved and maintained
Ethics of Care
Price Fixing International airline tickets Manipulation of Supply OPEC Exclusive Dealing Arrangements Gas stations that deal with only one petroleum supplier Tying Arrangements Microsoft ties together Windows, Internet Explorer, Office, Media Player
problems with olligpoly1
1. Obedience and punishment orientation (How can I avoid punishment?) 2. Self-interest orientation (What's in it for me?) 3. Interpersonal accord and conformity (The good boy/good girl attitude) 4. Authority and social-order maintaining orientation (Law and order morality) 5. Social contract orientation (Consensus and due process) 6. Universal ethical principles (Just laws, universal justice)
Kohlberg's model in short.....
Emphasizes justice to the exclusion of other values No evidence to support that higher levels are morally better than lower levels Male oriented (Gilligan)
Critiquing Kohlberg's Model
Is slavery wrong? Is discrimination wrong? Is freedom of religion universal? The case of Nazi Germany
Is relativism really valid?

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