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“Do well by doing good“
Katerina Jovanovska,
20.04.2014, Ljubljana, Slovenia
Capitalism is political, social, and economic system in which
property, including capital assets, is owned and controlled for
the most part by private persons. It functions only through
inequality.
(Source: The Macmillan Dictionary of Modern Economics)
Ethical foundations of capitalism
 Monetary and social welfare
 Fostering innovation (extraordinary dynamics, huge
gains in productivity, electricity)
 Creating wealth, prosperity
 Private property
 Free exchange
 Civilizing progress (education, freedom)
 Product safety, environmental protection
 Protecting rights of labor
Theories
• Adam Smith, “The wealth of
Nations”, 1776
Invisible hand of market
• Karl Marx, “Das Kapital”,
1876
Surplus value
• Max Weber, “The Protestant
Ethic And The Spirit Of
Capitalism”, 1904
Development of a "capitalist
spirit";
• Milton Friedman, 1970
Only one social responsibility
of businees- to increase its
profits”
Models of market capitalism



LME- coordinate economic activity through
markets and corporate hierarchies and
Models of market
compete successfully on the basis of low
capitalism
costs and major product and technological
innovations;
CME- coordinate economic activity more
through non-market mechanisms, such as
Coordinated market
informal networks or corporatist bargaining,
Liberal market
and compete on the basis of high quality
economies , CME (
economy
,
LME
(in
products and innovations in production
in Germany,
US)
processes;
Sweden)
HM-countries that fall somewhere in between
these poles and represent hybrids, can also
perform well.
(Source: “The Varieties Of Capitalism And
Hybrid Success: Denmark In The Global
Economy”, John L. Campbell and Ove K.
Pedersen, 2005)
Hybrid models, HM
(in Denmark)
The field of business ethics examines moral controversies relating to the
social responsibilities of capitalist business practices, the moral status of
corporate entities, deceptive advertising, insider trading, basic employee
rights, job discrimination, affirmative action, drug testing, and whistle
blowing.
(Source: IER, Internet Encyclopedia of Philosophy)
Ethical blindness
Temporary inability of a decision maker to see
the ethical dimension of a decision at stake.
(Source: G.Palazzo, F. Krings, Journal of Business Ethics, 2011).
Strengths versus Weaknesses of
Capitalism
 Strengths
• Extraordinary human achievement of the past two centuries
generated by capitalism.
• Life expectancy prolonged
• Poverty reduced
• Innovation expanse
• Needs of people with nothing to offer the market cannot be met by
capitalism
• Enemy of racial or ethnic discrimination. Prejudice is costly
 Weaknesses
• The short-term, purely self-interested thinking
• Dangerous climate changes
• Unequal property distribution, super rich and the very poor.
Strgengths versus Weaknesses of Capitalism
 Crises in capitalist markets and the
insecurity, unemployment, and
poverty
 Oprah Winfrey, Bill Gates
significant support fort various
community and social initiatives
Ethical Capitalism
•
•
Two essential ingredients:
A focus on creating long-term
economic and social value
A commitment by business to act as
stewards of the full spectrum of its
constituencies
Results: more customers, minimizing
operating costs through energy
efficiency, improvement employee
retention rates, long-term success.
(Source: http://www.huffingtonpost.com/
“Ethical Capitalism? It's Worth a Try”,
Stanley M. Bergman , 25.01.2014)
Customers
Society
Investors
Employees
Suppliers
Case studies “Do well by doing good“
 Henry Schein Cares global corporate
social responsibility program
 4.5 million children receive free oral
health care
 Market value $10 billion
(Source:http://www.newsday.com/, Stanley M.
Bergman, March 2, 2014)
•
•
•
Promote an environmental ethic of
sustainability
Committed to high quality standards and
never use artificial colors, flavors,
fragrances, preservatives. Additionally,
they contain no animal by-products and
are not tested on Animals.
Tom’s operates successfully in a highly
competitive market despite higher costs
from its use of natural ingredients and its
personnel policie
(Source: “Green Companies: Tom’s Of Maine”,
Edmund R. Gray, Kimberly S. Petropoulos)