Download Consumer Sovereignty

Canadian Business and Society:
Ethics & Responsibilities
Chapter
Two
How the Business System
Works
Copyright © 2008 McGraw-Hill Ryerson Ltd.
1
Chapter Outline
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The Right of Private Property
Individualism and Economic Freedom
Equality of Opportunity
Competition and Profits
The Work Ethic
Consumer Sovereignty
The Role of Government
The Fundamentals and Canadian Capitalism
Various Forms of Capitalism
The Right of Private Property
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The legal right to own and use economic
goods—for example, land and buildings
Ethical implications:
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Uneven distribution of wealth
Infringement of copyright rights
Membership rights (e.g., labour unions) are
sometimes preferred over individual rights
Individualism and
Economic Freedom
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Individualism: The view that the individual,
and not society or a collective, is the
paramount decision maker in society;
assumes that the individual is inherently
decent and rational.
Economic freedoms: Exist when the business
system operates with few restrictions on its
activities.
Equality of Opportunity
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The assumption that all individuals or groups
have an even chance at responding to some
condition in society.
Ethical implications:
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Difficult to achieve in capitalistic system
Wealth created not distributed equally
Inequities such as layoffs, drops in living
standards, excessively high executive salaries
Competition
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The condition in a market system in which
many rival sellers seek to provide goods and
services to many buyers.
Ethical implications:
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Oligopolies (few sellers in industry) or even
monopolies (one seller) can be created
More difficult for some firms to enter certain
industries
Firms might engage in anti-competitive activity
Profits
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The excess of revenues over expenses;
closely associated with competition.
Ethical implications:
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Profits sometimes viewed with disdain or as
immoral
Taxation of excessive profits
The Work Ethic
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A code of values, or a body of moral
principles, claiming that work is desirable, a
natural activity, and good in and of itself.
The Work Ethic
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Ethical implications:
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Government programs and society’s expectations
have influenced individuals’ attitudes toward work
Individuals now expect more from government
and business enterprises in terms of working
conditions, benefits, and salaries
Consumer Sovereignty
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The assumption existing in an economy that
consumers have and exercise power over
producers through the decisions they make in
purchasing the goods and services provided
by corporations.
Consumer Sovereignty
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Ethical implications:
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Consumers not always aware of alternative
products available
Consumers’ preferences are shaped by
advertising
Producers have power to ignore consumer wishes
The Role of Government
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Laissez-faire approach (i.e., “leave us alone”)
suggests minimal involvement of government
other than national security, internal law and
order, and a system of currency and
measures.
The Role of Government
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Ethical implications:
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Government now an influential stakeholder
(e.g., subsidies, taxation, tariffs, regulations,
legislation, loans, grants, ownership)
Government can restrict capital movement,
impose product standards, prevent businesses
from shutting down plants
The Fundamentals and
Canadian Capitalism
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An economic system that allows for private
ownership of the means of production (land,
labour, and capital) and assumes that
economic decision making is in the hands of
individuals or enterprises that make decisions
expecting to earn a profit.
Several pros and cons exist regarding
capitalism.
Various Forms of Capitalism
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Consumer capitalism
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Producer capitalism
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France, Japan, Mexico
Family capitalism
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United States, Britain, Canada, Australia
Taiwan, Malaysia, Thailand, Indonesia
Frontier capitalism
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Russia, China
Group Exercise
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In a group – identify one organisation you all know well
(an organization that you all belong to – like a university or that you use – like a beer company, an airline) –
discuss the ethical issues that the company may be
facing. Questions include:
What ethical issues is it facing now?
How do these issues affect its reputation
What do you think would make the organization better –
what would you change?