Canadian Business and Society: Ethics, Responsibilities & Sustainability Chapter 2 Ethics & Capitalism Part 1

So what is it? $

Capitalism is the social system which now exists in all countries Under this system, the means for producing and distributing goods are owned by a small minority of people. We refer to this group of people as the capitalist class. The majority of people must sell their ability to work in return for a wage or salary (who we refer to as the working class.)

Capitalism it’s system based on the private ownership of goods and services. Capitalist economies, also called “free market” Economies Empowers individuals and private businesses to decide most economic matters. This includes what things to make and sell, how much they cost, how to use resources and where to live and work.

“Private enterprise” has been credited with unleashing human freedom and creating extraordinary wealth through individual initiative. BUT…………………. Capitalism has also been credited with exploiting and oppressing humanity, spreading inequality, starting wars, and propelling the wholesale destruction of the global environment.

A Market System The network of buyers, sellers and other players that come together to trade in a given product or service. Market players – producers, buyers and consumers who drive economic activity in the market Suppliers of supporting goods and services such as finance, equipment and business consulting Entities that influence the business environment such as regulatory agencies, infrastructure providers and business associations

The Scottish economist, Adam Smith, developed an influential theory of capitalism in his most famous book, The Wealth of Nations

Adam Smith………… On the Positive Side Capitalists create wealth by investing their capital (money) to make more money. Benefits society by creating jobs Smith marveled at what he described as “the invisible hand” of the free market. He noted that the price of goods and services driven by “supply and demand.” When there is a limited supply of something but a great demand price goes up. If little demand prices go down. Smith believed that, in general, the free market did a better job of running an economy than governments.

An Opposite View

Marx believed that capitalists exploited their workers, becoming rich off their labor. He believed that the capitalist system was inhuman and pitted the interests of the owning class (the bourgeoisie) against the interests of the working class (the proletariat). Marx thought that the workers should join together in a “class struggle” to overthrow the capitalist class in a communist revolution.

He believed that a workers’ government should be formed to allow everyone to “work according to his ability and receive according to his needs.” . There are still arguments about the appropriate role for government in a capitalist society. Many people believe that the market forces of capitalism must be kept in check by democratic governments.

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