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2. The Ethics of the Free Enterprise System3
Section 3
The Ethics of the Free Enterprise System
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3. Ethics and Free Enterprise
Ethics consists of the principles of conduct, such as right and wrong, morality and immorality, and good and bad.
There are certain characteristics that a free enterprise requires to be an ethical system:
People can choose
A variety of products
Rewards depend on performance
Numerous Freedoms
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4. Ethics and Free Enterprise (cont.)
An ethical economic system rewards producers for responding to the preferences of the buying public.
Sellers that do not respond to public preferences end up taking losses and going out of business.
Proponents of free enterprise argue that no economic system can be ethical if it limits people’s freedom.
Critics of free enterprise argue that they system does not meet everyones basic needs
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5. Economic Principles in Key Documents
The Bill of Rights notes that “private property [shall not] be taken for public use, without just compensation.”
The Declaration of Independence lists complaints against the king of Great Britain, George III.
One complaint is that the king prevented the 13 colonies from “trad[ing] with all parts of the world.”
Article 1, Section 8, of the U.S. Constitution states that “no tax or duty shall be laid on articles exported from any State.”
To preserve competition, it was important to allow the free trade of goods across state lines.
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6. Economic Rights and Responsibilities in a Free Enterprise Economy
People in a free enterprise economy usually share three sets of rights and responsibilities:
Open disclosure. The right to sell an item comes with the responsibility to disclose any relevant facts about the item in question.
Obeying the law. One has the right to use private property as one wishes, within the limits of the law.
Being truthful. The responsibility attached to the right to compete is that one must compete in a truthful, legitimate manner.
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7. Questions?
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