Essay on Business Ethics part 2
Essay on Business Ethics part 1
Question 3
What are the Virtues of a Capitalist Free Market System? What is the Marxist criticism of such a system as exemplified by the Capitalist system? Does it follow then that if Marxism is correct that Capitalism is inherently flawed? How does Capitalism provide a Moral defense of its system?
The Virtues of a Capitalist Free Market System idealize the capitalist economic model as a system which is focused on free markets and free wage labor. Capitalism is a unique phenomenon that is associated with relatively stable economic system. Capitalism stands for the system of ownership, which is interrelated with the system of banking, as well as distant relationship that exists between markets and governments. In free market capitalism, prices are set in markets for ownership, money, labor, etc. De George states that free market capitalism is a type of economic organization or “an economic system,” which reflects the relations between people, including those relations that are “mediated by money and commodities, by prices and wages, by supply and demand” (121). Three basic characteristics help to describe capitalism and its virtues. These characteristics include the accessible accumulation of industrial capital, private ownership of production means and the existence of a free market system, according to De George.
The Marxist criticism of such a system as exemplified by the Capitalist system is based on the analysis of relationships between classes of a capitalist society. Marxist philosophy provides evidence against Capitalism of exploitation and alienation. Karl Marx’s radical criticism of Capitalist society leads to the ideas of formation of the two phases of post-Capitalist society, which are Socialism and Communism. Actually, Marx assumes that capitalism is immutable and cannot ensure the natural order of human society. The moral criticism of Capitalist system by Marx is explained in De George’s book Business Ethics. De George compares wage slavery with real slavery. He states that many Marx’s ideas prove the fact that capitalism is immoral. De George argues that wage system cannot be regarded as a form of slavery; therefore, it cannot be immoral. De George not only criticizes the ideas of Marx, but also he defends Capitalism.
However, De George does not follow that if Marxism is correct, Capitalism is inherently flawed. Undoubtedly, Marx has contributed to the development of economics. In his Capital, Marx represents a model of capitalism, which proved that capitalism is inherently flawed, and provides benefits to capitalists, powerful businesses through exploitation of workers. Labor has become a commodity with certain price, but it lacks soul. Marx believes that Capitalist system is crisis-prone, and will be destroyed. In general, Marx’s key message was to overthrow Capitalism, replacing it by Communism.
Nevertheless, Capitalism provides a moral defense of its system, according to De George. As the capitalist free market system values freedom, “each individual within a system makes free choices in each transaction in which he enters”(De George 101). From a moral perspective, this freedom is of great importance for individuals. De George state that an argument that can be used in defense of capitalism and free enterprise stands on the “maturity, intelligence and responsibility of those operating within the economic system”(109). The key argument of De George is that Capitalist system can be valued as morally legitimate because of the nature of processes that are based on the initial equality of human opportunities and on the eventual inequality of outcomes. Although such practices as sex discrimination and racial discrimination may have negative impact on the equality of opportunities in Capitalist society, Capitalist system has a well-developed system of laws, which are aimed at preventing these practices. In other words, the structure of Capitalist system allows promoting equality of opportunities that is morally legitimate. Thus, De George’s argument that is based on equality and liberty is a strong argument to defend Capitalist system. Although Capitalist society generates inequalities in terms of the distribution of public goods, these inequalities are morally permissible. According to De George, taxation system can help to reduce the level of social inequality to morally legitimate limits. He writes, “The overall system can reduce the differential between the highest and the lowest paid, or it can equalize the two considerably more than it presently does through a different tax structure. Such injustices can be handled within the system” (De George 148). Nevertheless, in the U.S., there is an obvious disparity between the rich people and the poor people. The taxation system is not effective in addressing this issue.
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