...Journal of Business Ethics (2007) 74:303–314 DOI 10.1007/s10551-007-9517-y Ó Springer 2007 Stakeholder Capitalism R. Edward Freeman Kirsten Martin Bidhan Parmar ABSTRACT. In this article, we will outline the principles of stakeholder capitalism and describe how this view rejects problematic assumptions in the current narratives of capitalism. Traditional narratives of capitalism rely upon the assumptions of competition, limited resources, and a winner-take-all mentality as fundamental to business and economic activity. These approaches leave little room for ethical analysis, have a simplistic view of human beings, and focus on value-capture rather than valuecreation. We argue these assumptions about capitalism are inadequate and leave four problems in their wake. We wish to reframe the narrative of capitalism around the reinforcing concepts of stakeholders coupled with value creation and trade. If we think about how a society can sustain a system of voluntary value creation and trade, then capitalism can once more become a useful concept. KEY WORDS: capitalism, stakeholder, ethics, economics, free market Introduction1 We live in the age of markets. While markets have been around for thousands of years, we are just beginning to understand their power for organizing society and creating value. In the last 200 years markets have unleashed a tremendous amount of innovation and progress in the West. The industrial revolution, the rise of consumerism, and the dawn...
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...Milton Friedman Jordan Locke Economics 10 April, 2013 Jordan C. Locke 10 April, 2013 Period: 2 Ms. House Milton Friedman Milton Friedman once said, "If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand”. Due to Friedman's many accomplishments and published works in the Economics field, I felt that he would be a great economist to write about. Milton Friedman was born in 1912, to two Jewish immigrant parents that lived in New York City. He earned his Bachelor's degree at Rutgers University at the age of twenty. He then went to the University of Chicago in 1933 to earn his Masters. In 1946, he earned his Doctorate at the Columbia University. He received the John Bates Clark Medal, honoring economists that had achieved the most outstanding levels of achievement by the age of Forty. He received the Nobel Peace Prize for his achievements in the field of consumption analysis, monetary history and theory, and for his demonstration of the complexity of stabilization policy. He served as an adviser for President Richard Nixon, and he was the president of the American Economic Association in 1967. He retired from the University of Chicago in 1977, and became the senior researcher at the Hoover Institute at Stanford University. He was the premier spokesman for the monetarist school of economics and a pioneer in promoting the value of free market economics, when the position was not popular. Milton Friedman was a...
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...Student name: Victoria Pursley Name of author and title of reading: The Relation Between Economic Freedom and Political Freedom Please note: journal entries should be recorded on the supplied form as a Word document and submitted to Turnitin no later than the start time for the corresponding class session. You must answer ALL questions to receive full credit. You may include references to direct quotations, but all answers should be in your own words. In order to help you with class discussion, I would suggest printing out a copy of the journal and bringing it to class. You may also use this printed copy in class for recording additional observations and analysis. 1. Author Background/Context: Who (briefly) is the author & in what historical...
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...Thesis Capitalism has been the subject of ethical criticism since it was first introduced into society. I defend the morality of capitalism because it gives people incentive to work, establishes a web of trust between them, satisfies their material well-being, and generates a wide spectrum of prosperity. Exposition As citizens of the United States, we are members of the leading capitalist economy in the world. Our production and distribution is mostly done privately and we operate in a “profit” or “market” system. The capitalist system has been a target for criticism throughout the last three hundred years and is being discussed now more than ever due to the recent recession and financial crisis (Shaw and Barry n.d., 1). Its effects, structure, varieties, and possibilities provide for a large field of study and writers from several different disciplines have provided their input to the debate. Most fundamental is the question of whether our capitalist system is a morally justifiable one. This question can’t be answered by reviewing the efficiency and productivity capitalism provides, but instead requires a thorough analysis of ethics. A capitalist society is characterized by the private ownership of property and a free market that grants citizens the right to use their resources for their own benefit. Private property is the ownership of productive resources like companies, stocks, and bonds and should not be confused with personal property. Personal property consists...
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...primacy of the nation-state by transnational corporations and organizations, and eroding local cultures and traditions through a global culture. Contemporary theorists from a wide range of political and theoretical positions are converging on the position that globalization is a distinguishing trend of the present moment, but there are hot debates concerning its nature, effects, and future. Moreover, advocates of a post-modern break in history argue that developments in transnational capitalism are producing a new global historical configuration of post- Fordism, or postmodernism as an emergent cultural logic of capitalism (Harvey 1989; Soja 1989; Jameson 1991; and Gottdiener 1995). Others define the emergent global economy and culture as a "network society" grounded in new communications and information technology (Castells 1996, 1997, and 1998). For its defenders, globalization marks the triumph of capitalism and its market economy (see apologists such as Fukuyama 1992 and Friedman 1999 who perceive this process as positive), while its critics portray globalization as negative (see, for example, Mander and Goldsmith 1996; Eisenstein 1998; and Robins and Webster 1999). Some theorists see the emergence of a new transnational ruling elite and the universalization of consumerism (Sklair 2001), while others stress global fragmentation of “the clash of...
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...In Milton Friedman's eyes, competitive capitalism is a superior form of economic organization that guarantees not only economic but also political freedom by separating economic power from the political one. If a free market is allowed to work with its own logic following the law of supply and demand, Friedman contends, it will provide the freedom of choice to individuals that can counteract the possible threat of coercive power. What Friedman does not address, however, is the possibility that an authoritarian government can wield its absolute power in both the economic and the political spheres, promoting capitalism in an international market while curbing democracy. The freedom to make decisions as producers and consumes or as workers and employers can indeed coexist with, and oftentimes overshadows, the lack of choice as a citizen who is formally entitled to participate in politics. In fact, the advance in material life made possible by a more efficient market system obscures the problem of...
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...sustaining entrepreneurial initiatives should be transferred to the public domain whenever potential users of these innovations are unable or unwilling to enter into mutually beneficial exchange relationships with the creators of the IPR. This reply offers a perspective on why Ray’s (2004) imperative does not maximize social welfare and, in fact, will tend to diminish social welfare over the long-term as a result of lower economic incentives for innovation. Introduction ‘‘Few trends would so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as they possible can. This is a fundamentally subversive doctrine’’ (Friedman, l962, p. 133). Morgan P. Miles is Professor of Marketing, Georgia Southern University. His research interests...
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...There are many features to the libertarian worldview. Individualism is the foundational principle of libertarianism. Human beings have dignity and are capable of making their own decisions. Everyone has the right to choose how they pursue life, liberty, and ownership of property and no one has the right to encroach upon an individual’s freedoms. Furthermore, people must be responsible for the consequences of their decisions. Libertarians also emphasize the value spontaneous order. Absent of central planners, the accumulation of people’s free choices is a complex network of real order. Civil societies, languages, markets, and laws have come about because free and like-minded individuals collaborate in order to each achieve their purposes. Libertarians are very skeptical of government. Because of their emphasis on individualism and spontaneous order, they view much of the existing political structure as unnecessary. However, most libertarians believe that the state is responsible to protect the inherent rights of humans. Valid functions of the state include law enforcement, the justice system, and basic military. Libertarians especially emphasize the need for protecting incentives. Incentives motivate individuals. Without incentives, societies will not advance. Therefore, the state must ensure that individuals get to keep the rewards of their efforts. Libertarian philosophy stresses the importance of free markets. As individuals have the right to secure property...
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...Keynes, ‘love of money’ and the current crisis Paolo Paesani1 This version 1 October 2010 Preliminary version ABSTRACT Keynes saw ‘love of money’, love for the unlimited accumulation of liquidity as mark of personal success and shield against uncertainty, as a defining element of capitalism. This paper investigates connections between ‘love of money’ and the current crisis establishing two main linkages: bonus-based compensation mechanisms and hedge funds. Closer scrutiny and regulation both of bonuses and hedge funds can help prevent future crises. Permanent solutions to the problems posed by ‘love of money’ however will come only from new models of education and persuasion. Keywords: Causes of the financial crisis JEL: 1 University of Rome “Tor Vergata”, e-mail paolo.paesani@uniroma2.it. A previous significantly different version of this paper has been published in Italian in Il Ritorno dell’Economia Politica , G. Bonifati and A. Simonazzi (Eds.) Donzelli Editore, 2010, Roma. I would like to thank Annalisa Rosselli and Matteo Formenti for their helpful suggestions and comments. The usual disclaimer applies. “Whereas modern theory serves as a simulacrum of the economy – stylised and abstract to be sure – Keynes theory is a diagnostic instrument in the service of Doctor Keynes, consulting economic physician” (Hoover 2006, p. 78) “I also want to emphasise strongly the point about economics being a moral science. [A science that]…deals with introspection and with values...
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...IIBM Institute of Business Management Examination Paper Business Ethics Section-A Part One: Multiple Choices: 1. (a) Information Technology 2. (a) Equal distribution of all benefits & burdens on peoples 3. (c) Retributive Justice 4. (b) Free Markets 5. (d) Historical Materialism 6. (a) Pure Monopoly 7. (a) Highly concentrated Markets 8. (b) Chlorofluorocarbons 9. (b) Market Cost 10. (c) Both (a) and (b) Part Two: 1. Definition: Mineral depletion is the ratio of the value of the stock of mineral resources to the remaining reserve lifetime (capped at 25 years). It covers tin, gold, lead, zinc, iron, copper, nickel, silver, bauxite, and phosphate. At first glance, sustainability and mineral resource development appear to be in conflict. Mining depletes finite resources and in a strict sense, therefore, is inherently unsustainable. For instance, there is only a finite amount of copper in the earth’s crust, and each unit of copper extracted increases the fraction of the total copper resource base that is in use. Thus, it can be argued that if we continue to mine we will eventually exhaust the available supply of minerals. This perspective, however, ignores the dynamics of mineral supplies. In practice the non-renewable character of minerals may be less constraining than it might seem. Five factors make the benefits from mining much more sustainable than they initially appear to be. First, through the process of exploration and development...
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...Brochure More information from http://www.researchandmarkets.com/reports/2882836/ The Globalization and Development Reader. Perspectives on Development and Global Change. 2nd Edition Description: This revised and updated second edition of The Globalization and Development Reader builds on the considerable success of a first edition that has been used around the world. It combines selected readings and editorial material to provide a coherent text with global coverage, reflecting new theoretical and empirical developments. It provides original texts, including classics in the field and others at the cutting edge, which have been carefully edited for the non–technical reader, and offers concise definitions of key terms and concepts, requiring no prior knowledge about globalization and development or related theories. The second edition expands the collection of classic texts and, at the same time, provides the most important and readable articles and book selections on recent developments. More than half of the readings are new for the second edition, with a higher degree of editing for a student readership, and with increased coverage of China and India supporting its genuinely global coverage. New pieces help to capture the implications for developing countries of the recent Great Recession of the global North. There is more on global inequality and uneven economic development, as well as on women, international migration, the role of cities, agriculture and...
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...Chapter 1: The phrase “Corporate social responsibility” refers to a corporation’s responsibility towards society. The topic is subjective, so naturally there is some disagreement about those “responsibilities”. Like do companies have a responsibility to donate money for charities or to give their employees higher wages and customers safer products? Or is their responsibility to maximize profit for their shareholders or stockholders? Shareholder theory: Milton Friedman argues that in a “free enterprise, private-property system” Corporate executives work for the “owners” of the company, and today these “owners” are the company’s shareholders. As their employees, the executives has a “direct responsibility” to run the company in according with their desires, which is of course making as much money as possible while confirming to the basic rules of the society, both embodied in law and ethical custom. On his view a company’s ONLY responsibility is to legally and ethically maximize shareholder’s returns. His view is the “shareholder’s view”. The main reason he holds this theory is, in his view shareholders own the company. Since the company is their property and only theirs, only they have the right moral right to decide what it should be used for. These “owners” hire executives to run the business for them, so the executives have a moral obligation to do what the stockholders want, which he claims is to maximize their profits. However he doesn’t say, that there are no limits...
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...this paper, and the premise of the research thus conducted. In order to answer and address this issue, it is first necessary to examine different aspects of entrepreneurship, as well as, current market conditions, which make this alternative an attractive choice for so many business professionals. I have often thought about the vest means of achieving success. Success can be measured in many different fashions. There is career success, success in academics, competition, and self-actualization. For the scope of this research paper, I will limit the definition of success as being measured by financial freedom and independence. As both a student and working professional, I have a strong belief and desire to perform to my highest potential, both in the classroom and in the office. Ultimately, like many others, the purpose of my efforts is to achieve this financial freedom and independence from an employer. The traditional means of achieving success, I have followed and been an active participant. These means include joining the military at a young age, graduating from college, and pursuing a professional career. Although I am pleased by the results of my efforts and endeavors, my journey is not complete. I am in pursuit of a Master’s Degree at Stratford University to enhance my knowledge, and expand my potential. Education is both important and essential to one’s own personal development. Not ever to be dismissed as an exercise in futility, academic pursuits can add to...
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...Labor Unions in the United States Posted Mon, 2010-02-01 17:21 by Anonymous Gerald Friedman, University of Massachusetts at Amherst Unions and Collective Action In capitalist labor markets, which developed in the nineteenth-century in the United States and Western Europe, workers exchange their time and effort for wages. But even while laboring under the supervision of others, wage earners have never been slaves, because they have recourse from abuse. They can quit to seek better employment. Or they are free to join with others to take collective action, forming political movements or labor unions. By the end of the nineteenth century, labor unions and labor-oriented political parties had become major forces influencing wages and working conditions. This article explores the nature and development of labor unions in the United States. It reviews the growth and recent decline of the American labor movement and makes comparisons with the experience of foreign labor unions to clarify particular aspects of the history of labor unions in the United States. Unions and the Free-Rider Problem Quitting, exit, is straightforward, a simple act for individuals unhappy with their employment. By contrast, collective action, such as forming a labor union, is always difficult because it requires that individuals commit themselves to produce "public goods" enjoyed by all, including those who "free ride" rather than contribute to the group effort. If the union succeeds, free riders...
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...Do companies have their internal resources distributed through an internal market of supply and demand for works? Suggest implications for you as future managers. 2. (a) It has been said that we are ‘addicted to oil’. How can you explain this in terms of income and price elasticity of demand? Try to define income and price elasticity, definition of in-/elastic demand, implications for revenue and pricing strategy. (b) Give some examples of things that could make the demand for oil more elastic. What specific policies could the government or companies take to make demand more elastic? (c, optional, harder) Which reasons may explain the recent drop in oil prices in 2015? Suggest some implications for you as future managers. 3. Milton Friedman famously wrote an article entitled “The social responsibility of business is to increase its profits.” After reading the article and related literature, consider the question of whether projects aimed at enhancing social responsibility are undermining the goal(s) of shareholders? Explain your reasons for and against, think of modern changes in the world that enhance or disable Friedman’s statement, suggest implications for managers. QUESTION 1 A real market economy ensures that greed is good – John Kay 18 January 2012, Financial Times Sixty years of division of the Korean peninsula has created two states with very different standards of living in one country. The Korean example is pathological. The division of Germany resulted in two...
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