Capitalism: Self-Interest and the Need for Ethical Values
As stated by Chell et al. (2016) it is wrong to consider capitalism as fundamentally unethical based on the philosophical perspectives and considering facts it is refutable. Capitalism is not the main issue here, but the approaches of the capitalists have to be changed for better future. Ethical capitalism will focus on developing long term social and economic value for the future of the world. Capitalism had emerged in the world in the early part of the eighteenth century and with the emergence of globalization, it has grown ten folds from its initial commencement to form the default operating system all over the world.
However, capitalism is only based on self-interest which is among one of the aspects of humanity but is expected to be the primary system for operating the world even in the future. Thus, it is essential to develop some ethical values in respect to capitalism for protecting the interest of the people in the future. The increase in capitalism has made the rich people richer at an extraordinary pace but still 16% of the world population still earn less than $1.25 per day (Bergman 2014). The report will critically evaluate the normative theories of ethics to provide suitable ways to make capitalism for more ethical and oriented towards the future.
According to Yang (2017), capitalism is the development of the private ownership that is focused on attaining more capital through new owners, firms and ideas. The model theory developed by Adam smith suggested that people are born with distinctive moral senses. This means that even though, people are selfish, they are drawn to other people which makes happiness of other people important to them. The society as such is driven by diverse interest of the people such as legal, political and economic aspects. However, plurality of interest has to be insisted to obtain realistic and flexible analysis. Therefore, from the capitalists view all these interest of the leaders in the society have to be embedded within them to develop ethical capitalism (Fridenson and Takeo 2017). Therefore, ethical capitalism will focus on developing long-term social and economic value and the capitalists have to focus on as agents to engage in commitment towards the society, suppliers, consumers, investors and employees. This means that the capitalist model will have to incorporate the interest of the society and develop a trust based relationship with the community (Vikström 2018).
Benefits of Ethical Capitalism and the Need for Change
The benefits of ethical capitalism are long-lasting and real and committing to higher purpose ensures minimization of operating cost by developing sustainable measures, increasing consumer base, benefits and employee retention. Ethical capitalism may be considered to be an idealistic view but has real life explanation to the future of the society. Ethical capitalism is essential for long term creation of value in the system (Drover, Wood and Payne 2014). However, capitalism has been in the under intense scrutiny due to the mishaps in the past and 2008 global crisis where due to selfish interest of the capitalists focused on short-term gain without having any care about the future reparations (Zou et al. 2016). Ethical capitalism or conscious capitalism or responsible capitalism whatever the name may be, it will be focused on developing long term value for environmentally and socio-economically.
According to Adam smith.” As every individual…endeavours…to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of greatest value; every individual labours to render the annual revenue of society as great as he can. [While] he intends only his own gain, …he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.” ~ ‘(Hill 2016, pp.25)
This states that capitalism is a self-regulatory economic system where government can only contribute by providing basic goods and services at low prices. This derives the fact that pricing mechanism would direct the actions of the private labelled companies for obtaining optimal outcomes socially (Bogart 2017). However, in order to coordinate the prices in the market and the economic actors for revenue maximization of society along with that of the individuals will require adequate reflection on benefits and social costs. Externalities are certain costs in the market that are not completely incorporated into the market framework which depicts the imperfections in the regulations and laws that develop the market framework. However, modernization and change in market situations are factors that have to be taken into consideration for developing a socio economic model that includes the change in circumstances as without these changes there is no guarantee whether the changes in the individual revenues will have a similar impact on the society or not (Rho, Sungmin and Michael 2017).
Capitalism has be developed into a three level model consisting of political authority, institutional foundation and economic markets. These shows that fine line has to be drawn at all these levels for developing an effective ethical capitalistic model. The major leaders in the global market and major global powers have to address the weaknesses and problems of the society along with thinking about their own interest (Martin 2016). This will invoke change in behaviors and development of new regulatory measures are required to enable the companies to contribute to the society and address all the current issues. Market competitiveness is one of the major aims of the organizations in the market and the companies will have to address issues to add value, removing inequalities and carbon footprint. This factors can only be addressed by the changing the leadership approach which will facilitate in defining the fine line between the self-interest and interest of the society.
Normative Theories of Ethics and Ethical Capitalism
Normative theory of ethics defines all the moral principles of identifying whether the actions of individuals are right or not. Utilitarianism is one of the theories in normative theories where the ethical aspect of any action is defined by cost benefit analysis. According to the utilitarianism, an action is good if it has positive effect on the overall society and it is wrong if it does not have positive impact on the overall society (Cugueró-Escofet and Fortin 2014). Therefore, in this respect, capitalism is against the morality as it does not have common good. On the contrary, capitalism can be right decision as it has positive impact on the business of the company but may have negative impact on the society. Therefore, in this view, in order to promote moral views, ethical capitalism is an option where the companies will have to take different bottom lines in to the organization goals such as triple bottom line where social and economic activities are measured to identify the contribution to the society (Uhlmann, Pizarro and Diermeier 2015). This means that as per the Utilitarianism view, the organizations will have to contribute to the development of their business and society at the same time.
The next moral view that will discussed is the Categorical Imperative which considers the morality of an action based on its rationality. It is rationally correct to think about profit maximization for the companies and for rich people trying to become richer but the other aspect that has to be considered that whether above objectives are attained by oppressing the society and people within it. Companies may consider profit maximization of their own companies to be their priority which is rational but they will have to do it without causing harm to the environment and the society (Gianluca, Operti, and Kovács 2015). According to Aristotelian Virtue Ethics, personal happiness is the ultimate goal and therefore, companies attain personal happiness increasing their profit margin and wealth maximization. However, as per this view, causing harm to other people and society are against the personal happiness of the people. As per the Stoic Virtue Ethics. Polluting the environment, causing harm to the society at large are against the moral beliefs as it develops from wrong thoughts and emotions. Similarly, Ross’s Intuitionism is based on duties which defines the credibility of people’s actions. This theory also clearly indicates that capitalist view of thinking about their own needs, wants and selfishly thinking about the short term objectives is wrong(Leffel et al. 2015).
Conclusion
The different types of normative theory of ethics shows that capitalist views are against the good of the society unless the companies and leaders are contributing something to the society and taking long term initiative to think about the long term implications on the society. The companies and political leaders will have to develop measures to bridge the gap between rich and the poor by giving back to the society with facilities that is necessary for the upliftment of the society and people living under the poverty line. In most of the normative theories, it can be seen that they have a similarity with the ethical concept in capitalism and statements mentioned by Adam Smith (Jayawickreme et al. 2014). Therefore, it is essential to develop real commitment to ethics as capitalism is the best possible model that has been developed. However, this model is not at all perfect and improvement is required which can be achieved by underpinning the ethical aspect into this model. This will help in entwining interest of the society and public interest and lead to the all-round development of the society. The global crisis of 2008 was only because of the short term goals of the people and their selfish need of profit maximization. Therefore, in order to avoid this morality has to be incorporated into the minds of the general population for developing better model of capitalism.
As a global citizen, my cognitive development will be based on six stages and three level of moral development based on Kohlberg’s model. Initially, before researching about this topic of ethical capitalism, I had similar views on capitalism, where my sense of morality was controlled and developed based on the external information and behaviour of other people. The first level of Kohlberg’s model is preconventional level, where I had gained knowledge about capitalism from perspective of other authors and researchers. Therefore, I believed that capitalism was bad, it is necessary to get rid of capitalist people from the society. My perception was developed based on the result of my action and I had started developing a different view about the topic after I have analysed it completely. In the next step, my belief was developed based on the readings of the case study, where I have gained new knowledge regarding ethical capitalism where rooting ethics into the societal model of capitalism is necessary for uplifting the society and contributing positively to the corresponding environment. After learning the topic of discussion and view of the researchers, I believed in the majority of the views proposed for development of the society. Moreover, I have felt that in order to do good to the society and to become a socially responsible corporate citizen, it is essential to incorporate the concept of ethics into the society to further develop long term goal to attain sustainable society. In the third level of the model, post conventional level, I have developed my own sets of views about ethical capitalism and need for new business models to prevent exploitation of the society at large. I have understood that going through, these stages of the model has been essential for gaining knowledge about the overall topic. I think that ethical capitalism is an option as society has been not able to develop a more efficient business model. Therefore, it is essential to develop a business model that will address the weakness of the capitalism model so the society can further progress to address the society of the individual (Habermas 2017). However, I feel that as long as the new business model is not develop capitalism is a good option as long as ethical aspect forms the foundation of capitalism.
References
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