The paper "Ethics and Morality of Let Capitalism Rip Allegation Made by David Cameron" is a good example of a business assignment. The concept of business ethics and corporate social responsibility has always been debatable, especially among the various schools of thought that have a different perspective over the same. Now the debate originates from the fact that not all business organizations behave in a socially responsible manner. At the same time, this debate is exaggerated by an argument that it is not the job of business organizations to be concerned about social issues. The remarks by the Prime Minister should also be seen in a similar context.
In order to analyze his allegation on the Labour Party for being responsible for ‘ let capitalism rip’ , it becomes imminent to first understand the free-market perspective and its case against corporate social responsibility. The free-market perspective advocates that the job of a business organization is to create wealth for the stakeholders. However, it incorporates this by abiding by the guiding principle of the shareholders who work to serve their own interest. On the contrary, the corporate social responsibility view suggests business organization to take into consideration the social issues prevalent in society.
The free market theory designates the business to create wealth by providing products and services. According to its perspective, “ There is one and only one social responsibility of business - to use its resources and engage in activities designed to increase its profit so long as it stays will the rules of the game, which is to say, engages in open and free competition, without deception or fraud. ” (Friedman 1962). Giving away money for any activity other than that associated with increasing the wealth of the shareholders is considered as a self-imposed tax.
At the same time, this perspective discourages the managers who are executing the business on behalf of the shareholders, to give away money for any untoward cause like corporate social responsibility. It is not that the free market is against any social development. In fact, free markets and capitalism have been at the centre of economic and social development. The modus operandi, however, is derived through its guiding principle. The social development would happen through an increased standard of living of the working class.
The standard of their living could be increased by higher wages. Now higher wages can be achieved if the organizations make a good profit and a part of it is shared as incremental wages to the deserving employees (Blinder, 1987). The free-market claims to contribute to the effective management of scarce resources. The school of thought favoring free-market accepts that at times market fails, but while advocating regulation to avoid the same, it puts the onus on the government and rules out any self-regulation.
Moreover, it also advocates minimal regulation just to avoid any market failure as in its views, regulations create an unnecessary barrier for entry to the market. The view pertaining to free-market validates its stand with certain arguments. Accordingly this theory, the socials responsibility is automatically served by creating wealth for the shareholders which then percolate down to increase the standard of living. The moment a business organization is starting focusing on the social goals, its primary purpose of doing business is diluted and the process of wealth creation is hindered which deprives the society in another way.
Further, in the free market where costs are transparently passed on to the consumer, the additional cost of social responsibility would burden the end user more and the very purpose of corporate social responsibility goes for a complete toss (Swasy, 1988). Another critical argument put forward by the free-market advocates is that if business tales up social obligations, what will be left for the government to do. More so, the common man will have no incentive to work hard as he can reap the benefits of social welfare by merely sitting idle.
Thus the distribution of resources will not be efficiently carried out.
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