“Do well by doing good“

Katerina Jovanovska,

20.04.2014, Ljubljana, Slovenia

Capitalism is political, social, and economic system in which property, including capital assets, is owned and controlled for the most part by private persons. It functions only through inequality.

(Source: The Macmillan Dictionary of Modern Economics)

Monetary and social welfare Fostering innovation (extraordinary dynamics,

huge gains in productivity, electricity) Creating wealth, prosperity Private property Free exchange Civilizing progress (education, freedom) Product safety, environmental protection Protecting rights of labor

Ethical foundations of capitalism

Theories

• Adam Smith, “The wealth of Nations”, 1776

Invisible hand of market• Karl Marx, “Das Kapital”, 1876

Surplus value• Max Weber, “The Protestant

Ethic And The Spirit Of Capitalism”, 1904 Development of a "capitalist spirit";

• Milton Friedman, 1970

Only one social responsibility of businees- to increase its profits”

Models of market capitalism LME- coordinate economic activity through

markets and corporate hierarchies and compete successfully on the basis of low costs and major product and technological innovations;

CME- coordinate economic activity more through non-market mechanisms, such as informal networks or corporatist bargaining, and compete on the basis of high quality products and innovations in production processes;

HM-countries that fall somewhere in between these poles and represent hybrids, can also perform well.

(Source: “The Varieties Of Capitalism And Hybrid Success: Denmark In The Global Economy”, John L. Campbell and Ove K. Pedersen, 2005)

Models of market capitalism

Liberal market economy , LME (in US)

Hybrid models, HM (in Denmark)

The field of business ethics examines moral controversies relating to the social responsibilities of capitalist business practices, the moral status of corporate entities, deceptive advertising, insider trading, basic employee rights, job discrimination, affirmative action, drug testing, and whistle blowing.

(Source: IER, Internet Encyclopedia of Philosophy)

Ethical blindness

Temporary inability of a decision maker to see the ethical dimension of a decision at stake.

(Source: G.Palazzo, F. Krings, Journal of Business Ethics, 2011).

Strengths versus Weaknesses of Capitalism

Strengths • Extraordinary human achievement of the past two centuries generated by

capitalism. • Life expectancy prolonged• Poverty reduced• Innovation expanse• Needs of people with nothing to offer the market cannot be met by

capitalism• Enemy of racial or ethnic discrimination. Prejudice is costly Weaknesses • The short-term, purely self-interested thinking• Dangerous climate changes • Unequal property distribution, super rich and the very poor.

Crises in capitalist markets and the insecurity, unemployment, and poverty

Oprah Winfrey, Bill Gates

significant support fort various community and social initiatives

Strgengths versus Weaknesses of Capitalism

Ethical Capitalism

Two essential ingredients: • A focus on creating long-term

economic and social value • A commitment by business to act as

stewards of the full spectrum of its constituencies

Results: more customers, minimizing operating costs through energy efficiency, improvement employee retention rates, long-term success.

(Source: http://www.huffingtonpost.com/

“Ethical Capitalism? It's Worth a Try”,

Stanley M. Bergman , 25.01.2014)

Customers

Employees

Suppliers

Investors

Society

Case studies “Do well by doing good“

Henry Schein Cares global corporate social responsibility program

4.5 million children receive free oral health care

Market value $10 billion (Source:http://www.newsday.com/,

Stanley M. Bergman, March 2, 2014)

• Promote an environmental ethic of sustainability

• Committed to high quality standards and never use artificial colors, flavors, fragrances, preservatives.  Additionally, they contain no animal by-products and are not tested on Animals.

• Tom’s operates successfully in a highly competitive market despite higher costs from its use of natural ingredients and its personnel policie

(Source: “Green Companies: Tom’s Of Maine”, Edmund R. Gray, Kimberly S. Petropoulos)