Introduction to Business Ethics
Introduction to Business Ethics
Karl Marx (1818 – 1883): He contradicted Hegel who said that ideas influenced historical development. Marx advanced his own theory that every phase of history is being governed by the “material conditions” which are in existence during that phase in history. In this connection, he maintains that during each phase of history, society is being ruled by the class which owns the primary “means of production” of that particular phase. For instance, during the 17th century, the landowners became the ruling class because they owned the land which produced the agricultural products which were the main product of that particular phase of history (Newton and Ford).
Adam Smith (1723 – 1790): A famous philosopher and economist from Scotland, he was the first to recognize that the most fundamental element of capitalism is the “voluntary act” of every individual in a free market, i.e., a seller who voluntarily sells something for money and a buyer who voluntarily parts with his or her money to pay for something he or she needs or wants. In his theory of economic enterprise, Smith explained that this voluntary act, which is actually motivated by self-interest, is the single driving force behind capitalism’s efficiency
Need essay sample on "Introduction to Business Ethics"? We will write a custom essay sample specifically for you for only $ 13.90/page
Negligence – the basis by which a party who was injured by a defective product could recover damages from its manufacturer. Negligence could be established if its four elements are present, namely: “duty, breach, injury, and proximate cause.” In other words, it should first be established that the negligent party has a “preexisting duty” to the complainant (like producing a safe product). Then it should be established that the said duty was not satisfactorily performed (the product did not turn out to be safe). Third, the complainant should have been injured. Finally, it should be established that the sole cause of the injury (proximate cause) was the product itself (Newton and Ford).
Capitalism – an economic doctrine or system which is characterized by free enterprise. Adam Smith and some economists who shared his views explained that capitalism is a system which has a free market where competition exists among sellers who are selling competing goods and services, on one hand, and buyers who want to buy said goods and services, on the other hand. According to these economists, this competition compels sellers to strive for efficiency if they want to sell their goods and services and requires buyers to offer adequate prices for goods and services so that the goods and services that they desire would be sold to them (Newton and Ford).
David Ricardo (1772 – 1823): Following up on Adam Smith’s proof that employers would always pay the lowest possible wages to laborers in order to raise their profits, Ricardo came up with his own conclusion that in a capitalistic system, even if an industrial enterprise becomes a thriving or successful undertaking, it would never pay its rank and file workers over and above the subsistence level – in other words, they would only be earning wages which would be enough “to keep them alive” (Newton and Ford).
Thomas Malthus (1766 – 1834): He was an English economist who came up with his “laws of population” where he contended that the population of the world would always be at the maximum level that its food supply could sustain. Hence, majority of the people would always be living at the “subsistence level” (Newton and Ford). In this connection, he offered his conclusion that unless population rate is effectively checked, “man’s misery of famine would become globally epidemic and eventually consume Man” (University of California Museum of Paleontology).
Consumer Product Safety Act – passed by Congress in 1972 and implemented by the Consumer Product Safety Commission (CPSC), this Act has three specific objectives, namely: “to set safety standards, require warning labels, and order recalls of hazardous products” (Newton and Ford). However, there are categories of products which fall outside the mandate of the CPSC, namely: “food, drugs, cosmetics, medical devices, tobacco products, firearms and ammunition, motor vehicles, pesticides, aircraft, boats and fixed site amusement rides” (US Consumer Product Safety Commission).
Civil Law – the set of laws which deals with cases involving conflicts or controversies which result from non-criminal actions or activities. Some examples of these cases are violations of contract provisions, disputes over ownership of properties, divorce cases, and damages to properties (Civics Library of the Missouri Bar). In civil cases, a judge or a jury first ascertains whether damage has been inflicted on the complainant. This is followed by a valuation of the extent of the damage. Then the final step is to determine how the complainant should be paid (Newton and Ford).
Supply and Demand – the relationship of supply and demand to market prices is one of the basic elements of a competitive capitalistic market. For instance, a significant decrease in supply will cause the price of a product to rise as consumers try to outbid each other for the right to buy the product. The shortage of supply would make the market very attractive to new sellers. Once this happens, the supply would inevitably increase and the moment it exceeds the volume of demand, the price would automatically drop to a point where buyers would once again be willing to buy the product (Newton and Ford).
John Rawls – A Harvard professor of sociology whose influence is believed to have made the concept of “distributive justice” acceptable to society (Newton and Ford). He advanced what he called the “theory of justice as fairness” where he talked about an egalitarian society composed of free citizens who enjoy equal rights (Stanford Encyclopedia of Philosophy).
Emil Durkheim (1858 – 1917): A French sociologist and author of Suicide where he suggested that the corporation would succeed the family and the church as the main source of moral support for every individual (Newton and Ford). In his work entitled The Division of Labor in Society, he maintained that a so-called ‘organic’ unity results from the division of labor which is inherent in a modern society. In other words, individuals could no longer satisfy all of their needs and have to rely on others for many of them. According to Durkheim, this state of specialization sets “people not only apart, but against each other” (Dunman).
Fraud – This is synonymous with trickery. Four elements should be present before fraud could occur. First, an important event or fact has been intentionally misrepresented. Second, the intended victim of the fraudulent act believed in the misrepresentation. Third, the victim, who relied on the misrepresented fact, actually acted on it. Finally, after acting on the misrepresentation, the victim lost either valuable property, money, or both (Simmons).
Collusion – this refers to a secret agreement of individuals or even organizations who want to defraud the government or some other private individuals or organizations. Collusion is established once it could be proven that the individuals involved met with the knowledge and the intent to commit an act of fraud. For instance, when representatives of two or more companies met in secret in order to fix the price of their product, collusion has occurred (Smith).
Conflict of Interest – for conflict of interest to occur, certain elements should be present. First, a person who is acting for another person in a certain undertaking has a personal interest in the same undertaking which goes against that of the person he is acting for. Second, he or she does not divulge his or her self-interest to the person he or she is representing. Third, he or she gains financially from said conflict of interest while the person he or she is representing suffers financially. When all of these elements present themselves, a fraudulent act has occurred (Simmons).
Embezzlement – this is the act of an individual of converting, in a fraudulent manner, any personal property owned by another and which was simply entrusted to him or her. An example of embezzlement is the practice of kiting which victimizes banks. Kiting takes place when an individual is allowed by a bank to withdraw from his or her deposited check even before the amount has been collected from the bank (bank A) where his or her check was drawn against a non-existent balance. To perpetuate the fraud, the individual then secures cash from another bank (bank B) by again depositing another check and withdrawing cash immediately to cover the check in bank A. The cash obtained through kiting is then utilized in the purchase of goods (Simmons).
Civics Library of the Missouri Bar. “What is Civil Law?” 2006. 8 March 2009.
Dunman, L. Joe. “Emile Durkheim.” 2003. 8 March 2009.
Newton, Lisa H., and Ford, Maureen M. Taking Sides: Clashing Sides in Business Ethics and
Society, Tenth Edition. (Order # 71257790 attachment).
Simmons, Mark R. “What is Fraud?” Association of Certified Fraud Examiners, Colorado
Chapter. 26 October 2008. 8 March 2009. <http://www.cocfe.org/WhatIsFraud.htm>
Smith, S.E. “What is Collusion?” 8 March 2009. <http://www.wisegeek.com/what-is-
Stanford Encyclopedia of Philosophy. “John Rawls.” 25 March 2008. 8 March 2009.
US Consumer Product Safety Commission. “Consumer Product Safety Act.” 8 March 2009.