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Economics Essay
hey guys
im a long time reader, first time poster.
this was my essay in a recent exam of which my socialist teacher only gave me 14/20
i feel i did cover both sides of the arguement and deserving of a higher mark.
just wondering what you guys think of it. thanks
Corporate objectives should be concerned more about profits and less about ethics.
Evaluate this statement.
The statement, ‘corporate objectives should be concerned more about profits and less about ethics’ is an interesting one to evaluate. The objectives of the firm are vital for the firm’s survival and having the wrong objectives could ultimately lead to the firm’s demise.
It is a common misconception of capitalism to believe that the firm itself is responsible for social and environmental effects of its actions. However to evaluate the situation at hand is to see the profoundness of such a statement. The laws of supply and demand state that whatever is demanded will be supplied as it is profitable for the firm to do so. The consumer thus has ultimate power over the firm as it is the consumer’s demand which is keeping the firm in existence. So it is the consumer that is the real root of the ethical question. Corporations should always follow the profit motive as this ensures both allocative and productive efficiency. Only those goods in demand will be produced and they will be produced at the lowest possible cost. Ethics of the business are ultimately in the consumer’s hands. If a business is being unethical it is the consumer’s responsibility to stop buying from this firm, as it is their demand which is funding the unethical behavior. They should switch expenditure to a more ethical firm. In laissez-faire capitalism, the firm is simply a tool of the consumer used to convert raw materials into the product that he or she wants. If consumers come through on their duty not to buy from unethical businesses, these firms will not survive unless they start a more socially responsible form of production. Ethics is thus a step towards the ultimate corporate objective of profit-maximisation, not a separate objective in itself. So firms should always be concerned about the long-term profit motive, not about ensuring ethical behavior at the expense of profits.
However, the welfare statist, or socialist, will have you believe that it is the duty of the firm to sacrifice profits in order to contribute to social and environmental well-being. This would ultimately mean that the profit motive; the powering force behind laissez-faire capitalism, would have to be abandoned. However, in doing this, the firm would no longer be able to achieve economic efficiency. The statist calls the profit motive “greed” of the “men at the top” and says that it will cause the exploitation of consumers. When this statement is analysed, the intuition of the statist becomes apparent. It is the greed of the men at the top which acts to protect the consumer, not exploit him. The men at the top are simply servicing the consumer. So in a situation where there is great social/ ethical imbalance, is it not the consumer who is at fault? Yes. The consumers hold the ultimate power over the objectives of the firm. It is thus the consumers who must take the lead in business ethics, not the businesses.
To conclude, the profit maximisation goal should always be the number one on the firms list of objectives. Ethical behavior is simply a sub-objective on the road to profit-maximisation, and the issue of social responsibility is solved with change in consumer – not business – attitude. So the profit maximisation is far more important than the goal of being ethically or socially responsible.
-end-
opinions?
im a long time reader, first time poster.
this was my essay in a recent exam of which my socialist teacher only gave me 14/20
i feel i did cover both sides of the arguement and deserving of a higher mark.
just wondering what you guys think of it. thanks
Corporate objectives should be concerned more about profits and less about ethics.
Evaluate this statement.
The statement, ‘corporate objectives should be concerned more about profits and less about ethics’ is an interesting one to evaluate. The objectives of the firm are vital for the firm’s survival and having the wrong objectives could ultimately lead to the firm’s demise.
It is a common misconception of capitalism to believe that the firm itself is responsible for social and environmental effects of its actions. However to evaluate the situation at hand is to see the profoundness of such a statement. The laws of supply and demand state that whatever is demanded will be supplied as it is profitable for the firm to do so. The consumer thus has ultimate power over the firm as it is the consumer’s demand which is keeping the firm in existence. So it is the consumer that is the real root of the ethical question. Corporations should always follow the profit motive as this ensures both allocative and productive efficiency. Only those goods in demand will be produced and they will be produced at the lowest possible cost. Ethics of the business are ultimately in the consumer’s hands. If a business is being unethical it is the consumer’s responsibility to stop buying from this firm, as it is their demand which is funding the unethical behavior. They should switch expenditure to a more ethical firm. In laissez-faire capitalism, the firm is simply a tool of the consumer used to convert raw materials into the product that he or she wants. If consumers come through on their duty not to buy from unethical businesses, these firms will not survive unless they start a more socially responsible form of production. Ethics is thus a step towards the ultimate corporate objective of profit-maximisation, not a separate objective in itself. So firms should always be concerned about the long-term profit motive, not about ensuring ethical behavior at the expense of profits.
However, the welfare statist, or socialist, will have you believe that it is the duty of the firm to sacrifice profits in order to contribute to social and environmental well-being. This would ultimately mean that the profit motive; the powering force behind laissez-faire capitalism, would have to be abandoned. However, in doing this, the firm would no longer be able to achieve economic efficiency. The statist calls the profit motive “greed” of the “men at the top” and says that it will cause the exploitation of consumers. When this statement is analysed, the intuition of the statist becomes apparent. It is the greed of the men at the top which acts to protect the consumer, not exploit him. The men at the top are simply servicing the consumer. So in a situation where there is great social/ ethical imbalance, is it not the consumer who is at fault? Yes. The consumers hold the ultimate power over the objectives of the firm. It is thus the consumers who must take the lead in business ethics, not the businesses.
To conclude, the profit maximisation goal should always be the number one on the firms list of objectives. Ethical behavior is simply a sub-objective on the road to profit-maximisation, and the issue of social responsibility is solved with change in consumer – not business – attitude. So the profit maximisation is far more important than the goal of being ethically or socially responsible.
-end-
opinions?
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