Capitalism and Ethics

Topics: Capitalism, Economic system, Karl Marx Pages: 10 (3508 words) Published: October 23, 2008
2.What is Capitalism3
3.History of Capitalism4
4.Greatest Strength7
5.Greatest Weakness8
6.Ethical in Australia?9
6.3.Industrial Relations11

Capitalism, as a form of government has a long and complicated history. Many have tried to define one single form of capitalism; however there are a number of different variations depending on things such as, geography, politics and culture. There are a number of different strengths and weaknesses associated with the ‘generic’ form of capitalism and this essay will discuss all of the major points of each. The economic, social and industrial relations system in Australia will also be discussed, in reference to whether or not the current capitalist arrangements are just and ethical. 2.What is Capitalism

Capitalism, according to the Collins English Dictionary (1999), ‘is an economic system based on the private ownership of industry’. Dainanu and Vranceanu (2005, p 5) state that ‘capitalism’s main purpose is maximization of profit’. Capitalism has the underpinning of a normative ethical theory such as ethical egoism. Shaw and Barry (2004, p 57) state that ‘Ethical egoism is the normative theory that the promotion of one’s own good is in accordance with morality. Shaw and Barry (2004, p 57) also state ‘egoism contends that an act is morally right if and only if it best promotes an agent’s (person, group or organisation) long term interests. In this case the long term interests are for those wishing to make a profit and continue to do so. Daianu and Vranceanu (2005, p 5) state ‘Capitalism consists not only of the private appropriation of consumption and production resources, but also of the assumption that complete control over the conditions of any action is both desirable and possible’. This relates to the economic assumption that decision making is completed by people who are perfectly rational. Government intervention is not accepted in a capitalist society, within the operating of the industry unless it is in the form of governing and ensuring rules and laws are being followed. The government is only introduced when markets fail and the assumptions of competitive equilibrium do not hold (Dainanu & Vranceanu, 2005, p 25). These assumptions are; increasing returns to scale, externalities and public goods. 3.History of Capitalism

Osborne (2001) states that the underlying theme of capitalism is the use of wealth to create more wealth, the simplest form of this is lending money at interest, which began in the middle ages. Capitalism began to be widely used during the 18th and 19th Century in England. Peasants were often forced off their land to work in factories, and the farm land was replaced with new factories. Examples of this are still present today in China, were peasants are forced off their land to work in factories for little wages (World Revolution, n.d.). Also in Australia from 1940’s onwards, immigrants were offered great jobs and conditions if they came to Australia, however upon arrival they often found their jobs to be menial or very dangerous and the wages were very low (Catley, 1996, p 57). Over the centuries capitalism has evolved and changed. Gough Whitlam was the first Australian Prime Minister to acknowledge that by using capitalist principles Australia could benefit greatly (Catley, 1996, p 61). Capitalism was present in Australia, but most chose not to recognise this. Other ministers had been exposed to the policies and ideas earlier in their political careers; however none worked to implement the strategies until Whitlam was elected in 1972. ‘The initial, strategic objective of the Whitlam government was to make Australian capitalism work more efficiently and to integrate it more closely with the world market more efficiently and to integrate it more...

References: Ayn Rand Institute Home Page (n.d.). Retrieved on 18th September, 2008 from
Cately, B
Daianu, D., & Vranceanu, R. (2005). Ethical Boundaries of Capitalism. Ashgate: Burlington, USA.
Harper Collins Publishers: Collins English Mini Dictionary (2nd Ed.). (1999). Great Britain: Collins
Klempner, M
Phelps, E. (2006). Retrieved 9th October, 2008 from
Sappy, R., Burgess, J., Lyons, M., & Buultjens, J
Shaw, W. & Barry, V. (Eds.). (2006). Moral issues in business (9th ed.). Belmont, Ca.: Wadsworth.
Stone, Raymond J
The Birth of Capitalism, (n.d.). Retrieved 10th October, 2008.
Weeks, J
Wheelwright, E.L., & Buckely, K. (1980) Essays in the Political Economy of Australian Capitalism. Volume Four. Australia & New Zealand Book Co: Australia
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