From Locke’s work it isn’t clear whether he is a compatibilists or incompatibilist. However, his work can be used to illustrate both views.
Locke provides a metaphor for hard determinism to show how our ‘free-will’ as it were is an illusion. He says imagine a man in a locked in a dark room, he is not aware of the fact that he is locked and makes a choice that he wants to stay in the room. Actually the man has no choice and he has an illusion of free-will.
Locke goes on to say that in order to have free-will you need to have two things:
Choice - so the man in the room doesn’t have a choice but to have free-will is to have a choice between being in the room and outside it.
Ability: You need to be able to exercise your choice for example if you are lying on a hospital bed tied up to several drips etc although you have a choice to walk out you do not have the ability to make that choice.
So, essentially what Locke is trying to say is in certain situation we have no choice and ability therefore our actions are determined however the times when we do have this we have free-will. So we can see Locke’s views as soft determinism.
Aristotle differentiated between ‘oecinoicus’ small scale trading just above the subsistence level and ‘chrematiske’ which is trading for profit. He did not agree with the latter and viewed people engaging in it as selfish parasites. Therefore, firms should not be charging sky high prices and making supernormal profits. - Not realistic and why would someone take the risk and become and entrepreneur then?
Virtue theory is about developing virtues within community so eudaimonia which is a high societal stage of human flourishing can be achieved. Virtue theory follows the stakeholder view of business ethics which is endorsed by Harvard Business School.
Employees and Employers
Employees have to create a good environment for employees to work in, by this we mean one where they can cultivate the virtues.
Justice is one the moral virtues and one of the means by which this can be achieved is whistle-blowing hence why whistle-blowing is seen as a moral action on virtue ethics.
Work is a school of character formation because it is where we learn to acquire certain virtues like scientific knowledge.
Weaknesses
Corporations in reality are uncomfortable with thinking about justice, honesty etc.
Is it really practical to have virtues as opposed to rules and regulations? How could we develop a code that was dedicated to embodying virtuous behavior, the development of virtue in stakeholders and the ultimate aim of well-being for all concerned?
Why would someone want to become and entrepreneur and take a large risk where the reward is simply the chance of eudaimonia? Also, as Aristotle himself points out not everyone will develop their virtues and fulfill their potential which means it makes it very hard for a business to survival on the basis of corporate social responsibility.
Strengths
Virtue Ethics insists on care and respect for the worth of the individual rather than assignment to an abstract mass market.
Virtues such as justice, honesty. prudence, courage, hope, endurance are among the more critical building blocks to which construct a stable economy.
Aquinas stresses that the virtues are “habits productive of good action, directed at work well done.”
Some may class as using this theory as “too difficult” but this would be to forget Thomas More’s Utopia ‘“You must not abandon the ship just because you cannot control the winds.”
The father of economics, Adam Smith, was influenced by virtue theory. He theory of specialisation and division of labour can be seen to have close link with this theory.
In this video I look at what is a monopoly? what characteristics does it have? Why might a firm want to be one? How does it do its pricing? What does a monopoly diagram look like? What efficiencies are associated with a monopoly? What are the costs and benefits to consumers?
I also made a booklet on this, please click here to see it.
In this video I explore what monopolistic competition is with examples of it, characteristics required to achieve this, diagrams of it in the short-run and long-run.
Issues surrounding sexual ethics and Ancient views surrounding sexual ethics
When sexual ethics is explored at A2 there are four specific topics which are: contraception, premarital sex, extramarital sex and homosexuality.
Contraception
This area focuses on exploring the purposes of sex and hence whether contraception is something which is morally acceptable. By far this area has the most conflicting views. Contraception is also an important topic because it has some serious implication for example, the world population and amount of unwanted babies that are born.
Premarital Sex
This not only focuses on what the purpose of sex is but in what context it can be performed. This is am important issues because it poses deeper questions like do children need to born into a married couple? Does the relation of the two individuals involved matter or whether it is done after marriage? Personally, I find this the most interesting point because over the years changes in attitudes towards this has changed the most.
Extramarital Sex
This area is concerned with sex being performed outside of marriage. Up till today there are still very negative views towards this because it seems to dismiss the purpose of marriage. It is also something which is not associated with positive outcomes which is what usually spurs these negative feelings.
Homosexuality
This like premarital sex has seen a huge shift in attitudes. Civil partnerships are now legal and a homosexual couple is not seen as something evil (in most people’s eyes). It is important because it questions our human rights, if we are of a different sexuality then do we not have the same rights as anyone else to express it?
Ancient Views
Pythagoreans and Stoics
Disapproved of sexual activity as it is not holy. Pythagoreans believed prevent the progress of the soul because it is bodily.
Plato
Feminist and believed in equality between women and men.
Sex is solely there to procreate and distracts us of our paths.
It should be conducted between two people who have no relationship so no one person is put down (quite literally!)
He suggested breeding parties be held were only the elite of society were allowed to have sex and breed.
Once the baby was born women should go back to working the way they did and the baby should be looked after by nurses in nurseries.
Rather strange idea in my opinion.
Cyrenaics
The celebrated pleasure and sensual enjoyment.
The encouraged sexual activity and all forms of it.
They saw sex as a supreme good and believed variety was a spice of life.
Epicureans
They had the right balance saying the pleasures of the mind need to be balanced with activities such as sex.
Bible
Old Testament had an all in all positive attitude to sex.
The Song of Songs in this is a whole book on love making
However, it still demonstrated a rather society.
New Testament seems to be focused around sex being used as a mechanism to have children. This was encouraged by the Thomastic approach which used cause as a way of determining morality.
In this video I explore what are the various pricing strategies (cost-plus pricing, price discrimination, predatory (destroyer) pricing, limit pricing, price skimming and penetration pricing. I look at some of the benefits and costs of these strategies and what are the diagrams used to shows them.
In this video I explore how Kantian ethics can be applied to business and consumers; employees and employers; business and globalisation; and business and the environment.
Application of Kantian ethics to Business ethics
Employees + Employers
Kantian Ethics has one fundamental belief which protects both employees and consumers and that is that profit is not an end in itself. Implying that firms cannot exploit consumers and employees for profit and profit should be used to satisfy all stakeholders. Kantian ethics follows the Stakeholder theory which is supported by Havard Business School. Kant saw business enterprises as moral communities which is further support to the view that employees and consumers should be treated with care and respected.
Employees are also expected to work in a democratic manner i.e. contributing to business decisions and the third formulation, Kingdom of Ends principle, implies that employees have a right to whistle blow in fact it is their duty to do so. Employees should also not give or accept bribes or engage in any similar activity e.g. sleeping with your boss to get a promotion as this cannot be universalized.
There are two crucial practical application of Kantian Ethics in respect to the relationship between employees and employers. The first is that contracts cannot be broken and must be fulfilled. This is because if contracts were allowed to be dismantled on a universal scale havoc would be caused.This protects employees as in theory redundancies should not be allowed (but now they are written in contracts!). The second is that a scheme called Open Book Management and it has been popular among firms. This supports views held by Kantian ethics as it every so often is a way of informing employees on a one-to-one basis on their progress, career opportunities etc.
Business + Consumers
Clearly, if the ends and means principle was taken literally then business and commerce could not exist because ‘price’ would not exist. However, Kant a canny business man himself made no delay when chasing students for lecturer’s fees. This shows that Kant himself had no problem with fees. What he had a problem is firm’s overcharging and using consumers purely as a means of making profit.
Kant explains this more clearly with his greengrocer example. In this example he says two shopkeepers selling homogenous goods for £3. However, grocer A utilizes this price because this is the market price but grocer B charges this price so the consumer does not go to grocer A. The later grocer would be doing an immoral thing because he is using the consumers as a means to an end.
Business + the Environment
When we looked at environmental ethics an interesting point is that Kant would give the environment legal rights not moral rights (Paul Taylor’s point of view). This makes sense when we explore the relationship between business and the environment. Businesses should follow environmental law as this is something that can be universalised. So basically businesses need to use the environment in moderation due to the universalisability principle.
Business + Globalisation
In this area of business ethics I will focus on the use of cheap labour abroad. Kant would disagree with businesses using cheap labour abroad in countries like India and China. The first reason is that the point of using cheap labour is to cut costs and maximise profits and Kant said you cannot use these workers as a means to an end. Furthermore, they should be treated equally to workers in the UK. Four conditions should be met in order for using labour from overseas to be correct and those are (i) workers must freely chose work (ii) the work should be ‘meaningful’ and provide opportunities (iii) workers should be allowed to develop morally and (iv) the salary must be fair and leisure activities of some sort should be offered. It can be conceived, that duty and goodwill gets rid of problems of globalisation!
Strengths
The stakeholder approach is supported by Havard Business School which demonstrates the practicality.
The idea that there is nothing wrong with fees and that Kantian ethics can be applied through schemes like Open Book management make the theory practical.
It preserves the dignity of individuals and provides a critique to utilitarianism
Promotes democracy and fairer business atmosphere
Bowie believes this can help promote world peace
Supports businesses adhering to laws (a bit like Natural Law)
Weakness
It is impossible to 100% apply this theory to business ethics given the nature of Kantian ethics which makes it unrealistic
Also, can we really make firms not be driven by profit but rather by duty?
It talks about the grocers and their motivation but if you are a monopoly or a similar market structure how can you arrive at a fair price?
The Kinked Demand theory is a theory of what a oligopolistic firm’s demand curve should look like, it has three main parts.
The first part is the equilibrium E. It is assumed in this theory that at this equilibrium MC=MR. This is the standard output an oligopolistic firm should operate at. This point can be known as tacit collusion. In order to understand the other two parts to this theory we will explore two scenarios.
Scenario One
Imagine in an oligopolistic industry, if one firm decides to increase the price then the competitors will respond by not changing their price so that they can capture the market share lost the firm who has increased prices. This implies that demand is price elastic. For if it was not then all the other firms would increase prices too. This is why above the price P the demand curve is elastic.
Scenario Two
Imagine now in an oligopolistic market that a firm decides to lower its price. Other rival firms in the market will follow suit to stop the firm from capturing market share and a price war will break through. This implies that demand is inelastic because firms are following suit which means demand will not change much. This is why at an price below P the demand curve is inelastic.
The kinked demand curve shows that firms are better off engaging in non-price competition and in tacit collusion. It is a great way to show how firms loose out by increasing or decreasing their price in an oligopoly.
In this video I explore how the prisoners dilemma shows how firms in an oligopoly behave through dominant and non-dominant strategies.
Competitive Oligopolies - Prisoners Dilemma (Dominant and Non-Dominant Strategies)
The Prisoners Dilemma is a form of Game Theory used to show how firms in an oligopoly are interdependent. We will look at how the Prisoners Dilemma shows how firms can have a dominant strategy or not have a dominant strategy.
A dominant Strategy
A dominant strategy is were a firm has an incentive (to gain market share and increase profits) no matter what the other firm does.
Firm A
Firm B
£2.00
£1.50
£2.00
£200k each
£100k (B) £1mil (A)
£1.50
£1mill (B) £100k (A)
3 million each
So both Firm A and B have an incentive to keep their price at £1.50 regardless of what the other firm keeps. But you might be wondering then what has this got to do with interdependence? The ‘pay-off matrix’ shows that if Firm A decided they wanted to keep their price at £2.00 so they can pursue other objectives such as Corporate Social Responsibility then Firm B can only make a maximum profit of £1million this shows their interdependence. As, if they were not interdependence their maximum amount of profit would not be reliant on the price set by rival firms.
No Dominant Strategy
This when a firm has to react to what another firm does in order to be better off. So the difference is that if they had a dominant strategy no matter what another firm does they will be better off at Price X, but here they can only be better off at Price X if the rival firm also charges at Price X or the other firm will need to follow suit to recapture lost market share and profits. This might sound a bit confusing so I will explain this using the ‘pay-off matrix’ below.
Firm A
Firm B
£1.50
£1.30
£1.50
£3 million each
£1.5m (B) £5m (A)
£1.30
£5m (B) £1.5m (A)
£1 million each
So if again we look at firm B who is deciding whether to price at £1.50 or £1.30. This decision will be based on firm A (unlike when the firm was choosing between £2.00 and £1.50 and had a dominant strategy). For example, if firm B charges at £1.50 it might loose out because firm A is charging at £1.30 and if it chooses to charge at £1.30 it might loose out again if the firm B is charging at £1.30. So this strategy also shows interdependence because it shows how a firm bases its prices on competitors. The non-dominant strategy which seems to be more common also shows why firms have an incentive to collude as well as cheat and engage in non-price competition.
What is a concentration ratio? A concentration ratio is a percentage which shows the percentage of output/sales of a group of firms in an industry. We usually show this b stating whether it is the top 2, 3, 5 etc. firms e.g. the 3-firm market concentration for the grocery market is 64.7% in 2008. Why is this important? From this measurement we can induce what market structure a particular industry belongs to. For example if a few firms dominate the market (oligopoly) the concentration ratio for the top x-firms will be high whereas if no firms dominate the market (perfect competition) then the concentration ratio for the same number of firms will be significantly lower. In an exam, as far as my knowledge goes you can be asked to calculate it, verify it or use it to suggest what market structure an industry belongs to.
What are the responsibilities of employees, employers and on a wider level businesses? Production and distribution of goods? How profits be handled? Who should run markets? What is the fairest type of market?
Purpose of businesses
The purpose of a business determines what are the rights and wrongs of a business and how it acts. As everyone has various opinions on what is the purpose of a business, for A2 OCR RS, three important theories should be learnt. The first is Shareholder theory which is advocated by the famous economist Milton Friedman. He believed the sole purpose of business is to profit maximise , ‘There is one and only one social responsibility of business...to increase its profits so long as it stays within the rules of the game’. So just from this theory we can see how the purpose of a business determines how a business runs e.g. if we follow stakeholder then employees should be paid as less as possible in order to maximise profits. The second theory is Shareholder theory and is perhaps the most popular. It is supported by Havard Business School and Preference utilitarian Peter Singer. This theory suggests that the sole purpose of a business is to satisfy its stakeholders and hence contribute to the well-being of society. The last theory is perhaps arguably the most abstract, it is Contractarian theory. This theory is advocated by John Rawls, Dunfee and Donaldson and presents the idea that ‘business is a means fir distributing justice’. This means that businesses should work with two principles: liberty and social justice.
Welfare of employees, predominately in the West, is a major ethical issues. In the UK we have various laws which do this. In the UK, 1978, the Advisory Conciliation and Arbitration Service (ACAS) was set up. Its purpose is to negotiate in disputes and arguable has been very successful, as there have been few major employee disputes. Ethics can guide to us to get a good balance between interests of employees and employers.
Information awareness
This is an important issue which we consider when looking at the relationship between businesses and consumers. Is it unethical for firms not to inform their consumers or manipulate the information? Should advertising exist?
Corporate social responsibility
This is a fairly new objective that firms pursue. It is mainly driven through demand from consumers for an environmentally aware firm. This is another branch of business ethics which is important for example, should a firm be ‘green’ as a response to consumer demand or for the environment itself.
There are many other areas such as use of cheap labor overseas, fair trade and other important case studies for example the Ford Pinto case which you will see in my other posts!
NL provides a stakeholder theory which can be applied to BE. This means that the purpose of a business is to satisfy all its stakeholders not just shareholders. In this post we will explore four branches within BE: the relationships between employees and employer; business and consumers; business and the environment; and business and globalisation. In addition, the strengths and weaknesses will be explored as well. When applying NL to BE there are two main sources of guidance we look to the 10 commandments (remember this is a Catholic teaching) and the formation of rules through primary precepts.
Employees and Employers
The Decalogue provides some good advice to how the relationship between employees and employers should be. Business must shut on Sunday as this is the day of Sabbath and the fourth commandment says ‘thou must remember Sabbath day, keep it holy’. Employers are expected not to behave rivalrous towards other firms in the industry as the tenth commandment suggest ‘Thou must not covet thy neighbor’. This implies that employers should treat employees with respect and value and not exploit them or their wages in order to compete with other firms. Employees, however, are also expected to behave in a certain way too for example they are expected not to steal (8th commandment). Furthermore, they are expected to whistle-blow if they see any practice which is moral and for this they should be rewarded. This belief stems from the commandment ‘thou must not bear false witness’ (9th commandment).
The primary precepts also provide some guidance as to how the relationship between employers and employees should be. The precept of life, education and most interestingly reproduction apply here. For example the precept of life determines that we should be kind and respectful to one another, the precept of education encourages employers to train and educate employees and the precept of reproduction implies that maternity and paternity leave should be given and employees should be respected for taking a leave not looked down upon.
Business and Consumer
Similarly, we can draw conclusions from Natural Law when exploring the relationship between business and consumers. Like employees consumers are expected not to steal or bear false witness. Businesses are also expected to charge a fair price for their goods and services because if the price is to high some people may interpret this as being stealing. Furthermore, consumers need to have all the information because this can also be seen as a form of deception.
Business and the Environment
Given that one of the primary precepts is worshipping God, we can induce that businesses should act as stewards and not exploit the environment as this is one way of worshipping God. Where possible green policies should be implanted e.g. use of solar panels.
Business and globalisation
This branch of BE looks at the utilization of cheap labour abroad in places like India and China. NL promotes the care and protection of the vulnerable hence workers in these countries should be cared and protected for. Furthermore as we saw in the employees and employers sections workers need to be given a fair wage and good working conditions.
Strengths
Supports laws that already exist e.g. informing the consumer
Supports Havard University’s stakeholder theory
Promotes fairness and equality
Has some great implications for the future
Weaknesses
Is it realistic?
The idea of firms not being rivalrous and competing has some problems e.g. in economics we see this can lead to adverse affects for the consumers
You can’t satisfy employees with good pay, working conditions etc and consumers with low prices - they clash.
