BB315014S Sustainable Management Futures 27 MARCH 2012

Transcription

1 BB315014S Sustainable Management Futures 27 MARCH 2012

2 Assignment Revisit (Q1) Part 1 : Read a text & answer two questions (each ~750 words) 1.1 Using your knowledge of the free markets perspective, examine the ethics and morality of let capitalism rip allegation made by Prime Minister David Cameron. (750 words) 1.2 Evaluate the system using Milton Friedman s and Norman Bowie s neo-classical models of corporate social responsibility (CSR). Make recommendations on the way forward for a more sustainable market economics. (750 words)

3 The Triple Bottom Line The dominant paradigm views economics as being value-neutral, even as economists from Adam Smith and John Stuart Mill to Milton Friedman and Paul Krugman are known for their research into political, social and not just economics A more adequate model must recognize that economic, ecological and ethical concerns are all directed at the same question: What are the best ways for human beings to live and flourish within the biosphere that is their only home? Corporate Social Responsibility (CSR) must be assessed on all three criteria: Economic, Ecological & Ethical The Three Pillars of Sustainability or The Triple Bottom Line.

4 Triple Bottom Line (3 Pillars of Sustainability) Economics Produced and distributed goods and services that individuals need and desire. Ecology Relationship by which individuals associate with their natural environment. Ethics The enquiry that deals with how individuals should live their lives. In traditional ethical thought self-interest and ethical responsibility are in conflict with each other The transition into sustainability can work in favour of businesses in the long-term The dominant paradigm of business and economics is incapable of adequately addressing these challenges Any legitimate attempt to do so must integrate the three E s DesJardins (2007)

5 CSR based on free-market solutions 5 Des Jardins contends that standard models of CSR assume (free) market-based solutions as a default position Market failures are an inescapable fact of economic life. Market failures are irreversible as is climate change We have strong reasons and the evidence not to trust the market, nor consumer demand or government regulation, as they are not free from outside influences Herman Daly makes a convincing case for economic development replacing economic growth

6 Daly s alternative model Argues that neoclassical economics with its emphasis on economic growth approach will inevitably fail to meet these challenges unless it recognizes that the economy is but a subsystem with Earth s biosphere Economic activity has to take place within this biosphere, it cannot expand beyond this, all the factors of production ultimately originate from the earth The Growth model of economics will prove unstable if resources move through this system at a rate that outpaces the productive capacity of the earth Hence, Daly puts forth a system that uses resources only at a rate that can be sustained over the long-term and that recycles or reuses both the byproducts of the production process and products themselves. 6

7 CSR and the Standard Model The classic model of CSR - primary responsibility of business managers is to make the most of profits within the law. Milton Friedman - social responsibility passes over the significance of their stockholder. Social responsibility of a business is to develop profits to the maximum by satisfying customer demand while obeying the rules of economic game competing honestly and evading deception and fraud. Friedman s view - economies whose markets are not open and free but moreover marked by deception and fraud are going to fail to attain economic ends. Norman Bowie argues that ethical customs also contain the duty of acting morally and avoiding harm, even when this is not prohibited by law. Bowie states that if a business obeys environmental laws it will be accepted by the society. Bowie found out that most consumers are not willing to pay more money for environmentally friendly products. Furthermore consumers are not keen to conserve resources or recycle.

8 Free Market Ethics The utilitarian ethical tradition describes that impartiality and equality were essential necessities of ethics. The view of free market defenders argue that both, the right for private property and the right of individual rights offer solid support for market economics. The right of privately owning and controlling property is an ethical justification. John Locke claims that besides with liberty and life, one basic natural right is property. 8

9 Which system? Let us assume that neither the capitalist nor the socialist model is inherently immoral, that both are morally acceptable If you choose either one, it involves a choice of certain values over others The mixture of freedom, security and risk is very different in the two models From a moral point of view, which is the best mix? Immoral practices might develop in either system. If they do, such practices must be rooted out and avoided Each society can and should attempt to do so and to improve De George s view is There is no one best society.

10 Capitalism and Government De George s six models of capitalism Laissez-faire capitalism: No govt role in business; fails to take into account the good of overall society, counteractive to the good of those who enter into economic transactions The government is the protector of capitalists at the expense of other society members Governmental protectionism to protect businesses from foreign competition The government has numerous of diverse task vis-à-vis business open to the common interests of the citizens Government and business work together for the sake of both business and the society as a whole. Close to socialism 10

11 Ethical Perspective Summary of Ideas Driving Value Accounting Application Self-Interest Utilitarian Beliefs Personal Virtues Religious Injunctions Government Requirements Universal Rules Individual Rights Economic Efficiency Distributive Justice Contributing Liberty The Role of the WTO in Global everyone in society would be better off if each individual could pursue his self-interests a law is "right" if the benefits to society are greater than the harm Business personal self-interest greatest good for the greatest 11 number individuals must adopt a set of values other people should be that support virtues behaviour given acceptable treatment individuals need compassion and kindness as well as truthfulness and need to have reciprocity temperance and compassion laws represent the fundamental rules are developed from minimum standards of agreed-on central authorities morality for society inspired rules dictate action for the greater good a summary of rights that can be agreed on to guarantee freedoms maximize output and level of profitability never implement a course of action that harms the less powerful do not try to obtain self-fulfillment that results in the disruption of the rights of others rules will be used to eliminate the self-interests of those making the decisions protect each individual's guaranteed rights and freedoms economic efficiency those individuals who are disadvantaged should be guaranteed a social contract follow the rights of liberty within the limitations established by laws self-serving bias drove the scandals at Enron and WorldCom could be a huge gap between shortterm and long-term benefits virtues of courage and integrity protect accounting's credibility apply the Golden Rule to accounting decisions government regulations and accounting standards set the rules for accounting rules and principles must be integrated to control self-interests focus on stakeholders rights when making accounting decisions accountants must understand the cost of inaccurate financial statements inaccurate financial statement can harm society accountants need to protect the interests of the public by their actions so the rights of the public are not violated.

12 Websites The Guardian - The Times - The Telegraph - The Independent - The Economist - BBC -

13 Websites Social Science Research Network (SSRN) - Eastern Economic Journal - Journal of Regulation - Thinking Economics -

14 Assignment Revisit (Q1) 1. Theoretical framework on conceptual basis. Use to justify and explain how it will help you explain issues raised. Provide appropriately referenced evidence for the chosen framework. 2. Analysis - application of theory to evidence. Use the framework that you have reviewed in (1) in order to explain, analyse and discuss the issues that you identified in (2). Provide appropriately referenced evidence for the chosen analysis. 3. Conclusions & Recommendations Summary of findings from (1) and (2). Outline a future strategy that would address the most important findings. Provide appropriately referenced evidence or supports for the recommendation. 4. Structure, Format & Presentation I. Title page II. Introduction III. Discussion IV. Conclusions and Recommendations V. References 5. Language 6. Referencing

15 Assignment Revisit (Q1) Theoretical framework 30% Application, evaluation, critical thinking 30% Conclusion & recommendation 10% Introduction, structure, format 10% Language - 10% Referencing 10%