Ethics In Capitalism? Are Those 2 Mutually Exclusive And Contradictory?

At work, several of my co-workers lashed out at Walmart for what they regarded as their unfair business practises. Their allegations, substaniated by a former walmart employee was that the presence of Walmart devalues the networth of homes in the surrounding areas, and more than a few accused them of unethical business practises.

The unethical business practises, that my mates levelled against Walmart was their decision of offering very low prices on their goods, thereby, attracting hordes of customers, and putting mom and pops businesses at peril. Alternatively, these medium scale businesses could follow suit by lowering their prices, to preempt the defection of their long time customers to walmart, or just pack up. I listened to them, and defended the corporation, insisting that though I wasnt a fan of capitalism, however, who am I to call the shots, when the country, USA is a capitalistic society. Capitalism, from the outside, may be about greed, profit, at all cost, be it laying off workers, outsourcing jobs, for a huge return, at a cheaper rate, or the willingness to sell the enterprise to the highest bidder.

I did not have any supporter, for I was accused of defending a corporation. One of the ladies, even stated that she shuns shopping at Gap, and other stores with questionable business practises. But what can we do? As my co-workers remarked, Walmart at times, do send their workers to rival business stores, to check on the prices of their inventory and then, would mark down their prices in order to attract more customers. As such, there is a bidding war between the rival industries, but can we, the consumers complain, when we are getting a fair deal? Can the community, complain, when they are rewarded with hefty property taxes from these corporations?

The casualties are the struggling businesses, the mom and pops store, with no resources to survive. But seriously, does capitalism really give a hoot about them? When we hear of ethics in capitalism, does it appear contradictory to you, or do you feel that both of them can go hand in hand? How can ethics in this capitalistic society be addressed, (and I am sure, it has been an issue with the Enron debacle), when companies are outsourcing their jobs, rewarding the head honchos with a 7 figure salary, while laying off workers? Shouldnt they be all lumped together, or seriously, if ethics in businesses was addressed, does the notion, "Fighting squarely with your rivals" feature in such debates? I think ethics itself in a capitalistic society is at best, contradictory. What do you think?

The unethical business practises, that my mates levelled against Walmart was their decision of offering very low prices on their goods

If you offer high prices, they accuse you of gourging. If you offer low prices, it's also unethical. Dullards they are.

insisting that though I wasnt a fan of capitalism,

I am a fan of capitalism. I don't see why you shoudn't be one.

I think ethics itself in a capitalistic society is at best, contradictory. What do you think?

Capitalism is about fair competition in the marketplace. Ethical capitalists strive to enrich themselves without stealing or defrauding others. If you refuse to steal or defraud others, your profit-seeking actions will benefit others. Some "capitalists", instead of competing fairly in the marketplace, resort to fraud, theft, and the abuse of government influence in the race to get ahead. Those are the unethical ones. Low prices being evil? Ridiculous.

I never regarded the low prices of commodities as evil, and thus ridiculous. I shop for bargains. The techniques of lowering prices at certain stores, according to a former coworker, was undertaken, out of a secret trip, by an employee of a rival store to another store, to check out their prices. Is that unethical, sure. But if the prices were already set, beforehand, be it one dollar, as long as no external factor influenced their decision, that's ok with me.

The casualties are the struggling businesses, the mom and pops store

When a business becomes unprofitable despite your best efforts, it is a sign that it's not the ideal business for you to be in. When word processors were invented, the "casualties" were the typewriter manufacturers. So they sold off their factories and use their resources to start new businesses. "Protection" will have harmed development.

That's exactly what the mom and pop stores should do; they should sell their stores and enter into new businesses in which they will have an advantage. New businesses that a giant corporation can't do effectively. In the process of finding new businesses to enter into, moms and pops would have succeeded in developing the economy a little bit more. The society will be able to enjoy the low prices of Walmart as well as the new businesses created from the ashes of the mom and pop stores that couldn't compete. Every business failure is just manure for future success.

was undertaken, out of a secret trip, by an employee of a rival store to another store, to check out their prices.

If you have ever started a business, you will agree with me that a vital step is to check your competitor's prices. As long as your prices are not hidden from the general public, there's no reason why a competitor shouldn't be able to make use of it. How can you run a business without knowing where your prices stand relative to your competitors?

Posted by: Ndipe
The techniques of lowering prices at certain stores, according to a former coworker, was undertaken, out of a secret trip, by an employee of a rival store to another store, to check out their prices. Is that unethical, sure. But if the prices were already set, beforehand, be it one dollar, as long no external factor influenced their decision, that's ok with me.

I agree with you so far except for the fact that if a choice was going to be made between capitalism and the rest of the market systems available,i would choose capitalism not that am an ardent fan or something.
However,here,i seem to disagree with you.Is it really unethical to check with prices of rival stores in order to fix prices of certain commodities?Remember one of the major determinants of demand is THE PRICES OF OTHER COMMODITIES OR RELATING COMMODITES as the case may be.I mean,theoretically,the invinsible hand (the interaction between the forces of demand and supply)seems to be responsible for the prices of commodity but does that law really apply in real life terms?Think about it.

with Capitalism the consumer is always a winner, low prices; high quality.

since we all are consumers , then we all are WINNERS .


Capitalism is it.

upson,that depends entirely on the kind of economy.In Nigeria,can you get low prices and high quality?Can you?

It's only logical that he highest quality items in any product category will always be more expensive than others. But that has nothing to do with whether capitalism is right or wrong. Over time, prices go down and quality goes up.

Capitalism is about fair competition in the marketplace.

Could you explain what you mean by 'fair'?

For example, if a large corporation uses its power in the market to force smaller companies out by predatory pricing, is that fair?

Or if the large corporation forbids its suppliers from supplying any competitor, is that fair?

@Ka, that is why I wrote that ethics in capitalism is contradictory. Fair competition comes into play when competing corporations, offer prices, solely on factors, like the cost and overall revenue that will be derived from selling their product. Checking out, or should I write, sending out your employees to check out your competitior's prices, while posing as a buyer is unethical, no 2 ways about it. Ok, let me give you a hypothetical example. We all have different computer corporations. We are middle men, and Dell offers us some of their consignment at a cheaper price, lets say, 500 dollars each. Now, it is upto me to determine how much I will charge my consumer, depending on how much money that I am eager to reap off. Supposing a rival of mine decides to sell his computer at a loss, for 450 dollars, just to spite me, would I be willing to go further down, because I am eager to gain more customers? I don't think so.

That is why I wrote capitalism is contradictory. I am all for fairness, but when you choose to counteroffer your rival's earlier price for a product, that to me is not fair. No wonder mom and pops stores are floundering in my area. But hey, some critics would say that capitalism is only for the fittest.

For example, if a large corporation uses its power in the market to force smaller companies out by predatory pricing, is that fair?

First of all, what is fair is fair, regardless of whether your company is "large" or "small".

Secondly, predatory pricing isn't an objective term. Very low prices is what you mean. (that is bad?)

Thirdly, it's not an objective term. When a company chooses a very low price to 'drive out' the competition, you can't really say whether they intend to raise the prices after their competitors have been driven out or not.

Fourthly, most economists believe that predatory pricing is a myth. Read: www.cato.org/pubs/pas/pa-169.html

Also, if a company 'drives out' it's competitors by low prices, the consumers (you and I) will benefit from the low prices, while the 'predatory' company will lose it's money. If the company attempts to raise prices after driving out the competition in order to recover its loses, competitors will just return the market. In order words, it an unprofitable practice, unless the government helps the big company by erecting artificial barriers to entry.

Based on these points, is predatory pricing fair? Is it fair for a company to offer very low prices to consumers in order to lose lots of money on the short run and gain nothing on the long run. My answer: it's not unfair, it's stupid. Should companies be alowed to offer ultra-low prices to consumers in exchange for big losses? Absolutely!

We all have different computer corporations. We are middle men, and Dell offers us some of their consignment at a cheaper price, lets say, 500 dollars each. Now, it is upto me to determine how much I will charge my consumer, depending on how much money that I am eager to reap off. Supposing a rival of mine decides to sell his computer at a loss, for 450 dollars, just to spite me, would I be willing to go further down, because I am eager to gain more customers? I don't think so.

If your competitor is willing to lose 50 dollars on every sale in order to spite you, he is simply hurting his own business. Isn't that rather stupid? If he continues doing that, then eventually he will go bankrupt, and the customers will return to you. If he's too rich to go bankrupt, then his business has been turned into a charity.

Is charity unfair? When the red cross gives people free food that someone else sells for a living, is that unfair?

Or if the large corporation forbids its suppliers from supplying any competitor, is that fair?

Exclusive contracts are nothing special. For instance, David Beckham cannot play for two different football clubs at the same time? Beyonce cannot release her music through two different record labels at the same time? Is it "unfair" that I can't record music for Celine Dion unless she dumps her current label? If a supplier decides to sign an exclusive contract wih a large corporation, it simply means that the large corporation is worth it. As long as the supplier wasn't forced at gunpoint to sign the exclusive contract, but did it to make lots of money, it is fair.

Supposing I find myself in the position of a competitor to a large corporation which has signed exclusive contracts with major suppliers, I will just look for new suppliers who haven't signed such contracts. By the time my business grows to a certain point, the old suppliers will have a good reason to terminate their exclusive contracts. Once they discover that they can make more money by supplying products to the new guy, they will start liberating themselves.

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Exclusive contracts are nothing special. For instance, David Beckham cannot play for two different football clubs at the same time? Beyonce cannot release her music through two different record labels at the same time? Is it "unfair" that I can't record music for Celine Dion unless she dumps her current label? If a supplier decides to sign an exclusive contract wih a large corporation, it simply means that the large corporation is worth it.  As long as the supplier wasn't forced at gunpoint to sign the exclusive contract, but did it to make lots of money, it is fair.

Of course superstars have sufficient 'power' to negotiate contracts at terms favourable to them - so as long as they get a good lawyer to read the small print, they may not mind being locked into an exclusive contract. The point is that there is a certain amount of volition here - the superstar consciously makes the decision to agree to the contract, especially because he knows he has many other options if the other party doesn't agree.

The case is somewhat different where there is a large company who because of its dominance in a certain area can pretty much lay down the law as to what the terms of the contract will be, and if the suppliers don't like it, they can take a walk. Of course you will say that there are many options open to the supplier - they can move elsewhere, change business, etc. But let's not pretend that these are easy decisions that can be made without much pain. In fact, the decision to remain a supplier of the big contractor may even have some emotional input - what if the supplier's family is tied to the area and doesn't want to move?

Supposing I find myself in the position of a competitor to a large corporation which has signed exclusive contracts with major suppliers, I will just look for new suppliers who haven't signed such contracts.  By the time my business grows to a certain point, the old suppliers will have a good reason to terminate their exclusive contracts.  Once they discover that they can make more money by supplying products to the new guy, they will start liberating themselves.

What if the existing company wants to extend its control by insisting in its contracts that none of its business partners should do business with anyone who does business with a competitor? Do you think this is unrealistic, or excessive, or still all right as it doesn't stifle competition?

I'm tired of being the only capitalist in this country. I'm tired of being the only one answering these questions.

What if the existing company wants to extend its control by insisting in its contracts that none of its business partners should do business with anyone who does business with a competitor?

Every contract signed by a knowledgeable businessman has an expiry date. When a contract is up for renewal, if the suppliers feel it no longer favors them, they can decide not to renew it. It's not very complex.

The case is somewhat different where there is a large company who because of its dominance in a certain area can pretty much lay down the law as to what the terms of the contract will be, and if the suppliers don't like it, they can take a walk.

That's how every contract works, whether the company is big or small. If you don't like it, you can take a walk. If the big company doesn't like the fact that the suppliers don't want exclusive suppliers, it can also take a walk.

Of course you will say that there are many options open to the supplier - they can move elsewhere, change business, etc.

Exactly. It seems as if you already know the answer. There are so many possible businesses to choose from.

But let's not pretend that these are easy decisions that can be made without much pain.

Hardly is there a major business decision that does not involve a certain amount of pain. It's part of the process.

In fact, the decision to remain a supplier of the big contractor may even have some emotional input - what if the supplier's family is tied to the area and doesn't want to move?

In any geographical area that one's family is 'tied' to, there are a variety of businesses that one can run.

I didn't know that answering these questions was a burden, all right, I won't ask you any more, then.

I just feel lonely not to find anyone who can hold the same position that I hold in the whole country; that's all.

A prominent broker, has chosen to eschew from investing in companies with business alliances with South Africa, likewise, he wont invest in the tobacco industries, because cigarette kills. Now, another investor would choose a different approach and steer his clients into investing in that biz sector, because of the potential profits to be accumulated from such investments. Can someone see, how the line of ethics are compromised?

Moreso, dont you find this ironic, or at the least, quite baffling that some publishing biz, would accept advertisements from cigarette companies, and beneath the ad, would post a disclaimer about the health hazards of cigarettes and the warning from the surgeon general about cigarettes. Now, the concluding reasoning is that money, rather than ethics is the underlying factor in taking up this advertisements. Readers Digest, one popular magazine in the USA does not accept ADs from tobacco companies, and I like their stance.

Can you now see the conflict between captialism and ethics?

No, I don't see the conflict. Ethics is a personal thing. What is ethical to me may not be ethical to you. Capitalism in a mostly free market system allows you to practice your own ethics and allows me to practice my own ethics.

Seun:

No, I don't see the conflict. Ethics is a personal thing. What is ethical to me may not be ethical to you. Capitalism in a mostly free market system allows you to practice your own ethics and allows me to practice my own ethics.

This statement somehow doesn't sound right, afterall countries have different business law to limit what your ethics are
you just don't do thing "you" think is right/wrong- the societal interests are also taken into account

Seeing the way you have riped the discussion line by line and taken everyone opinion at face values, theres no room for understanding in here!

"Capitalism in a mostly free market system allows you to practice your own ethics and allows me to practice my own ethics."



Ndipe's comment.


Your above discourse is misleading. There are rules that govern the business structure of a society. If you flout any of the rules, you may be subject to being penalized. I am certain that you are familiar with the Enron Saga and the consequences that resulted for the head honchos. IF capitalism allowed businesses to practise their own ethics, then we wont be having a set minimum wage for the masses, because some entrepreuners would cheat their employees out of their paycheck. The bottom line, is that while the publishing industry can decide which advertisements to accept in their magazines/newspapers, at the same time, they have to adhere to the rules of the governing body of the country. So, while a magazine could (without any conscience) accept funds, in exchange for a placed advertisement from a tobacco company, they have to post a disclaimer (whether they like it or not) about the health defects associated with smoking.

Your above discourse is misleading. There are rules that govern the business structure of a society. If you flout any of the rules, you may be subject to being penalized.

Yes, I forgot to mention the basic moral element of a capitalistic society: respect for private property. Fraud is wrong, it has to be, because it's an indirect form of stealing which is a violation of the victims' rights.

However, many rules businesses are forced to abide by are unecessary, wasteful, and downright stupid:

IF capitalism allowed businesses to practise their own ethics, then we wont be having a set minimum wage for the masses, because some entrepreuners would cheat their employees out of their paycheck.

Um, everyone should know that minimum wage laws are stupid by now. See www.yaf.com/minwage.shtml

The bottom line, is that while the publishing industry can decide which advertisements to accept in their magazines/newspapers, at the same time, they have to adhere to the rules of the governing body of the country. So, while a magazine could (without any conscience) accept funds, in exchange for a placed advertisement from a tobacco company, they have to post a disclaimer (whether they like it or not) about the health defects associated with smoking.

I don't think I meant to imply that mostly-capitalistic economies have no laws or regulations.

On the other hand, I am for government, setting rules and regulations for businesses to adhere to, mainly for checks and balances, otherwise, profits would be acquired by corrupt companies at the exploitation of employees (like cheap labor) and the environment

http://www.ft.com/cms/s/312ea7a8-c6fc-11db-8078-000b5df10621.html.

Phillip Morris, until recently, never informed the public on the health effects of smoking cigarettes, like cancer. So, I was a bit surprised and found it ironic, that this tobacco company was advertising on television, in which they discussed topics on how to quit smoking or something to that effect. Its been long, so I just went on the website, and hmmm, I just have to conclude that their message of quitting smoking while selling cigarettes at the same time is very contradictory. Were it not for the lawsuit, among other deterents(?) (I don't know if the govt were involved in it), would they have informed the public on the hazards of smoking? I doubt it.

http://www.philipmorrisusa.com/en/home.asp

About minimum wage, I am in whole support of the government, being involved in it, by instituting fair practises like minimum wage, etc for the benefits of the employees. That protects the welfare of employees, because no business would be able to circumvent their employees, by cheating them without paying dearly for it. The law mandates an employer to also provide overtime pay of 1.5 to their employees who work past the required 8 hours a day at their job. Even with the existence of such laws, there are stories of some corrupt companies who have attempted to cheat their employees with resulting repercussions to pay for their greed.
So, if the govt did not step in by stipulating a certain amount of money to be paid to an employee aka minimum wage, what makes you think that these greedy corporations wont cheat their employees of their paycheck, all in a bid to make more money for themselves. Tell me, how is that ethical in a capitalistic country?

The American workers fare better than their Nigerian counterparts. We have heard of stories of unpaid salaries for civil servants. Servants in housholds are accustomed to working from morning to night either washing the dishes, feeding junior, washing the car, doing laundry, cooking, with an occasional break in between. Since there are no laws to protect their rights in Nigeria, at the end of the month, their 'oga' and 'madam' would give them their paltry salary of --- that was agreed upon when they were brought from their hometown. There is no such thing as overtime, or even minimum wage for them, but I gotta tell you that it would be a different ball of game, if they worked for such families in the USA for more than 8 hours without getting overtime pay.

- Minimum wage is rubbish. Forget about it.
- Exploitation of cheap labor is not corruption. Americans call it 'outsourcing'. The practice equalizes wages.
- Cigarette smoking is bad for your health, but for some people, the benefits ("image" may outweight the risk.
Capitalism doesn't force you to accept tobacco ads, but it allows you to start a business to help nicotine addicts.
- Workers with unpaid salaries are victims of theft, and we have adequate laws against theft in Nigeria.

Adequate laws against theft in Nigeria? Could it be possible that unpaid public servants in Nigeria can utilize such laws to their advantage?

I also did not know that there is an 'image' (of what) achieved in smoking cigarettes. Is it any different from peer pressure?

Adequate laws against theft in Nigeria? Could it be possible that unpaid public servants in Nigeria can utilize such laws to their advantage?

Unpaid public servants in Nigeria are not victims of capitalism. They are victims of a corrupt government that wastes limited resources trying to inefficiently provide what the private sector can provide adequately. But we do have nice laws in Nigeria - the problem we have is in the enforcement of those laws. More laws won't help.

Yeah, they are victims of capitalism, because, of the corrupt practises of the state government. Is it not amazing that there is a bit of a relationship between unpaid salaries, and low wages, offered by some corporations to illegal immigrants in the USA? There have been stories of workers who have been unpaid for overtime work by their corporation, all for what? Greed?

Yeah, they are victims of capitalism, because, some of the [size=14pt]state government[/size],

You've said it yourself; it's the corrupt government.
The problem of corrupt government is present in communist countries too, so it has nothing to do with capitalism.

Capitalism is very much against theft: why bother to work hard if others can just steal your possessions?

I'm anti-capitalist and will continue being one.
It is only the rich who benefit from capitalist states.
Communism is the best. Crime is not completely eradicted, no one is saying it's perfect, but it's a lot better than capitalism.

How can you be in a society where people work hand in hand to benefit everyone and say it's not good?

In Theory Communism is the best, but in practice name one good fully communist nation?
Socialism is the best! I mixture, the government should control the emenities, but not strangle hold every business, thats just bad economics

I'm anti-capitalist and will continue being one.

Until you grow up and study Economics 101.

It is only the rich who benefit from capitalist states.

It's only the lazy that have to[i] remain[/i] poor in capitalist states. In communist states, everyone is poor!

Communism is the best. <<snip>> no one is saying it's perfect, but it's a lot better than capitalism.

If this is true, then why is it that people living in communist countries (USSR, Cuba) are always trying to escape?

How can you be in a society where people work hand in hand to benefit everyone and say it's not good?

Because there is no such thing as "everyone". Because what benefits me may not benefit you. So it's just a lie.

In Theory Communism is the best, but in practice name one good fully communist nation?

Which theory? According to the many theories of economics 101, communism is utter foolishness!

Socialism is the best! I mixture, the government should control the emenities, but not strangle hold every business, thats just bad economics

Why should government control the amenities when the private sector can provide them perfectly well?
Why is it that whenever the government of any country tries to control food the result is famine?
If they are so bad with food, it's stupid to think that they will be better with water or electricity. Wake up!!

It's only the lazy that have to remain poor in capitalist states.  In communist states, everyone is poor!

how can u say such?
what about disabled people, people without degrees, foreigners who can't speak english, women who have lots of young children and so, may not be able to work?

how can u say they r poor because they r lazy? 

do u mean to tell me that in 9ja, for example, all the poor people r lazy