“Do well by doing good“

1. “Do well by doing good“ KaterinaJovanovska, 20.04.2014, Ljubljana, Slovenia

2. Capitalism is political, social, and economic system in which property, including capital assets, is owned and controlled for the most part by private persons. It functions only through inequality. (Source: The Macmillan Dictionary of Modern Economics)

3. Ethical foundations of capitalism • Monetary and social welfare • Fostering innovation (extraordinary dynamics, huge gains in productivity, electricity) • Creating wealth, prosperity • Private property • Free exchange • Civilizing progress (education, freedom) • Product safety, environmental protection • Protecting rights of labor

4. Theories • Adam Smith, “The wealth of Nations”, 1776 Invisible hand of market • Karl Marx, “Das Kapital”, 1876 Surplus value • Max Weber, “The Protestant Ethic And The Spirit Of Capitalism”, 1904 Development of a "capitalist spirit"; • Milton Friedman, 1970 Only one social responsibility of businees- to increase its profits”

5. Models of market capitalism • LME- coordinate economic activity through markets and corporate hierarchies and compete successfully on the basis of low costs and major product and technological innovations; • CME- coordinate economic activity more through non-market mechanisms, such as informal networks or corporatist bargaining, and compete on the basis of high quality products and innovations in production processes; • HM-countries that fall somewhere in between these poles and represent hybrids, can also perform well. (Source: “The Varieties Of Capitalism And Hybrid Success: Denmark In The Global Economy”, John L. Campbell and Ove K. Pedersen, 2005)

6. The field of business ethics examines moral controversies relating to the social responsibilities of capitalist business practices, the moral status of corporate entities, deceptive advertising, insider trading, basic employee rights, job discrimination, affirmative action, drug testing, and whistle blowing. (Source: IER, Internet Encyclopedia of Philosophy)

7. Ethical blindness Temporary inability of a decision maker to see the ethical dimension of a decision at stake. (Source: G.Palazzo, F. Krings, Journal of Business Ethics, 2011).

8. Strengths versus Weaknesses of Capitalism • Strengths • Extraordinary human achievement of the past two centuries generated by capitalism.  • Life expectancy prolonged • Poverty reduced • Innovation expanse • Needs of people with nothing to offer the market cannot be met by capitalism • Enemy of racial or ethnic discrimination. Prejudice is costly • Weaknesses • The short-term, purely self-interested thinking • Dangerous climate changes • Unequal property distribution, super rich and the very poor.

9. Strgengths versus Weaknesses of Capitalism • Crises in capitalist markets and the insecurity, unemployment, and poverty • Oprah Winfrey, Bill Gates significant support fort various community and social initiatives

10. Ethical Capitalism Two essential ingredients: • A focus on creating long-term economic and social value • A commitment by business to act as stewards of the full spectrum of its constituencies Results: more customers, minimizing operating costs through energy efficiency, improvement employee retention rates, long-term success. (Source: http://www.huffingtonpost.com/ “Ethical Capitalism? It's Worth a Try”, Stanley M. Bergman , 25.01.2014)

11. Case studies “Do well by doing good“ • Henry Schein Cares global corporate social responsibility program • 4.5 million children receive free oral health care • Market value $10 billion (Source:http://www.newsday.com/, Stanley M. Bergman, March 2, 2014) • Promote an environmental ethic of sustainability • Committed to high quality standards and never use artificial colors, flavors, fragrances, preservatives.  Additionally, they contain no animal by-products and are not tested on Animals. • Tom’s operates successfully in a highly competitive market despite higher costs from its use of natural ingredients and its personnel policie (Source: “Green Companies: Tom’s Of Maine”, Edmund R. Gray, Kimberly S. Petropoulos)