Corporate Governance, Internal Decision Making, and the Invisible Hand

Proponents of the dominant contemporary model of corporate governance maintain that the shareholder is the primary constituent of the firm. The responsibility for managerial decision makers in this governance system is to maximize shareholder wealth. Neoclassical economists ethically justify this objective with their interpretation of Adam Smith's notion of the Invisible Hand. Using a famous quotation from The Wealth of Nations, they interpret the Invisible Hand as Smith's (An Inquiry into the Nature and Causes of the Wealth of Nations, Methuen &; Co., London) assertion that market participants, in pursuing their own self-interests without regard to the interests of others, will collectively provide the optimal economic benefit to society. We argue that the traditional interpretation of Smith is too narrow and potentially harmful to society. In order to fully understand Smith's notion of the influence of the Invisible Hand on human behavior, one must also consider The Theory of Moral Sentiments. In that work, Smith (The Theory of Moral Sentiments, A. Millar, London) portrays the pursuit of self-interest as only one of several potential motivations for human action. He also acknowledged the existence of a “sympathy principle,” which refers to the ability and propensity of human beings to consider the interests of others. Heilbroner (The Essential Adam Smith, W.W. Norton, New York, p. 59) suggests that Smith's sympathy principle allows one to “determine the appropriate degree of self-interest, the proper display of benevolence, the desirable strictness of justice.” In fact, Smith indicates that (1) a society whose members pursue self-interest without a sense of justice will eventually collapse; (2) a society whose members pursue self-interest checked by their sense of justice alone will survive; (3) a society whose members pursue self-interest, justice, and the interests of others will flourish. Since a more complete reading of Smith indicates that human beings, in considering their own interests, also reflexively consider the interests of others when making decisions, then the traditional corporate governance model appears to be lacking. A broader, multiple stakeholder approach to corporate governance that considers the interests of other constituencies may be more consistent with Smith's views. In particular, Smith's sympathy principle provides a theoretical foundation for a shift away from the narrow, yet dominant, shareholder-based corporate governance model and toward multiple stakeholder models of corporate governance [e.g., Business and Society: A Strategic Approach to Corporate Citizenship, Houghton Mifflin, Boston, MA] and internal decision-making [e.g., Sloan Management Review 38, (1997) 25–37].     

Corporate profit,entrepreneurship theory and business ethics

Economic profit is produced by entrepreneurs, those special individuals able to detect and seize as yet unexploited market opportunities. Many large capitalist firms manage to deliver positive profits even in the most competitive environments. They can do so, thanks to internal entrepreneurs, a subset of their employees able to drive change and develop innovation in the workplace. This paper argues that the goal of increasing economic profit is fully consistent with the corporation doing good for society. However, there is little justification for corporations to transfer the whole economic profit to shareholders. Economic agents entitled to receive the economic profit are precisely those who create this profit, namely the internal entrepreneurs.     

Understanding Social Welfare Capitalism,Private Property,and the Government’s Duty to Create a Sustainable Environment

No one would deny that sustainability is necessary for individual, business, and national survival. How this goal is to be accomplished is a matter of great debate. In this article I will show that the United States and other developed countries have a duty to create sustainable cities, even if that is against a notion of private property rights considered as an absolute. Through eminent domain and regulation, developed countries can fulfill their obligations to current and future generations. To do so, the governments must reject perfectly competitive free market capitalism and the absolute right to private property, and more fully adopt social welfare capitalism as their economic system. The result will be a sustainable society that balances democracy, individual rights and individual flourishing with the community’s flourishing.     

Welfare to Well‐Being Framework for Research,Education, and Outreach

The proposed framework is intended to serve as a model for understanding the comprehensiveness of welfare assistance policies that contribute to the economic well‐being of individuals and families. The framework uses a systems approach to move thinking from a narrow focus on welfare assistance as welfare for the few to well‐being of the many. Such an approach provides a new way to understand policies and language related to welfare reform.     

Consumer Trust,Social Marketing and Ethics of Welfare Exchange

The global corporate scandals such as Enron, Worldcom and Global Crossing have raised fundamental issues of business ethics as well as economic, social and anthropological questions concerning the nature of business competition and global capitalism. The purpose of this conceptual paper is to introduce the concept of “welfare exchange” to the existing notions of economic, social and anthropological notions of business and exchange in markets and society in the 21st century. Global competition and business success in the 21st century continue to raise the nature of economic value and the interaction among diverse actors in international markets, institutions and society. We believe that the nature of such exchange between consumers and organizations, which can also be termed social marketing, need to increasingly take into account a welfare and ethical component. In this paper, we introduce our concept of welfare exchange to emphasize the importance of such welfare and ethical issues in the global business environment of the 21st century.     

Capitalism and rights: An essay toward fine tuning the moral foundations of the free society

The moral foundations of the free society are not epitomized by democratic decisions about costs and benefits, as Michael Novak recently argued in The American Vision: An Essay on the Future of Democratic Capitalism. Nor is equality of opportunity, insured through government measures that prohibit private discrimination, a component of the liberty that characterizes the free society, as Milton and Rose Friedman recently argued in their Free To Choose. Rather, it is the theory of rights — which is the theory of private property, broadly understood — that underpins and epitomizes the free society, justifying the capitalist economic order in the process. For that theory describes our basic moral and legal relationships, and shows as well that capitalism, unlike socialism, is a fundamentally moral system.Roger Pilon, Research Fellow, Institute for Humane Studies, 1177 University Drive, Menlo Park, CA 94025; currently: Special Assistant to the Director, U.S. Office of Personnel Management, Washington, D.C. 20415; A.B., Columbia University, 1971; M.A., Ph.D., University of Chicago, 1972, 1979.     

论非公有制经济在构建社会主义和谐社会中的地位

构建社会主义和谐社会,从宏观上看,是社会经济基础和上层建筑之间的和谐。而经济基础本身则依赖于各种不同经济成分之间的和谐。以公有制为主体,多种所有制经济共同发展的社会主义基本经济制度就是强调经济基础的和谐。按照这样的理念,发展非公有制经济,可以激发民众创业的热情和积极性,把消费资金转变为生产资金,吸纳更多的劳动力就业,创造更多的劳动就业机会,并进一步扩大中等收入阶层的比重,促进社会稳定和持久的繁荣,实现共同富裕的社会主义本质。因此,非公有制经济的发展对构建社会主义和谐社会具有重要的意义和价值。     

Adam Smith's invisible hand argument

Adam Smith is usually thought to argue that the result of everyone pursuing their own interests will be the maximization of the interests of society. The invisible hand of the free market will transform the individual's pursuit of gain into the general utility of society. This is the invisible hand argument. Many people, although Smith did not, draw a moral corollary from this argument, and use it to defend the moral acceptability of pursuing one's own self-interest. Smith does use the invisible hand argument; however, a close reading of theWealth of Nations reveals that Smith thought the interests of merchants and manufacturers were fundamentally opposed to those of society in general, and that they had an inherent tendency to deceive and oppress society while pursuing their own interests. How can these two views of what results when merchants and manufactures pursue their self-interest be made compatible? It is argued that the invisible hand argument when applied to merchants and manufacturers, (its application to labour and landlords is only mentioned briefly), is extremely restrictive, and that similar restrictions must apply to the moral corollary. In particular, the invisible hand argument applies only to investing capital in one's own country for maximum profit.     

Personal values associated with political consumption: an exploratory study with university students in Brazil

Emerging countries have witnessed an incredible change in their societal structure in the last few years. In Brazil, the economical rise of the middle class brought more that 100 million people to the marketplace. This stimulus to consumerism (i.e. the social and economic order that encourages the purchase of goods and services in ever‐greater amounts) is accompanied by a notable growth in social movements and mobilization of citizen‐consumers, which indicates changes in the values of individuals and concerns with the direction the society is taking. Conscious and political consumption consequently arises as an alternative way. Especially among young consumers such issues are interesting to address from a theoretical and social point of view, as this new generation will shape the future of the nation. Therefore, the main objective of this study is to analyse socially conscious and political consumption in terms of consumers’ civic engagement as political citizens. We argue that the young political consumer is value‐oriented. The study relied on quantitative research, conducted through an internet‐based survey where 458 valid questionnaires were obtained. Schwartz's Portrait Values Questionnaire was used to measure personal values of the interviewees. Conscious and political consumption were measured through eight questions addressing alter‐ and anti‐consumption actions. The results indicated significant differences among the personal values of the university students that were classified as political consumers. Universalism and benevolence stood out among the core values of this group, with prominence of self‐transcendence, appreciation for equality and concerns for the well‐being of others. However, a gap was observed between the discourse and action of interviewees, once only one‐third of the sample undertook some form of political consumption. The conclusion was that most of the university students interviewed show the will to change society with individual actions, but demonstrate very little political commitment, and currently do not act politically in their purchases.     

"全面二孩"、人口年龄结构变动与长期经济发展:2017～2050

本文实证分析"全面二孩"政策的实施对人口年龄结构的影响及由此带来的经济发展水平和增长速度的影响.研究结果表明,"全面二孩"政策的实施使少儿抚养比显著提高,劳动年龄人口占比不会上升,老龄化程度得到一定减轻,但无法改变人口迅速老龄化的总趋势.该政策的实施尽管显著提高了少儿抚养比,但并没有创造出新的"人口红利",因而该政策在一定时期内对经济发展水平产生一定的负面影响.     

中国社会福利体系适度性研究——国际比较与实证分析

社会福利体系是影响经济可持续发展和社会安定的重要因素。政府在社会福利体系中起主导作用,但存在福利支出的适度性问题,福利过度或不足均不利于经济社会发展。本文对中国与OECD的社会福利体系做了比较,并选取美国等OECD七国和中国1980-2007年的数据作为样本开展实证分析。研究发现:(1)结合发达国家的经验,现阶段我国的社会福利总支出、养老保险支出和健康福利支出偏低;(2)但收入维持支出(即最低生活保障支出)却超前于经济发展水平和政府财力;(3)失业福利支出是否适度,不同分析方法得出了不同结论,有待进一步分析。     

Violence in/by the market

ABSTRACT

In this paper, I discuss a definition of violence to unearth the generally unrecognised violence perpetrated by the logic of the market as is was constructed through a history of modern thought and capitalist organisation of life as the central system of modernity. Enslavement of humanity to the purpose of capitalist economy and its key institution, the market, which is to optimise economic value, is arguably the consequence.     

Adam Smith's concept of the social system

This essay will postulate that Adam Smith's view of society was formulated out of historical influences far broader than generally conceded by many commentators in economic thought. Smith's basic behavioral concepts of sympathy and self-interest are significant contributions to economic thought as are his philosophy of human nature being based on liberty and freedom and not simply the creation of wealth. The vectors of influence that converged on Adam Smith were of varied and even contradictory natures. Yet the result of this collision of philosophical forces was clearly an event of significance in the history of philosophical and economic thought.Edward W. Coker is presently an Assistant Professor of Business Administration at USM-Gulf Coast, teaching primarily in the area of economics and finance. Dr. Coker has appeared on the programs of the American Economic Association, the Southern Economic Association and the Financial Management Association, both as presenter and discussant of papers. His interest in business ethics is reflected in his doctoral dissertation on the writings of Adam Smith. He is also a member of the Association for Social Economics and has participated on several panels sponsored by that organization.     

Determinants of Nigerian managers’ environmental attitude: Africa's Ubuntu ethics versus global capitalism

We investigate the impact of economic, institutional, and ethical pressures on African managers' corporate social and environmental attitude based on a survey involving 377 Nigerian executives in the extractive industry. We find that environmental orientation and behavior are mostly induced by instrumental economic motives, while ethical considerations exert a weak impact. This finding is significant because it contradicts mainstream corporate social responsibility (CSR) literature in Africa, which suggests the dominance of the culturally based, altruistic African Ubuntu philosophy. Based on this research finding, we suggest that economic globalization has spurned a transnational capitalist cadre of managers whose values are shaped far more by global capitalist instincts than any putative cultural philosophy. The findings also undercut the fundamental logic underpinning the numerous global initiatives to promote environmental responsibility by multinational corporations in developing countries, which assumes that managers will pursue environmental sustainability voluntarily in the absence of robust regulations and strict enforcement.     

International Marketing Ethics from an Islamic Perspective: A Value-Maximization Approach

International marketing practices, embedded in a strong ethical doctrine, can play a vital role in raising the standards of business conduct worldwide, while in no way compromising the quality of services or products offered to customers, or surrendering the profit margins of businesses. Adherence to such ethical practices can help to elevate the standards of behavior and thus of living, of traders and consumers alike. Against this background, this paper endeavors to identify the salient features of the Islamic framework of International Marketing Ethics. In particular, it highlights the capabilities and strengths of this framework in creating and sustaining a strong ethical international marketing culture. At the heart of Islamic marketing is the principle of value-maximization based on equity and justice (constituting just dealing and fair play) for the wider welfare of the society. Selected key international marketing issues are examined from an Islamic perspective which, it is argued, if adhered to, can help to create a value-loaded global ethical marketing framework for MNCs in general, and establish harmony and meaningful cooperation between international marketers and Muslim target markets in particular.     

A study on development strategy of Korean hidden champion firm: Focus on SWOT/AHP technique utilizing the competitiveness index

The purpose of this study is to offer development strategies for hidden champion firms; it is thought that in order to overcome Korea’s economic crisis and to secure new growth engines for sustained economic development, the country needs to foster more hidden champions that can lead global market. The study draws from an empirical survey of 61 Korean firms on hidden champion promotion list as well as 45 experts; the results were analyzed using SWOT/AHP model and a corporate competitiveness index to develop development strategies for Korean hidden champions. The results suggest that Korean hidden champions should seek opportunities for industrial growth based on technological strength, create competitive advantages in the market, and reduce their dependency on large corporations. Hidden champions should target market niche rather than competing with global firms; this is possible with competitive strengths based on specialist technology that will satisfy customers. Thus, authors argue that small- and medium-sized enterprises in Korea should focus on developing technological competences in order to possess specialist core technology that will support their growth in the global market.     

Buy Local? Governmental Incentives to ‘Inform’ Consumers

This paper considers governmental incentives to provide information to local consumers about the relative merits of local versus foreign goods. We construct a model in which a local firm in a small, open economy competes in its domestic market with imports. Consumers are willing to pay an idiosyncratic premium for the local product, drawn from some support that the importing country government can affect through a costly information campaign. We examine incentives to undertake such a campaign in autarky and in the case of trade. We show, inter alia, that while a national welfare‐maximising government will always wish to shift this distribution upwards, it may not wish to reduce the variance of valuations, and that the optimal response of a foreign government will be to increase any support it offers to its exporters. Furthermore, falling world prices generally reduce the attractiveness of such a campaign both to a welfare‐maximising government and to one that cares only for domestic profits.     

河南省对外贸易经济福利模型研究

从福利经济学角度探讨了河南省对外贸易所产生的经济福利,并构建了河南省对外贸易经济福利理论模型。认为,河南省对外贸易的发展不能以过度牺牲环境为代价,必须用其产生的经济福利分析对外贸易,只有在对外贸易增加了河南省经济福利的前提下,对外贸易才是正确的。     

Economy suspended: the possibilities of a Badiouian business ethics

In the philosophy of Alain Badiou, ethics can only arise in relation to an evental truth procedure that breaks from the economic logic of a situation. Further, because for Badiou there cannot be economic truths per se – rather, economic matters must be understood in their relation to one or more truths in the domain of love, art, science or politics – a Badiouian business ethics would look entirely distinct from any ethics that simply places limits on certain kinds of economic activity. Although Slavoj ?i?ek, among others, has suggested that this marks an essential weakness in Badiou's economic/political theory, it may actually be the greatest strength of his position. Within a capitalist system, a Badiouian business ethics would then be a question of mobilizing economic resources in order to serve the ongoing construction of a truth procedure. For a business to be considered ethical on Badiou's terms, it must break – and continue to break – from the dominant logic of capitalism and its merely economic pursuit of profit maximization.     

Creating a high‐skills society during recession: issues for policy makers

The present study looks at the skill formation policies adopted by policy makers in Greece in order to create a high‐skills society. It examines empirically the demand side of the skill creation process within 300 small enterprises in order to understand how far supply‐side measures have influenced the demand for well‐trained staff within small businesses. The article draws on empirical data from 650 interviews with workers and small firm owners that explored owner demand for higher level skills and training. The study questions the effectiveness of the measures put forward by policy makers in order to encourage an up‐skilling strategy in the country. The analysis reveals that this policy agenda has been supported predominantly by various skills supply‐side initiatives including investments in higher education and subsidized accredited company training. Yet the empirical evidence indicates that such initiatives have not so far influenced owner demand for higher level skills and training, suggesting a new agenda for policy intervention may be necessary. The study provides valuable lessons for policy makers across the advanced capitalist world on the development of a high‐skills society.