1. Capitalism is an economic system in which the major portion of production and distribution is in private hands,
operating under a profit or market system. Socialism is an economic system characterized by public ownership of property and a planned economy.
2. Capitalism has gone through several stages:mercantile, industrial, financial, and state welfare.
3. Four key features of capitalism are: the existence of companies, profit motive, competition, and private property.
4. Profit motive is based on two assumptions about human nature:
(1) that human beings act out of self-interest and personal advantage and
(2) that they are basically economic creatures who recognize and are motivated by their own economic self-interests.
5. Although property often relates to physical objects, it also implies a bundle of rights and interests.
6. John Locke maintained that property is a moral right. Even if it is, we can still ask:
Are we entitled to everything that we produce through our labor?
7. One basic defense of capitalism rests upon a supposed natural moral right to property.
Utilitarian deny the existence of such rights. Other critics doubt that this right entitles one to have a system
of property rules and regulations identical to the one we now have in the U.S.
8. Another basic defense of capitalism is utilitarian and is associated with the classical economic arguments of Adam Smith.
Smith attempted to provide a moral justification for capitalism by insisting that when people are left free to pursue their own economic interests,
they will, without intending it, produce the greatest good for all. Smith based his claim on these assumptions:
(1) only labor creates value, (2) human beings are acquisitive, (3) humans must have unfettered access to raw materials,
(4) they have a natural propensity for trading, and (5) they have natural endowments, which should determine the kind of work they do.
9. Critics question the basic assumptions of capitalism (theoretical challenges) and whether it has delivered on its promises (operational challenges).
Specifically, they ask: (1) Are humans basically economic creatures? (2) Does only labor have real value?
(3) Does capitalism breed oligopolies? (4) Has capitalism promoted competition? (5) Does capitalism exploit and alienate?
10. As we enter the last decade of the century, our capitalist socioeconomic system faces a number of challenges.
Among the problems that must be overcome are (1) a fixation on short-term performance at the expense of long-term strategies and
(2) a lack of interest in the actual manufacturing of goods. In addition, we must come to grips with (3) our society's changing attitudes toward work.
Justice and Economic Distribution
1. Justice is one important aspect of morality. Talk of justice and injustice generally involves appeals to the related notions of rights, fairness, equality, or desert.
Economic or distributive justice concerns the principles appropriate for assessing society's distribution of social benefits and burdens,
in particular, wealth, income, status, and power.
2. Economic distribution might be based on pure equality, need, effort, societal contribution, or merit.
Each of these principles is plausible in some circumstances but not in others. In some situations the principles pull us in different directions.
Dissatisfied with this fact, some moral philosophers have sought to develop more general theories of justice.
3. Utilitarianism holds that the maximization of happiness ultimately determines what is just and unjust.
John Stuart Mill contends, more specifically, that the concept of justice identifies certain very important social utilities
and that injustice involves the violation of the rights of some specific individual.
4. Utilitarians must examine a number of factual issues in order to determine for themselves which economic system and principles
will best promote social well-being or happiness. Many utilitarians view favorably (1) an increase of worker participation and (2) a more equal distribution of income.
5. The libertarian theory emphasizes contribution, merit, and the free market system;
it identifies justice with liberty, which libertarians understand as living according to our own choices, free from the interference of others.
They reject utilitarianisms concern for total social well-being.
6. The libertarian philosopher Robert Nozick defends the entitlement theory. His theory holds that the distribution of goods, money,
and property is just if people are entitled to what they have; that is, if they have acquired their possessions without violating the rights of anyone else.
7. Nozick argues that theories of economic justice not in accord with his will inevitably fail to respect peoples liberty. (Note: refer to the Wilt Chamberlain story.)
8. Libertarians operate with a distinctive concept of liberty, they defend free exchange and laissez-faire markets without regard to results,
they put a priority on liberty over all other values, and they see property rights as existing prior to any social arrangements.
Critics contest each of these features of libertarianism.
9. The egalitarian theory emphasizes equal access to primary goods. John Rawls approach lies within the social contract tradition.
He asks us to imagine people meeting in the original position to choose the basic principles that are to govern their society.
Although in this original position people choose on the basis of self-interest, we are to imagine that they are behind a veil of ignorance.
This means that they do not have any personal information about themselves.
Rawls contends that any principles agreed to under these circumstances have a strong claim to be considered the principles of justice.
10. Rawls argues that people in the original position would follow the maximin rule for making decisions which contends that inequality
is permissible if and only if it improves the lot of society's worst off. They would choose principles that would guarantee that the worst that could happen to them
is better than the worst that could happen to them under any rival principles. Rawls argues that they would agree on two principles.
The first principle states that each person has a right to the most extensive scheme of liberties compatible with others having the same amount of liberty.
The second principle states that any inequalities must be (1) to the greatest expected benefit of the least advantaged and
(2) open to all under conditions of fair opportunity.
11. Rawls rejects utilitarianism because it might permit an unfair distribution of burdens and benefits.
Contrary to the entitlement theory, he argues that the primary focus of justice should be the basic social structure,
not transactions between individuals. He contends that society is a cooperative project for mutual benefit
and that justice requires that the social and economic consequences of arbitrary natural differences among people be minimized.
12. Each of the theories: utilitarian, libertarian, egalitarian is compatible with the tenets of capitalism.
13. The socialist theory of justice proposed by Karl Marx rejects the assumptions of these theories and of capitalism itself. It associates justice with need.