Answer Sheet-1

QUESTION 1: [25 marks]

 What is capitalism? From your experiences, share two instances that show the
benefits and two instances that show the disadvantages/costs of capitalism. [10
MARKS] [200-400 words]
Answer-
A capitalist economy is one in which private property rights, free trade, and a competitive
market are the norm. Capitalism's defining characteristics are portrayed in the definition.
Prof. Loucks defined a capitalist economy as one in which artificial and natural capital are
owned privately and used for profit. The government does not intervene in the market in any
noticeable way. The United States, the United Kingdom, Germany, and Singapore are all
excellent examples of capitalist economies.
Existence of private property, Freedom of ownership, Operation of the pricing mechanism,
Profit motive, Free competition and collaboration, Consumer Sovereignty are the defining
characteristics of a capitalist economy. creates inequalities of class, The importance of
becoming an entrepreneur: Entrepreneurs are the backbone of a free market economy.
Merits
 Efficiency. Companies in a capitalist economy have an incentive to maximise output
while also satisfying consumer demand. Today I can receive any product from
Amazon or Flipkart on my door step.
 Increasing prosperity. When businesses and people alike are incentivized to think
outside the box and put in the effort necessary to succeed, the result is increased
creativity and economic growth. The smart watch I use involves innovation and it is
because of capitalism I am able to own and use it.
Demerits
 Force of dominance. Firms can achieve monopoly status in the product and labour
markets when their capital is privately owned. Swiggy and Zomato have a duopoly in
the food delivery market.
 They disregarded the social good. If there is a free market, externalities won't matter.
Negative externalities, such as pollution from production, are often overlooked by a
profit-maximizing capitalist firm, which can have a negative impact on people's
quality of life. Zomato recently came under a lot of heat for not looking after their
delivery personnel and the partners living in constant vicious cycle of debt.
What was the Marxist critique of capitalism? Do you believe that there can be, in reality, an
alternative to capitalism? Share two criticisms of the Marxist argument. [15 MARKS] [300-
500 words]
Answer-
Karl Marx felt that economic determinism will lead to a revolution since he saw society as
firmly organised into two classes and particularly exploitative. Marx criticised capitalism for
being an oppressive system that separates people from one another. His line of thinking went
like this: even if employees generate goods for the market, it is the market and not the
workers who ultimately have power. Capitalists, who own the means of production and exert
authority in the workplace, force workers to toil for them. He claimed that work had become
dehumanising, routine, and better suited to machines than to autonomous, imaginative
humans. People themselves become things, inhuman machines that make decisions based on
cold profit and loss calculations rather than on any consideration of human worth or need.
Marx came to the conclusion that capitalism prevents us from developing our own ethical
society.
Marx simply could not comprehend. His adherents were no better. Marx's grand and
complicated vision for a new world order is the result of his integration of his theory of value
with his philosophy of human nature and his claims to have uncovered the laws of history. If
the first three quarters of the twentieth century served as a laboratory for that vision, then the
final decade of the century shows how utopian and ultimately unworkable it is.
A growing number of disillusioned radicals and ex-Marxists are seriously questioning
traditional Marxism in the wake of communism's collapse, despite the fact that it was
relentlessly criticised for decades by mainstream economists.
Alienation is increasingly rarer in today's workplaces. Unionization and progressive
management practises have both contributed to a dramatic increase in employee voice. In
addition, four million Americans are in charge of their own working schedules as self-
employed individuals.
Many have argued that the economic determinism of classical Marxist theory is a major flaw.
Marx contended that historical developments and the form of society were both dictated by
these 'economic laws.
Yet, upon further inspection, it is evident that other variables also determine historical
outcomes; for example, the worldwide growth of capitalism has been met with varying
responses from various cultures. Some countries have promoted neoliberalism (the United
States and the United Kingdom under Thatcher and Bliare), while others have adopted a
social democratic stance and used the state as a buffer to protect citizens from the worst
excesses of Capitalist exploitation (Scandanavian countries). China has developed a form of
autocratic-capitalism, while others (Cuba and, more recently, Venezuala) have rejected it in
favour of a Socialist dictatorship.
QUESTION 2: [25 marks]
 What is usury? [10 marks] [200-400 words]
Answer
Usury is the act of lending money at an interest rate that is regarded excessively high or that
is greater than the rate authorised by law. Usury, which initially referred to collecting interest
at any rate on loans, emerged in England during King Henry VIII's reign. Over time it grew
to signify charging excess interest, however in certain faiths and regions of the globe
charging any interest is considered prohibited.
Although the practise of charging interest on borrowed money is nothing new, in 16th-
century England, the maximum rate of interest that could be imposed by law was capped at a
few percent. However, several faiths have avoided usury throughout time since interest is
incompatible with their beliefs.
In contrast to the present banking system, lending in the past was done between people and
small groups, hence it was important to establish clear societal standards for loan conditions.

The three Abrahamic religions (Judaism, Christianity, and Islam) all have extremely firm
prohibitions against usury. A number of Old Testament scriptures speak out against charging
interest on loans, especially to those who are less financially secure. As a result, Jews have
traditionally only allowed interest-bearing loans to those from outside their group.

The Christian tradition against usury has its roots in the Old Testament's denunciation of
usury. Among Christian believers, there is a school of thought that says lenders should not
count on repayment. During the 16th century Protestant Reformation, a line was drawn
between permissible and unacceptable forms of lending money at low interest rates, with
usury (charging high interest rates) falling into the latter category. Islam, on the other hand,
has historically not established this difference, yet charging interest is not permissible in the
faith.

The practise of charging interest on loans dates back many years. It has mostly been banned
to deter persons from exploitative loan tactics.
 State the arguments for and against usury, with reference to Aquinas, Luther, and
Calvin. [10 marks] [200-400 words]
Bible verses that speak out against charging interest on the impoverished were seen by Luther
as appeals to charity on his part. When violating the do-unto-others ethic, as in "they do not
desire to be treated this way in return by others," Luther argued that usurers are guilty of sin.
Because of this mutual agreement, businesses and rich families may charge interest to one
another. Although Luther urged Christians to give alms to the poor rather than loans, he was
willing to consider rates of interest below 5%.

The Scholastics gave finance their full attention, but they always saw it as related to justice
and natural law. Instead of focusing on narrow concerns like how to maximise utility or how
to best channel individual self-interest as a modern economist might, Aquinas and his
contemporaries were more concerned with questions like how best to divide wealth and
guarantee that economic interactions were fair. According to Aquinas, money's "natural goal"
or "function" is to facilitate trade, as he argued in Summa Theologica (1265-74). Using
money for its own sake, rather than to enable the exchange of commodities and services, is a
violation of natural law. Like selling wine or wheat without the permission to consume them,
this was essentially the same as selling the same item again. Aquinas argued that charging
interest on a loan is unethical since it amounts to selling something that doesn't exist, and that
this creates an imbalance that runs against to justice.

John Calvin's 1545 letter against usury clarified that when Christ commanded to "lend
wishing for nothing in return," He meant that we should serve the needy without expecting
anything in return. In accordance with the principle of fairness, we should evaluate people
based on their actual conditions rather than on abstract legal standards.
With this way, money might be lent to businesspeople at a rate of interest in the expectation
of a return. A loan made to a working poor person might be given back with no interest, but
the borrower should still expect to be repaid. When helping the poor, it's important to do it
without expecting anything in return.
 What are two modern forms of usury? Explain in detail. [5 marks] [150-200 words]
Answer-
A properly running legal credit market counters usury. This social evil may flourish in the
cracks that the legal credit system, no matter how effective, is unable to fill. Banks provide an
economic resource-allocation function while making investment decisions. Their credibility
and prudence contribute dramatically to balanced prosperity and social development. Credit
distribution must be regulated by the norms of economy and efficiency, with the lowest
feasible production cost and an appropriate return on capital invested, to ensure the security
of deposits and to fulfil the entrepreneurial essence of banking. Banks pick their clients by
collecting and analysing data on their borrowers' actual financial situations and their capacity
to make their main and interest payments on time.

The minimum capital and organisational criteria for conducting banking activities are
contingent on the company meeting certain standards, as are the integrity and experience
qualifications for the corporate executives. Criminal infiltration, which would promote the
growth of usury, is one of the main targets of these rules. Credit broker registration is
currently governed by official government rules. This is an area in which knowledge and
integrity criteria and corporate openness can successfully pick agents, averting the danger of
wrongdoing.

QUESTION 4: [25 marks]

 What is the Invisible Hand, according to Adam Smith? Explain using an example. [10
marks] [200-400 words]
A metaphor, "the invisible hand" refers to the unobserved forces at work in a free market
economy. The best interests of society as a whole are served by people acting in their own
self-interest and exercising their right to choose how and what they produce and consume.
Price changes and the ebb and flow of commerce are both the result of the dynamic
interaction between supply and demand in the market.
Adam Smith coined the phrase "invisible hand" to describe how the incentives provided by
free markets can lead to individuals acting in their own self-interest to produce what is
societally necessary.

Laissez-faire, or the "let do/let go" philosophy, includes the concept of the "invisible hand" in
its market-based economic theories. Basically, the theory behind this method is based on the
belief that the market will naturally stabilise in the absence of any interference from the
government or other forces.
Adam Smith, a Scottish Enlightenment thinker, first introduced the concept in several of his
works, including the economic interpretation in his 1776 book An Inquiry Into the Nature and
Causes of the Wealth of Nations (often shortened to just The Wealth of Nations) and his 1759
work The Theory of Moral Sentiments. After World War I, the phrase began to be used in an
economic context.
Both of these central concepts can be reduced to the "invisible hand" metaphor. To begin, the
unintended and broad advantages of free market exchanges are significant. And second, these
advantages are more substantial than those of a centrally planned and regulated economy.
With every transaction, information is transmitted about the worthiness and difficulty of a
product or service. As a result of these signals being captured in the price system, competing
consumers, producers, distributors, and intermediaries, all of whom are pursuing their own
plans, are spontaneously directed to fulfil the needs and desires of others.
 Do you feel that it is possible to have fairness in a free market? If yes, then how
would you account for the presence of economic inequality in the current free
markets? [15 marks] [300-500 words]
Answer-
Ideally, in a free market economy, supply and demand would be let to determine how
resources are distributed, with no interference from the government.
Free market advocates often highlight the following benefits of their preferred economic
model:
Theoretically, it helps promote political and civil liberties since it allows individuals more
leeway in their production and consumption decisions.
It's a positive factor in both economic expansion and openness.
It's essential for healthy markets.
The demand for goods and services is a direct reflection of consumer preferences.
In a market driven by supply and demand, competition drives down prices while
simultaneously ensuring that consumers receive the highest quality products or services
possible.

A rule or legislation that is intended to restrict the actions of individuals to whom it pertains
is known as a regulation. Those who break these laws risk losing their enterprises or personal
possessions and perhaps jail time. The United States economy is a hybrid system in which
both private enterprise and public sector organisations play significant roles.
The following are some of the benefits that a regulated economy offers:
It has the best interests of customers at heart.
It ensures the public's well-being and safeguards the environment.
It ensures monetary steadiness.

A well-balanced economy strikes a middle ground between an unrestrained free market and
heavy government oversight. There are flaws in free market economics, but there are also
flaws in highly controlled economies. The key is to find a middle ground between
unrestrained market forces and just enough government oversight to ensure the safety of
people and the planet. The public interest is safeguarded and private enterprise is encouraged
when this equilibrium is reached.

There is no modern nation that allows completely unrestricted market activity. But countries
that place a premium on private property, capitalism, and individual rights tend to have the
most free markets.

It stands to reason that political systems that shy away from regulating or subsidising
individual behaviour would inevitably interfere less with voluntary economic transactions.
Further, a system where property rights are safeguarded and capitalists are incentivized to
pursue profits is more conducive to the development and success of free markets.
Some people and companies, for instance, make it their mission to amass savings by never
spending all of their money. While others put their money where their mouth is by investing
in businesses they start or grow. Trading stocks and bonds can be profitable for these actors.

In the case of bonds, savers can trade their current funds for the promise of future funds plus
compensation (interest) from business owners. Investing in stocks is a way to convert savings
into a stake in a company's future profits. Today, free financial markets are unheard of.

QUESTION 6: [25 marks]

 In your perspective, what is philosophy? Is there any use of studying philosophy?
Mention two examples to support your position. [10 marks] [200-400 words]
Answer-
The term "philosophy" is used to describe the academic discipline concerned with
investigating fundamental questions about being, knowing, being valued, thinking, and
speaking. To put it another way, it is the study of fundamental human concerns. It's a method
that helps you think more critically about everything, so it's a great way to broaden your
horizons. Having its origins in ancient Greece, philosophy is one of the world's oldest
academic fields. Ancient philosophers like Plato and Aristotle continue to inspire modern
thinkers with their timeless writings. The arts, the sciences, and even politics have all felt the
influence of philosophy to varying degrees.

Philosophy is useful because it helps pupils to challenge authority and think for themselves.
The development of students' own convictions and the use of their own critical thinking skills
is emphasised. This is an important talent, especially in today's environment when separating
reality from fiction may be a daunting task. Success in debate is another skill that students
may pick up from studying philosophy. This is crucial because it equips students with the
tools they need to defend their beliefs against criticism and broadens their perspective by
exposing them to alternative points of view.

Philosophy is a great way to get insight into who you are and how you fit into the world.
Studying philosophy can help us become more critical thinkers by encouraging us to examine
the validity of our own views and the assumptions we've made. We often accept things at
face value without investigating their foundation. It is possible to gain insight into one's own
worldview by learning about the historical development of ideas and how they came to be.

Ethics, as well as the big problems of life and death, meaning, and purpose, can all be framed
by philosophical considerations. Studying philosophy helps students hone their critical
thinking and abstract problem-solving abilities, two skills that are applicable across
disciplines.
 In what way does philosophy or philosophical theories help to understand business?
Analyse with examples? [15 marks] [300-500 words]
Answer-
A "soft" discipline like philosophy may not seem to have anything to do with business at first
glance. This, however, is far from the reality. When considering a career in business,
philosophical thought is among the most relevant and useful disciplines.

Today's companies must plan for their future operations and the kinds of personnel they wish
to hire by looking ahead 10 years. Ethical concerns, such as corporate citizenship or unfair
labour practises, and technological ones, such as whether automation should be permitted
given its ability to quickly replace human employees, are two examples of difficulties that
may be usefully examined via the lens of philosophy.

The significance of a clearly articulated corporate ethos becomes clear upon reflection.
Consider carefully which businesses you want to do business with. People appreciate dealing
with businesses whose employees are kind and helpful right from the start. All of your
consumers are the same. Many consumers will pay a premium to do business with a company
that prioritises their needs.

Having a real approach to business is crucial. If you put out your company's philosophy only
so it can be used as a sound bite and talking point with clients, rest assured that your staff will
find out about it. If your firm claims to have strong principles yet disregards the demands of
its customers, they will be quickly exposed. If the code of ethics promotes an inclusive work
environment, yet a department head assigns employees to different teams out of partiality, it's
evident that this is not a principle he upholds. The inclusive mentality will be perceived as
dishonest and harmful to team morale if those above him in the business hierarchy allow it to
occur.

An organisation may do well to follow the tenets of being forthright, providing excellent
customer service, and being an upstanding community member. The capacity of a corporation
to provide the required outcomes can be severely impacted by practises like cutting costs,
prioritising money above people, and embracing exclusivity. You must know how to place a
philosophy in the minds of your followers if you want to be a leader. Cutting corners is a
common misconception about innovators, whereas in fact they are always looking for more
efficient methods.

The former is a pessimistic approach to doing business, whereas the latter is an optimist's
dream. Try to find ways in which your company's culture might reflect your own beliefs and
ideals. Consider how you feel about things like quality, honesty, and working together. These
are the bedrock of every company's guiding principles.