MGMT4P96 – Business & Society

Asma Zafar| Assistant Professor | Goodman School of Business

Alternatives to capitalism

19th January 2023

Today’s Agenda
 Housekeeping items
 Groups

 Quick review
 More on capitalism
 Business power in a capitalistic system

 Alternatives to capitalism
 Socialism
 The Buddhist economics
 Open source

 Developing our own alternative economy

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Housekeeping – groups
 I have heard from the following people so far:

Group number Members

1 Aric, Lex, Michael Damaia, Gwen
2 Makayla, Brendon, Curtis, Teodora, Caleb
3 ?

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Topics choices for issue briefs
Topic Students assigned the topic Count Still
available?
Post-Capitalism Caleb Pelletier 1 Yes

Business & Government Colin Pearson 1 Yes

relations
Consumerism Lex Dobson, Ryan Parkhurst, Hussein Kamaleddine 3 No

Environmental issues Teodora Vucenovic, Emily Stesl, Gwen Ryder 3 No

Globalization Godfrey Mawere, Sashwat Lad, Michael MacLeod 3 No

Ethical issues Jacob George, Will Neil, Michael Damaia 1 No

Alternative organizational 3 Yes

forms
The future of work Matthew Wilks, Makayla Levy, Michael DeAngelis 3 No

Corporate Governance Brendon Furlanetto, Curtis March, Aric Stubbe 3 No

CSR Marco Muraca, Kaitlin Nethery, Nolan Slywchuk 3 No

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Review – last class
 Various ways to understand how business is connected with nonmarket
forces; saw three models
 The Capitalistic system – indirect connection between business and society;
market shields business from nonmarket forces
 The Dominance model – questions the ‘free market assumption’; sees few
private and public owners as jointly running the show; concentration of wealth
 The Countervailing forces – no shield between business and nonmarket forces
 The assumptions of capitalism
 Many of them are now dysfunctional
 Questions have been raised whether our current economic system is a moral
one!

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Today’s learning objective…
 To understand the issue of business power in relation to capitalism
 To consider a few alternatives to capitalism
 Open source
 Socialism
 The Buddhist economics

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The problems with the capitalistic system
 Fraught with the issues
 Feeds greed
 Inherently exploitative
 Unsustainable (adverse impact on natural resources due to short-termism)
 Gives rise to inequality
 Leads to an erosion of human rights (e.g., the right to choose, free will, etc.;
workers defined by work rather than any other aspect)

 Another problem:
 Organizational power! Businesses want to create and retain control through
intellectual property

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What is power?
 Power
 The ability or strengths to act (power to do)
 The ability to compel another entity to act (power over)
 Business power
 The force or strength behind an act by a company, industry, or sector
 Some sources of business power?
 ‘consumerism’ (needs and wants)
 Control over resources (over customers; over products, such as patents)

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Forms of power
 Coercive Power
 someone in authority forces someone to do something, with threat of
punishment
 Reward Power
 rewarding people to get things done
 Legitimate Power
 title or position that grants the right to take action
 Referent Power
 those in power are used as role models
 Expert Power
 superior training and experience provide influence

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The issues with corporate power
 Corporate personhood
 A corporation is a separate legal person (separate from its founders,
managers, and shareholders). It can acquire and sell assets, enter into
contracts, may sue others and may also be sued in its name, much like a
natural person
 Limited liability
 In case of failure of a corporation, the personal assets of owners and
shareholders are not at risk

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On organizational power – the Turing example
 Watch these two videos
 https://nyti.ms/2okXMgz
 https://youtu.be/NS9blbLr
Kv4
 Think about:
 What is valued in the
capitalistic system
 What is not valued?
 Is Martin Shkreli the hero or
the villain of the capitalist
system?

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More on the Turing example
 Raised the price of a drug by 5000%
 Claiming for the good of the people
 But was chasing profits
 Is Martin Shkreli a hero or a villain of the capitalist system?
 hero as a capitalist but villain in any other society also a villain for the capitalist
society as well as he made it look worse!
 Possible to chase profits while caring for other constituents
 Why do you think he raised the price of the drug so much?
 Sole rights to the drug Diaprim
 People were dependent!!!
 Noticed the demand and controlled the supply (“inelastic demand”)

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Kelly Music Software – another example
 KMS – the Amp Up is a music
 Discussion questions
 What is the dilemma that KMS is facing?
 What can be the advantages of open source software?
 Do you see any downsides?
 [5-minute timer]

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Can alternatives solve the problems of capitalism?

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Socialism – a better system?
 What is socialism
 Political and economic theory of social organization that advocates that the
means of production, distribution, and exchange should be owned or
regulated by the community as a whole
 Basic ideas and assumptions
 People are primarily cooperative rather than competitive
 Workers’ share is distributed after portion of their income is deducted to be
used for common good (defense, education, health)
 State provides and cares for individuals and groups who can’t provide for
themselves
 Main criticism
 What is common good is often contested and not decided by the public

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Market socialism
 While socialism is often equated with authoritarian state socialism, some
new versions have emerged, such as market socialism
 Market socialism: A variant of socialism based on public or cooperative
ownership of the means of production, retention of market competition,
and allocation of factors of production based on market mechanisms
 An example – Solidarity Economy
 Based on worker-owned cooperatives
 Operate under the principles of democratic decision-making
 Inclusive participation (forums)
 Empowerment of marginalized groups
 Still compete in an open market
 New Era Windows https://www.youtube.com/watch?v=V5eRf2boH68

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Arguments for & against socialism
 For socialism…
 Workers are no longer exploited,
since they own the means of
production
 All profits are spread equitably
among all workers, according to his
or her contribution
 Factors of production are valued for
usefulness to society (as ends)
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 Against socialism…
 Underlying assumption about the
cooperative nature of humans may
not stand true
 Doesn't reward people for being
entrepreneurial and competitive
 Government set up to represent the
masses may abuse its position and
may not represent the masses
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Buddhist Economics
 Rests on the philosophy of deep interconnections between the individual,
collective, and the environment
 Individuals’ actions need to be seen as having an impact on the collective and
the environment
 Means or factors of production are seen as ends in themselves
 The Middle way – meditation an important virtue – spend time meditating to
lower the desire for consumption
 Primary measure of success – wellbeing, happiness, equity, sustainability

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Capitalism vs. Buddhist Economics

Capitalism Buddhist economy

Concept of the self Self-interest No self
Concept of work Necessary evil Self-fulfillment
Measures GDP Well-being
Concept of factors Means to an Ends in themselves
of production end
Goal of Business Fulfill desires Reduce suffering

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Short break

 [Take a 5-minute break]

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In-class simulation
 “The Island Economy”
 Debrief
 You will work in small groups to read a scenario and set up a new economy by
thinking about provided prompts.
 From time to time, I will introduce 2 – 3 shocks in the mix
 You end goal should be to decide upon the characteristics of the new economy
that you will set up
 Don’t forget to give your group a name that reflects the kind of economy you’re
creating!

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Key takeaway
 The problems of capitalism are very much solvable
 Inspiration can be taken from alternative economic models such as socialism
and Buddhist economics
 Creative, out-of-the-box thinking is needed to solve the problems that have
arisen due to capitalism

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Next class
 Business and Government relations
 Please read
 The power of lobbyists is growing in Brussels and Berlin. 2021. The Economist


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