Evaluation of Capitalist Economic Crisis - Term Paper Example

Business Ethics: Should London Be Occupied - Can Capitalism Be Morally Justified? A Critical Evaluation of the Ethical Underpinnings of Capitalism Table of Contents Table of Contents 2 Introduction 3 Occupy London Movement 3 Capitalism System 3 Capitalism and Economic Crisis 5 Conflicts about Capitalism 6 Conclusion 8 References 9 Introduction Occupy London; the continuing dispute is an important ongoing incident which has taken place in London for protesting against the economic disparity, deficiency of affordability for housing requirement, public discrimination, corporate greed and power of business organisations and against government actions. The main reason for ‘Occupy London’ is corporate greed of bankers and politicians. Through this protest the general people are basically blaming the corporate world for a capitalist system (Reeves, 2011). Occupy London Movement The Occupy London has started as a result of economic crisis. According to protestors, the current economic system of the United Kingdom is not in stable condition. The system is unfair as well as unjust. The protest has started after the massive impact of financial crisis on employment, housing and education among others. It has been said that the corporate greed, the lack of regulation to regulate the industry and the financial organizations are the reasons for financial crisis (Vance, 2009). As a result of financial crisis there were almost 154,266 jobs losses in October, 2008 (Telegraph Media Group Limited, 2008). According to the protestors, there is an impending need for bank reforms and capitalisms adjustment to deal with the financial crisis. Capitalism System The financial crises have called for further regulations, additional bailouts and further state action along with more incentive schemes, supplementary recovery systems and more government involvement in organisational activities. Besides adjustment, capitalism requires a dynamic protection. In the recent financial crisis, all economic misjudgements are being resuscitated for fighting bad economic conditions. Robert Murphy, in his book “The Politically Incorrect Guide to Capitalism”, has described that government intervention not only flattens the liberty and the individual privileges, but also impairs the people who it tries to help. Capitalism abuses the poor for the welfare of rich. The current critics say that capitalism fears autonomy of permitting people to choose their own financial businesses and permit the free market to operate its path. Capitalism’s critics believe that controllers and officials understand better compared to private inhabitants who create their own deliberate activities (Murphy, 2007). Thomas DiLorenzo in his book “How Capitalism Saved America” said that capitalism is the basis of evolution and human development and it prospers due to free altercation which is equally beneficial. Capitalism conveys several new products and services which was previously considered as expensive and was only available to the rich people. Capitalism is the basis of rising economic flexibility. It can decrease the income disparities within a country. In other words, capitalism lessens poverty, improves living standards, increases financial prospects and allows better and nonviolent life (DiLorenzo, 2005). Though capitalism has many positive impacts, it has been held responsible for producing monopolies, spoiling customers, risking employees, destructing the business environment, initiating uncertainty, bringing discrimination, and abusing the Third World. In spite of understanding what protesters have aimed at, government needs to first comprehend what protesters are against with (Vance, 2009). The objective of capitalism is generating products and services for gaining more profit without considering people’s requirement. In capitalist economy, production does not occur by considering if the customers are ready to pay for it, rather it occurs by the measurement of capitalist to gain more sales. Those products or services might fulfil people’s requirements but those requirements will not be satisfied if people do not possess enough money. The profit drive is not because of the corporate greed for different capitalists, rather they do not have any other alternative except profit. The requirement for generating profit is forced on capitalists so that they do not lose their money on venture and secure their position in the market. Increased competition with other entrepreneurs imposed them to reinvest profit as much as possible which they can pay for to maintain the average production (World Socialist Movement, 2006). In capitalist system, people are given wages or salaries for generating products or services which are ultimately sold for making profit. The profit is earned by people as they can create more sales compared to price to purchase in the employment market. The working people are abused by the capitalist. The profit motive of capitalism is the main reason for maximum financial problem of the world including the UK. It is the reason for starvation, employment loss, protest, crime or even war (World Socialist Movement, 2006). Capitalism and Economic Crisis The capitalist market economy is hideous. As a result of great economic crisis, several people of the UK lost their homes and jobs. Modern economies that believe in open market aim at assuring wealth for all. 20th century was characterised by astonishing inventions, financial trade, and better risk administration that bring effective management of business. Present economic system cannot abolish the financial variations but it should be able to calm them. But the economic crisis has traumatised these misapprehensions. It has forced people to reconsider the long appreciated opinions of capitalism. In the starting period the open economy was effective where any kind of error can rapidly be amended. The central bank which plays vital role in open economy should be liberated and must concentrate on maintaining the inflation rate so that it does not become so high. Market is the center of every effective economy, but market cannot operate on its own. Government needs to involve more in saving the economy when market drops and control it strictly to inhibit any kind of failures which happened in the past. Economies need to maintain stability between market and government. The recent economic recession has exposed the central errors in the capitalist system and the odd idea of capitalism that appeared in the final phase of 20th century. If economy market downfalls are inescapable, it requires taking cooperative action. In any economy, trust is vital which binds relationships to run the market effectively. The financial crisis has resulted in loss of trust between bankers and people. In the current circumstances, federal government should enact new laws for banks or financial institutions to obtain safety net which can also reduce the capacity to take risk (Murphy, 2007). Conflicts about Capitalism There are several conflicts regarding the activities of banks and financial institutions. The financial sector is reluctant to admit their collapse to avoid the loss of brand image. The ethical conduct and individual accountability are blamed for worse condition of economy. It is the nature of human to repetitively move the blame to others shoulders comprising those who are offended. The economic system of the UK is exaggerated (Stiglitz, 2010). The businesses need to change because organisations are very much concentrated on short-term objectives such as quarterly incomes, immediate sales, extensive consumerism, and living style further than the average. The economy is regarded as ‘long on short’ and ‘short on long’. ‘Short termism behavior’ effects in poor investment and poor resource distribution decisions with dreadful impacts on the economy. There is also requirement to adopt externalities. The longer the internalisation is overdue the larger will be the threat of investment (Gore & Blood, 2008). Several critics have evolved for increased rules on capitalism. Occupy London movement exhibits the collapse of trust between public and the financial, the academic and the political leaders. Citizens are just mere observers of crisis and people who are liable for crisis are reluctant about it (Schoibl, 2011). There is need for improved capitalism in the UK, a different type of financial system which is much reasonable to the lower salaried employees and demand broader liability from higher salaried employees. As a result of financial crisis more and more people have begun to consider that capitalism is uneven and Marxist theory is correct. Capitalism has generated a tendency to create larger industrial boom and burst. In the long run, capitalism inevitably extinguishes the economic stability. Karl Marx had claimed that capitalism can submerge the middle class people into risky life. He believed that capitalism finishes the collective base of middle class life style. Capitalism has been defined as a procedure of innovative demolition. Several organisations have transformed, industries are developed in a continuous flow of revolution. The supporters of capitalism argue that it provides everybody the advantages which were traditionally enjoyed by a few limited middle class people who had owned wealth and reasonable safety and liberty. In the 19th century, maximum people had no wealth or security, they lived by selling their efforts and when economy collapsed they had to face difficult times. But as capitalism progresses, growing number of people will be capable of gaining advantage from it. As capitalism has advanced majority of people’s incomes have become higher compared to before. Capitalism has exposed the security and wealth of middle class people (BBC, 2011). Conclusion The present capitalism has no clear rules and lesser marketing restraints. Thus, in future more conflicts and further economic downturns can be expected. The organisations need to maintain more transparency with respect to financial dealings and status. The current system has given the banking and other financial organisations a bigger scope for controlling their books of records which increases higher risk taking activities and more inadequacy. There is need to develop a new economic system which can generate significant employments and works for all citizens. To create a new society where everyone will be capable of satisfying their ambitions, maintain life style according to their affordability, and share ideas and values needs strong regulation on the businesses and the financial activities of the organisations. Occupy London protest generates different views towards capitalism. In the UK, capitalism should be swapped with something better and it must not be about voracity and gambling (Stiglitz, 2010). References BBC, 2011. A Point of View: The Revolution of Capitalism. News Magazine. [Online] Available at: http://www.bbc.co.uk/news/magazine-14764357 [Accessed November 14, 2011]. DiLorenzo, T. J., 2005. How Capitalism Saved America: The Untold History of Our Country, from the Pilgrims to the Present. Random House. Gore, A. & Blood, D., 2008. We Need Sustainable Capitalism. The Wall Street Journal. [Online] Available at: http://online.wsj.com/article/SB122584367114799137.html [Accessed November 14, 2011]. Murphy, R. P., 2007. The Politically Incorrect Guide to Capitalism. Regnery. Reeves, P., 2011. Occupy London Causes Havoc In Church of England. NPR. [Online] Available at: http://www.npr.org/2011/11/02/141948466/occupy-london-causes-havoc-within-church-of-england [Accessed November 14, 2011]. Schoibl, D., 2011. Britain Needs a Decent Capitalism not an EU Referendum. Social Europe Journal. Stiglitz, J., 2010. Why We Have To Change Capitalism. Telegraph Media Group Limited. [Online] Available at: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7061058/Joseph-Stiglitz-Why-we-have-to-change-capitalism.html [Accessed November 14, 2011]. Telegraph Media Group Limited, 2008. Financial Crisis: UK Job Losses. Financial Crisis. [Online] Available at: http://www.telegraph.co.uk/finance/financialcrisis/3542572/Financial-crisis-UK-job-losses.html [Accessed November 14, 2011]. Vance, L. M., 2009. Does Capitalism Need Adjustment? Ludwig Von Mises Institute. [Online] Available at: http://mises.org/daily/3287 [Accessed November 14, 2011]. World Socialist Movement, 2006. What is Capitalism? Articles. [Online] Available at: http://www.worldsocialism.org/articles/what_is_capitalism.php [Accessed November 14, 2011]. Read More