Chapter 14 Summary

Chapter 14 asks the biggest business ethics question of all: Is the free market good? If we are going to dedicate our lives (or a major portion of our lives) to this enterprise of business, we’d do well to think about its foundations. Should we be capitalists? Why or why not? What are the moral problems posed by capitalism and free markets? Are there other ways of doing business? Better ways? Other ways of organizing societies? Better ways?

Aristotle opens the chapter by casting into doubt the notion that business is a good. For Aristotle, wealth-getting by good household management is honorable, but wealth-getting by retail trade (what we would normally call business) is not honorable and is “justly censured.” Adam Smith has the opposite understanding of business. For Smith, business is the power whereby civilization makes itself.

Karl Marx continues the discussion by explaining the nature of (and warning of the dangers of) “commodity fetishism”: our cultural desire for things. Once we understand what a commodity is, Marx argues, we see how our society becomes confused by the desire for them.

Robert Heilbroner encourages us to reflect on capitalism, its goods, and its evils. For Heilbroner, it is important that we recognize that capitalism is a kind of “regime” like other regimes, with an order of social life and distinctive hierarchies and power structures.

John Stuart Mill insists on the importance of freedom and independence in education. Even though it might be necessary for the government to involve itself in the financing and oversight of education, it is crucial, he insists, that instruction itself remain independent so that the government is never involved in indoctrination. Thus, for Mill, the capitalist notion of liberty in exchange is carried over to the liberty of ideas.

John Maynard Keynes looks ahead at the economic possibilities for future generations. He argues that any economic difficulties we are currently experiencing are just growing pains, and that overall, the human race is on the way toward solving the economic problem, so that the problem faced by our grandchildren and great-grandchildren won’t be “how to make a living” but rather “what to do with all our free time”!

E. F. Schumacher argues that Buddhism and Buddhist economics can be an excellent guide for contemporary business life. He insists that there is a “Middle Way” between “material heedlessness” and “traditionalist immobility.” Capitalism is not inherently good or bad, but must be incorporated into a good life with judgment and care.

Nobel Prize winner Amartya Sen discusses the importance of economic disasters—and the anticipation of them—for the less fortunate, such as famine. For Sen, both the economist and successful capitalist nations have a duty to help those in grievous need (especially those who have not benefited from capitalism or have even been harmed by it).

Daniel Bell argues that capitalism has lost its moral foundation and is now the source of many (if not most) of our cultural problems. Furthermore, it presents us with a deep contradiction between functional rationality and ideals of efficiency and a serious antirationalism emphasizing the importance of immediate pleasure satisfaction.

Thomas Frank expresses anger and frustration at belief systems that allow economic disasters without holding anyone accountable or making any provision to stop similar disasters from happening in the future.

Robert Kuttner argues that we must carefully examine the interaction between our free market economy and our commitment to the democratic system. The uneven distribution of wealth that inevitably results from a free market poses a challenge to our political system, because power moves with money. Accordingly, if we want free citizens with a free democracy, we must “shake the hegemony” of the free market and our commitment to the ideal of the free exchange of wealth. Rather than these two ideas going hand in hand, as is sometimes supposed, Kuttner shows that they are in fact in profound tension.

Finally, in an interview from Fresh Air on NPR, Sheelah Kolhatkar explains the details of a recent insider trading scandal involving SAC Capital and the scandal’s legal aftermath. Over the course of the interview, she explains some of the pressures that lead to insider trading and the legal requirements to secure convictions on insider trading charges.

By the close of Chapter 14, you should:

Understand several large moral problems posed by free markets and capitalism
Understand the dangers of “commodity fetishism”
Understand the cultural problems created by capitalism
Understand how poverty and capitalism relate to each other
Understan the problems with a completely free market, as well as the problems with an overly regulated market
Understand the nature of and circumstances that lead to insider trading, and how recent insider trading cases have been dealt with by the Justice Department

Chapter 14 Summary

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