Globalization.

Economic system
The system a society uses to provide the goods and
services it needs to survive and flourish.
2 tasks
1. Producing (what to produce, how & who will
produce.
2. Task of distributing to the members of society.

To accomplish these two task, the economic system
relies on three social devices.
1. Tradition based societies based societies that rely
or traditional communal roles.
2. Command economy govt. decides.
3. Market economy private individuals decide what
they make & who gets it.
The Business System
All the three devices are used in the
market these days.

Free markets laissez-faire

The debate is on
Arguments for and against free
markets within the nation.
Arguments for and against free
trade between nations.
The business system
Locke(1632 1704), said human beings have
natural right to liberty and private property.

In absence of govt., human beings would find them
selves in the state of nature.

In Lockes state of nature,
1. All are free and equal
2. Each person owns his body and labor, and whatever
he mixes his labor into.
3. People agree to form a government to protect their
rights and freedom of property,

Lockean Rights
The right to life, Liberty (freedom to do any work) and
Property (American way,--- now more socialistic)
Free Market and rights: John Locke
Locke never used his theory to argue for free markets.
Several authors in 20
th
century (Friedrich A Hayek,
Murray Rothbard, Eric Mack have used this work for
the same.)
Criticism
1. Right to liberty and property may move away from
equality.
2. Mixing labor into some object that is unclaimed, the
object becomes persons property. Robert Nozick
opposed it.
3. The right to liberty and property overrides all other
rights. This is a negative right, may interfere with
positive.
4. Free market may lead to unjust inequality
5. Personal rights to liberty at times becomes
subordinate to the need to care and develop relation
John Locke: Cont..
(1723 1790) father of modern economics. Originator of
Utilitarian argument of free trade.
Invisible hand for public welfare : Acc. To Smith, it is
the market competition that drives self-interested
individuals to act in ways that serves society.
According to Adam Smith
1. Market competition insures that the pursuit of self-
interest in markets is subordinate to public welfare.
2. Government interference in markets does not advance
the publics welfare.
Criticism
1. Rests on unrealistic assumption.
2. False assumption that all costs are paid by the
manufacturer
3. Not always motivated by self-interest.
4. Some govt. planning is needed. 5. Govt. may effect
unemployment .
Free market and Utility: Adam Smith
(1818 1883) strongest critic of the inequality that free
trade is accused of creating.
He wrote at the height of industrial revolution. He saw the
exploitative effect of it.

He said there are only two sources of income:
1. Sale of ones own labor
2. Ownership of means of productions (Building, machinery,
land, raw materials)
Workers can not do anything on there own. They were
forced to sell their labor. They were not paid well.

Alienation
Marks was of the view that human beings should be enabled
to realize their human nature by freely developing their
potential for self expression and satisfying there real
human needs.
Marx and Justice: opposing free trade

1. Capitalism (An economic system based on private
ownership of capital) alienates working class by not
allowing them to develop their productive potential.

2. Capitalism forces people into work that they find
dissatisfying and that is controlled by someone else.

3. Instilling false view of what their real needs and desires
are

4. Capitalist ownership and unregulated markets produce
inequalities of wealth

Real purpose of government is to distribute incomes.

Marxs and Justice: opposing free trade

An economy that retains a market and private property but
relies heavily on government. E.g. Sweden, Germany,
Denmark, Japan, Netherlands, Belgium, Norway, Finland,
India, Switzerland.

US with less govt. intervention has much greater inequality.
Top 10 % of U.S. Households receive 15 times more
income than bottom 10 %. Sweden & Germany 7 times
and Japan 10 times.
Also per capita GNP, Inflation and unemployment is higher
in US.


The mixed economy
A property that consists of an abstract and non-physical
object such as a software, song, an idea, a recipe etc.

Lockean view it becomes my property and violation would
be violation of my property rights.

Utilitarians argue that intellectual property pushes other to
create more and get profits.

On the other side Marxists support collective or common
ownership of property.

Copyright
Granting as private property right.


Intellectual Property
On Sept 24 1990, the soviet legislature decided to to switch
to a free market structure and scrap 70 years of
communist economies.



Assignment: define: ideology, individualistic ideology,
communitarian ideology, bourgeois, proletariat,
immiseration of workers, social Darwinism, naturalistic
fallacy.


Decline of Marxism