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 Outline
‡ Introduction
‡ Concepts and Definition
‡ Historical Evolution of Capitalistic Ethic
± Ancient and Medieval Period
± Protestant Ethic
± Adam Smith and Laissez-Faire
± Science and technology
± Darwinism
± Karl Marx and Communism
± Keynesian Theory
± Government Role
‡ Current Business Ideology
 j j
 

‡ Management theory and practices have
developed while influenced by its complex
environment including technological,
political and sociocultural dimensions.
‡ The concepts and actions are affected by
value systems that are determined not
only from within organization but by







 of the
society.
 jj 
 


‡

: Economic system
characterized by the following: private
property ownership exist; individuals and
companies are allowed to compete for
their own economic gain; and free market
forces determine the prices of goods and
services. (Inversterwords.com)
‡

: a person who supports
capitalism. A person who owns or controls
a lot of wealth and uses it to produce more
wealth (Oxford)
 II. Concepts and Definition (cont«)

‡ | : A system of principles based on

ideas of right and wrong, whether true or
false; rules of practice in respect to human
actions (Small Business Notes)
 II. Concepts and Definition (cont«)

‡ ]
are normative proposition of what
human being ought to desire and how one¶s
social world ought to be structured and operated.
Thus, values are normative standards,
determinants and guideline by which individual
human beings are influenced in their choice of
action.
‡ Value is a basic framework for organizational
theory and management practices
‡ The goal attainment is reflected organizational
value; thus also social norm and ideology.
 II. Concepts and Definition (cont«)

‡ j

 are aggregated of the ideas,

beliefs and mode of thinking characteristic
of a group, such as nation, class, caste,
profession, religious sect and political
party). Ideologies are determined by
geographical and climatic situation,
habitual activities and cultural environment.
 II. Concepts and Definition (cont«)

‡ Values determined individual decision-making,

while ideology is held by a group of people.
‡ K

: Values and ideology of a group
provides individuals with social role, and the
individuals attempt to pursuit the role and
internalize the values and norms of group.
‡ The change of manager¶s role reflects from
value and ideology, and organization also
influences the social value and ideology.
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Ancient Trade
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‡ | 


 

 



‡ Old Testament: Examples of commercial
activities and laws, regulations for their
governance
‡ Code of Hammurabi (B.C. 2000): Guidelines for
merchants and peddlers set by Babylonian ruler
‡ Ancient Greece: Commerce was developed, but
looked down by Greek Philosophers ³necessary
but distasteful´
‡ Rome: Recognition of necessity of business
activities to accomplish purpose of empire; but
still disdained
 _ 


r!
‡ "




± #
!Closed social
structure and specific definition of
roles for lord and peasant
±

   provided
ideology and value system
‡ Usury is sin, trade is dubious,
and business person is enemy
‡ Sets the strict rules and
regulations on commercial
activities
 _ 



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‡ Growing commerce between local communities;
increased craftspeople under guild system
‡ Concession of church toward commercialism
± St. Thomas Aguines (13C) : Recognition of social role of
commercialism
± Just price and acceptable profit margins for wages of labor
for public benefit
± Trade and commerce is necessary evil; concession because
of human¶s weakness
± seeking wealth = Avarice = sin
± Private property is good because men work harder and less
disputed than for common property
 K


 |
1. 16th Century: Urbanization, development of
communities, oversea trades in Western Europe

%  




&

‡ Primary force in development of capitalistic
system
‡ Jews situation in Europe: restricted from
participation in social activities
‡ Judaic values: self-control, hard work, sobriety,
thrift, abidance
‡ Compatibleness with capitalism; thus
contributed to


: Increased number of merchants and
bankers over Asia
m  


 

‡ 
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‡ Capitalism in northern Europe
evolved by the Protestant work
ethic of Calvinism
 Protestant Ethic

‡
 : John Calvin (1509-1564)
French Reformist
± Occupation is given by God
± The accumulation of wealth through
work is good thing.
± Importance of work within value of
frugality, thrift and industry.
± Success and prosperity is interpreted as
God¶s approval.
 Protestant Ethic

‡ _1
#
2(1706-1790) : one of
Founding Father of the United States.
‡ A model of 18-century modern person with
industriousness, utilitarianism and participation
in social activities.
‡ 3



 attitudes: Honesty,
punctuality, industry, and frugality is useful
because it assures credit.
‡ ³Do you see a man skilled in his work? He will
serve before kings; he will not serve before
obscure men´ (Proverb 22:29)
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French seaport, 1638

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‡ Economic freedom allows the individual to maximize
self-interest
‡ Individual behavior for maximize self-interest benefit
the total society
‡ ³Invisible hand´ controls market and competition to
allocate resources for social benefit
‡ No need of government control = Laissez-faire
‡ Justified the growth of industrialist
 | /  
 


4)
‡ Common value of three forces as basis for
industrial society
± Rationality
± Empiricism
± Utilitarian mentality
± Utilization of natural resources for personal
betterment for Glory of God
± Importance of knowledge and literacy
 # j

7

‡ 

7 ³Origin of the Species´´ 1858
± Evolution of organism: An organism adapted itself
successfully to its environment continually is able to
survive =Survival of fitness
‡ Herbert Spencer; Social Darwinism
± The most capable and resourceful people would rise to
the top of social hierarchy as natural order
± Natural selection for poor and rich
‡ Formation of 



  with
Protestant ethic and Laissez-faire
 4 




 



 8

))))m
‡ ³Communist Manifesto´, 1848, with
Frederic Engels and ³Das Kapital´ in
1867
‡ Capitalist break down natural social
order (feudal, patriarchal and idyllic
relations that tied man and natural
superiors)
‡ Proletarian Revolution to break
capitalistic order, and establish
communism in a society achieved
maturity of capitalism
 Communism
‡ A social structure in which classes are
abolished and property is commonly
controlled.
‡ A final stage of society that would be
achieved by a proletarian (laborers)
revolution after achieving capitalistic
advancement, described by Karl Marx.
  r









 

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‡ Emergence of large companies and factories
‡ Summit in the evolution of traditional capitalistic
ethic
‡ U.S. federal government action was favorable to
business system e.g. tariff laws, legal forms of
corporate, transportation
‡ Public dissatisfaction against antisocial action of
industrialists in late 1800s
2 





‡ 

 against monopolistic
power of railroad (Grange movement)
‡ K



 

 
± Interstate Commerce Act (1887): regulations
on railroad
± Sherman Antitrust Act (1890): restricted
monopolistic practices
± Pure Food and Drug Act (1906): ensured
quality of food and drug
‡ $
(


± Knights of labor (1897): advocated social reform with
agrarian group
± American Federation of Labor (AFL) (1886): To gain
more share of benefits of economic system for
laborers, but within capitalistic framework
± Socialist Labor Party
± Industrial Workers of the World (IWW): Militant
industrial unions
± Represented violent reactions to Industrial Darwinism
 j "



8
"

1. 4

 in 1929 and doubt
against protestant ethic
‡ Crash of stock market in US
‡ Massive economic collapse and cause of
large number of unemployment
‡ Challenge against traditional capitalistic
ideology: individual effort cannot control
the external forces
% &


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´ 1936
‡ Protestant ethic, saving, withheld from
consumption and lead dislocation and
underutilization of economic resources
‡ Market mechanism under Laissez-faire does not
assure the effective allocation of human and
other resources Need of balancing mechanism
‡ There is no self-adjustment system within
market
‡ External force is necessary to provide balancing
mechanism- government role
 & |





 
‡ Government intervention and control
became stronger due to the wars
‡ Fair Employment Act 1946: Federal
government had prime responsibility for
maintenance of full employment and full
utilization of economic resources
‡ Defense, nuclear energy and space
programs
‡ Government expenditure in nondefense
sector was increased
 Emergence of various factors
affecting managerial values
‡ Technological changeInternationalization:
adaptation to cultural values of different
societies
‡ Voices from other social groups:
Environmentalists, women activities, consumer
protection, minority, lobbying group
‡ Limited resources: Oil crisis in 1970s
± Doubt on the growth concept of ideology
‡ Self-fulfillment
 8  _j


1. Ethical pluralism on business
organizations
‡ Calvinistic ethic: Profit maximization
‡ Judio-Christian ethic: Broader social role
2. Recent views
‡ Business organization must satisfy the
interests of stakeholders in order to
retain their cooperation and participation
in the organization activities
m j

 
‡ Industrial policy is a long-term strategy that is
designed to maximize the nation¶s economic
growth and well-being in the face of international
competition
‡ Robert Reich (1982): Industrial policy is an
alternative strategy to Supply-side economics as
a means to stimulate industrial development and
growth. It focuses on the most productive pattern
of investment (infrastructure, skilled work force,
subsidy, tariffs, tax breaks) while it balances
regional growth and assists allocation of labor
resources
‡ Comprehensive Industrial policy was effectively
implemented in Germany, France and Japan
 Conclusion
‡ Capitalistic ethic has evolved through forces of
the changes in sociocultural norms and
ideologies
‡ Current capitalistic ethics have been influenced
from various complex forces; resulting to ethical
pluralism
‡ Management theory and concepts have been
changed from these historical evolution of
sociocultural value system and other
environmental changes.
 References
‡ Kast, F.E., and Rosenzweig, J.E., 1985,
Organization and Management, A Systems and
Contingency Approach, Forth Edition, McGraw-
Hill Book Company
‡ www.investerwords.com
‡ www.smallbusinessnotes.com
‡ Oxford Advanced Leaner¶s Dictionary, 2005, 7th
Edition, Oxford University Press
‡ Calvinism, Wikipedia
‡ Benjamin Franklin, Wikipedia
‡ Communism, Wikipedia
Thank You Very Much