What should be privately owned and what should be publically owned?

Private ownership has been shown to be more efficient and more profitable. But public ownership may be better at benefiting the region or country the resources are located in. Private ownership is simple: resources act like just another asset that can be invested in (i.e. just like capital). The more households decide to “invest” in resources, the more resources will be extracted. Public ownership is modeled by assuming that the revenues from resource extraction are equally distributed among the population and thus act as an additional source of income to all households. The rate of resource extraction is decided upon by voting. It can be said that it is the things which determine whether they should be owned publically or privately. In the case of nature resources, it is better if they are owned publically because it would benefit the region more efficiently. For instance, there is another natural resource that should be owned publically and that is water. It is the right of every person human being to use water and no one really owns the whole water resource. Meanwhile, costly means of enjoyment should be privately owned.

1.      What is the difference between equality of opportunity and equality of outcomes/results?

Equality of opportunity provides in a sense that all start the race of life at the same time. Equality of outcome attempts to ensure that everyone finishes at the same time. Equality of Opportunity: We all start at the same point, but differences in outcome aren’t necessarily unjust—they could reflect harder or better work

Equality of Outcome: Anything other than perfect equality shows discrimination, and we all ought to have the same amount (i.e. outcome.) Equality of Outcome seems like an ideal option to us. We’re all human, and we all have similar needs, so why shouldn’t we all get the same? Alas, equality of outcome doesn’t work for two reasons. For one, it’s impossible to apply: people are neither able nor willing to willingly distribute their wealth proportionally. Secondly, think about the incentive: if I get the same outcome no matter what, then what’s the point of excelling? (The only motive would be for personal enjoyment, but even such a commendable thing wouldn’t be financially incentivized.) Equality of opportunity, meanwhile, doesn’t have such problems. People are not expected to distribute their wealth, and hard work and passion—provided it’s a meritocracy—will be rewarded. Alas, equality of opportunity doesn’t seem possible to apply perfectly, especially with things like inheritance. What are the obstacles to equality of opportunity in a capitalist system?

A capitalist economy cannot function without unemployment, or what Marx had called “ a reserve army of labour”. Such a reserve army is necessary for restraining money wage claims of the workers, which is a condition for the stability of the value of money. (In a system where much wealth is held in the form of money or money-denominated assets, this stability is of paramount importance.) Besides, a reserve army is required for enforcing work discipline among workers. A slave society imposes work discipline among the slaves through brutal coercion. A feudal society likewise imposes work discipline among the serfs working on the Monseigneur’s land through the use of the whip. But under capitalism, where direct coercion is not the primary instrument of instilling work discipline among the workers (though it is used pervasively), the place of the Monseigneur’s whip is taken by ‘the threat of the sack’. Anyone who is suspected to be a laggard is given the ‘sack’ and the fear of this happening makes people work. Now, the ‘sack’ obviously becomes effective only in a society where there are unemployed persons, so that being pushed out from the ranks of the employed to those of the unemployed becomes a terrifying prospect. If there was full employment then one could walk out of one job only to join another with no harm done to oneself. Hence the fear of the ‘sack’, which is essential for work discipline under capitalism, requires the existence of unemployment. A capitalist economy therefore cannot function if it maintains full employment. And this would also hold for any ‘reformed capitalism’ which sought to introduce equality of opportunity. It follows, therefore, that equality of opportunity is impossible under capitalism.

 Is perfect competition possible

Requirements of Perfect Competition

• All firms sell an identical product.
• All firms are price-takers
• All firms have a relatively small market share.
• Buyers know the nature of the product being sold and the prices charged by each firm.
• The industry is characterized by freedom of entry and exit.

Because these five requirements rarely exist together in any one industry, perfect competition is rarely (if ever) observed in the real world. For example, most products have some degree of differentiation. Even with a product as simple as bottled water, for example, producers vary in the method of purification, product size, brand identity, etc. Commodities such as raw agricultural products, although they can still differ in terms of quality, come closest to being identical, or having zero differentiation. When a product does come to have zero differentiation, its industry is usually concentrated into a small number of large firms, or an oligopoly.

4.      What are the barriers to competition?

Many industries also have significant barriers to entry, such as high costs of startup (as seen in the auto manufacturing industry) or strict government regulations (as seen in the utilities industry), which limit the ability of firms to enter and exit such industries. And although consumer awareness has increased with the information age, there are still few industries where the buyer remains aware of all available products and prices.

As you can see, there are significant obstacles preventing perfect competition from appearing in today's economy. The agricultural industry probably comes closest to exhibiting perfect competition because it is characterized by many small producers with virtually no ability to alter the selling price of their products. The commercial buyers of agricultural commodities are generally very well-informed and, although agricultural production involves some barriers to entry, it is not particularly difficult to enter the marketplace as a producer.

What about things that are not profitable, but useful to society?

One of the pillars of any marketing campaign is the pricing. It comes right alongside the development of the product, its positioning, and the venue where it is sold. When it comes to a price reduction strategy_, _ you have a couple of options. You could either go for a temporary reduction in price, which would be a discount, or you could reduce the pricing permanently. Both temporary and permanent price reduction strategies have their own benefits. Whatever price you set, it is going to be an important factor in a lot of things: the volume of sales you get, the profits you make, and even the way your brand is perceived. Price is actually the factor which might prove to be not profitable to a company if it is cheap. However, when the price of a specific product is very low, it will be very good for the public because they will be able to purchase that product without having to shrink their budget. It can be said that price is what is not profitable about the product but it is beneficial in terms of public.

 Is work in itself a natural part of life?

In my conception, what is ‘natural' to us is anything that the human race have to deal with since the dawn of its own time. Anything we had to evolve with. Our ancestors used to seek for food, hunt, grow seeds, take care of the kids, build shelters, travel, look for good places to live, construct weapons and tools, clothing and anything else they would need. All of that, but they also had a LOT of free time. Humans are around for about sixty thousand years, and the great majority of that time we spent as what today is called primitive living. Anything that the human race had to continuous deal during that time is still strong inside every one of us today. And we’re not including the time when we were more ‘apish’ than humans. Time that still have a large influence in what we are.

Have you ever noticed the difference between two elders, one that have done nothing since his retirement, and other that kept working? Either in his profession, hobbies, volunteering or just studying. It’s noticeable how the second one is almost always in better mental conditions.

I believe we are just not made for doing nothing.

Is it inherently good to work?

Absolutely. Life needs preoccupation - and it needs variety and freedom. Work as an abstract concept isn’t the issue, the issue is the implementation of that concept. People resist work because of no balance; doing an activity shouldn’t then mean doing that very same activity again over 1,000 times. The challenge is compromise - people being able to experience change, all the time, at the cost of no identity. Humans are around for about sixty thousand years, and the great majority of that time we spent as what today is called primitive living. Anything that the human race had to continuous deal during that time is still strong inside every one of us today. And we’re not including the time when we were more ‘apish’ than humans. Time that still have a large influence in what we are.

Have you ever noticed the difference between two elders, one that have done nothing since his retirement, and other that kept working? Either in his profession, hobbies, volunteering or just studying. It’s noticeable how the second one is almost always in better mental conditions. Work is definitely good for physical skills and being adept at them gradually. In the absence of work, humans can actually lose their touch and never earn for themselves besides being physically weak.

 Is the consumer really “king”?

In free market economics, consumers dictate what goods are produced and are generally considered the center of economic activity. The prices in an economy are said to be dictated by the consumers. The law of demand states that ‘other things remaining the same, as more and more good are demanded, the prices rise and vice versa.’ In accordance to this law, when the consumers demand a great amount of a particular good or service, their prices tend to rise. The reasoning behind it being, when there is more demand, the producers raise the prices in order to acquire a larger profit arising out of the increased demand. The consumer is always at an advantage when there is competition because competition means choice. Their votes determine the fate of the manufacturer or service vendor. The theory of consumer choice in Economics states that consumers take into account the following factors before making a purchase. They are

1) How much satisfaction they get from buying and then consuming an extra unit of a good or service

2) The price that they have to pay to make this purchase

3) The satisfaction derived from consuming alternative products

      4) The prices of alternatives goods and services

9.      In what areas do you feel you have power/don’t have power as a consumer?

As a customer, I can say that I don’t have much power when there is a specific product that I must purchase and there is no substitute available for in the market. There are some specific brands that produce very unique and quite influential products. Even though the price of these products is high, I have to purchase them because I cannot find them anywhere else. This is the fact that not even a single customer can deny. Every consumer has a brand that he or she likes due to several factors like quality or reliability and these qualities are very difficult to find in other companies. Therefore, a consumer cannot do anything but just buy the product at a certain point. I may choose not to purchase the product but it will be at a disadvantage because at some point, I will feel the need to purchase the product regardless of all other issues. This is when I feel that I cannot exercise my power a lot because it is bound now. Regardless of the persistence that I show, I will choose that brand at one point or other.

10.  How is the government involved in the economy?

In the narrowest sense, the government's involvement in the economy is to help correct market failures, or situations in which private markets cannot maximize the value that they could create for society. This includes providing public goods, internalizing externalities (consequences of economic activities on unrelated third parties), and enforcing competition. That being said, many societies have accepted a broader involvement of government in a capitalist economy. Perhaps most important, the federal government guides the overall pace of economic activity, attempting to maintain steady growth, high levels of employment, and price stability. By adjusting spending and tax rates (known as fiscal policy) or managing the money supply and controlling the use of credit (known as monetary policy), it can slow down or speed up the economy's rate of growth and, in the process, affect the level of prices and employment. For many years following the Great Depression of the 1930s, recessions—periods of slow economic growth and high unemployment often defined as two consecutive quarters of decline in the gross domestic product, or GDP—were viewed as the greatest of economic threats. When the danger of recession appeared most serious, the government sought to strengthen the economy by spending heavily itself or by cutting taxes so that consumers would spend more, and by fostering rapid growth in the money supply, which also encouraged more spending.

 Are business and government enemies?

Government is not a “them.” Neither is “business” a “them.” Rather, both are “us.” We have the privilege and good fortune to live in a democracy – meaning, the government is picked by us. And that’s true at every level from city council all the way up to the President. The government is us, which, in 1776, was a radical notion. For better or worse (I think better), we don’t get to point to government as something imposed on us from above, but rather something raised up from the people. If you’re looking at government (or business), you’re looking in the mirror. And that includes everyone, even people you don’t agree with.

What about the notion that government is simply unnecessary? Let’s rewind for a minute. Imagine a scene on the landscape a million years ago. After a successful outing bagging an oversized mammal, two good folks got into a tussle over dividing it. Next thing, one is about to club the other into submission and it’s an all-out melee. Up walks the biggest/strongest member of the group, realizing chaos is about to ensue, and demands that the fighting stop (under penalty of more pain). The two fighters scratch their heads and figure out a better solution. Thus was born the rather common sense solution that an impartial figure could mediate conflicts and prevent them from happening in the first place – government.

 What is the Canadian Business System?

 Business: An organization that seeks earn profits by providing goods and  

services

Profit: What remains (if anything) after a business’s expenses have been  

subtracted from its revenues

- Profits reward the owners of the business for taking the risks involved in

investing their time and money

- In Canada’s economics system, businesses exist to earn profits to the owners

who are free to set them up

- Consumers also have freedom of choice, so businesses must take into

consideration the consumer needs and wants

-  Businesses won’t survive (even if they are very efficient) if there is no

demand for their product or service

- People who can spot good opportunities and develop a good plan for taking

advantage of it will succeed

- Good opportunity are things that consumers need or want, and something

that is not being supplied to consumers or it is being supplied inefficiently or

incompletely by other businesses

-  Businesses produce most of the goods and services we consume, employ a

majority of the working people, create most new innovations, provide

opportunities for other businesses (usually as their suppliers), support

charities, and provide community leadership

- Healthy business climates contributes directly to one’s quality of life and

standard of living

- New forms of technology, service business, and international business allow

to keep production, consumption and employment growing for ever (not

always smoothly though)

- Business profits improve the personal incomes of millions of owners and

stockholders

- Business taxes help to support government at all levels

 What is Capitalism and what are its core assumptions?

Capitalism is an economic system where private entities own the factors of production. The four factors are entrepreneurship, capital goods, natural resources, and labor. The owners of capital goods, natural resources, and entrepreneurship exercise control through companies. The individual owns his or her labor. The only exception is slavery, where someone else owns a person's labor. Although illegal throughout the entire world, slavery is still widely practiced.

Wage Labor. There has to be a large group of people dispossessed of the means of production (property necessary to fulfill their needs).

Production For Exchange. The purpose of production is not to fulfill people’s needs, but to create profit from exchange on the market.

Private Ownership of the Means of Production. Private ownership creates wage labor through inequality. Without inequality, wage labor, thus capitalism, would be unthinkable.

Money/Credit. Money is a universal equivalent that makes all exchange values (commodities) commensurable. Credit is necessary to keep anarchic capitalist market relations from constantly crashing (i.e., more then they do now).

A State with a Monopoly on the Legitimate Use of Violence. Because inequality is necessary for wage labor, violence (or the internalized threat thereof) is necessary to keep the dispossessed dis-possessed.

 How did Capitalism evolve over the 20^th century? Why?

The 20th century saw a far reaching and lasting transformation of capitalist production processes: In contrast to the 19th century, when production concentrated in few global centres, particularly so in the non-agricultural and services sector, global divisions of labour ramified over the course of the 20th century. Production now more often spanned two or more countries. Arguably, this differentiation attained a new quality in recent decades, which coincided with the rise to prominence of concepts such “globalization”, “neoliberalism”, and “global production networks” across the social sciences and humanities. Economic history dealt with this transformation mainly as a phenomenon of decreasing transport and organisational costs after the micro-electronic revolution and container shipping. To our opinion such an interpretation falls short and does not cover the huge structural transformation of capitalist production that started much earlier.

Production in the 20th century was increasingly organized in hierarchical networks, cut into ever smaller steps that facilitated value extraction at nodal points of dynamic global value chains. Value-chain-management became a fashion in Management Science by the end of the 20th century, preparing business students for optimizing not only the technical foundation of a global production process but even more so teaching them to navigate the volatile mixture of state regulations, financial opportunities and competing nations offering incentives for production relocation. 

 How does Capitalism vary across countries?

germany tops our list of one of the most capitalist countries in the world. Capitalism in Germany is found in its institutions such as banking and educational systems. German industries have prospered because the country has made it a priority to train its labor force to succeed in various industries. These various systems have worked together to make a robust capitalistic market for the country. Americans are known to be risk takers and capital makers. In the US it is possible to begin a business of humble means and expand it to grow into a conglomerate business model for people wanting to start a new business. Imagine a tiny dry cleaner who adds space in strip malls and soon owns over twenty businesses. This is the epitome of wealth and capitalism in the US. China has focused in the last fifty yearscapi on educating the masses and the effort has paid off. Adult literacy in China has risen to almost 95% and is steadily rising. China is placing a priority on the development of its human capital and offers it workers more on the dollar to produce goods for export. India is beginning to realize its potential economically as it encourages capitalism throughout the country. The infrastructure is limited by the human capital available to take jobs offered by the companies poised to hire qualified candidates as corporations globally look to India for offshore needs (call center and telemarketing, etc.). Between India and China, they both account for the world’s population at almost 40% all tolled.

How did management thought evolve over the 20^th century?

The advent of industrial revolution in the middle of the 18th century had its impact on management. Industrial revolution brought about a complete change in the methods of production, tools and equipment, organization of labor and methods of raising capital.

The origin of Evolution management can be traced back to the days when man started living in groups. History reveals that strong men organized the masses into groups according to their intelligence, physical and mental capabilities. Evidence of the use of the well-recognized principles of management is to be found in the organization of public life in ancient Greece, the organization of the Roman Catholic Church and the organization of military forces. Thus management in some form or the other has been practiced in the various parts of the world since the dawn of civilization. With the onset of Industrial Revolution, however, the position underwent a radical change. The structure of industry became extremely complex. At this stage, the development of a formal theory of management became absolutely necessary. It was against this background that the pioneers of modern management thought laid the foundations of modern management theory and practice.

 What are the functional areas of business and how do they fit together?

Companies organize by functional areas for many reasons. First, it's more efficient to have staff with similar skills grouped together. They can easily team up on projects requiring their expertise and will have backup expertise if one staffer is unable to complete their work. For example, a company is going to set up a new server in their data center and they'll likely need several different staffers from the information technology department involved in the project. Since all work in the same functional area, it is possible for a single manager to assign them all to the project and to make sure the project is completed on time.

Just as different functions in the human body are performed and regulated by different organs, different functions within a business are performed and controlled by different parts of the business. One of the reasons for separating business operations into functional areas is to allow each to operate within its area of expertise, thus building efficiency and effectiveness across the business as a whole. The key functional areas of a business are the following:

·         Management

·         Operations

·         Marketing

·         Accounting

·         Finance

 What comes to mind when you think about social issues in management?

The Social Issues in Management (SIM) studies the social issues, institutions, interactions, and impacts of management. The common logic of SIM is the shared interest in understanding responsible behavior by organizations and the people and groups working in and around them. Such investigation leads me to ask fundamental questions about the ethical systems, roles, functioning, and legitimacy of business institutions. 

It can be said that social issues in the management include:

Individual and organizational ethics. Descriptive, including behavioral, work covers individual characteristics, group/organizational influences, and firm-environment interactions. Prescriptive work includes ethical theories; e.g., rights and justice, and the study of norms, values, and moral principles.

Organizational and systemic governance. The study of relationships and responsibilities covering both top-level corporate and within-organization governance, and social/environmental governance, including regulatory partnerships, corporate corruption/compliance, strategic issues/public affairs management, and corporate political activity.

Stakeholder behaviors, relationships, and systems. Descriptive approaches illuminate interactions with multiple stakeholders; e.g., corporate philanthropy and management of natural environmental issues. Instrumental approaches investigate the impacts of stakeholder management on firm goals. Prescriptive approaches consider the organization’s responsibilities to stakeholders; e.g., corporate social responsibility, corporate social performance, corporate citizenship; and stakeholders’ responsibilities to the organization.

 Who is to blame for the issues in the garment industry?

The Rana Plaza tragedy was an outcome of a corrupt system that is rotten to the core. The building was built without observing proper building codes and laws, and using poor materials—something that should have been monitored from the beginning by concerned authorities of the Bangladesh government, whose negligence is particularly culpable in this instance. Unfortunately, in Bangladesh, any kind of permission for high-rise buildings can be obtained through bribes, and the building can be built without procuring suitable building materials.

The systemic failure of government protection of human rights and lack of respect towards workers’ right allows incident like Rana Plaza to continue to happen. Beyond the famously low wages, unsafe working conditions and restrictions and repression of labour unions plague the industry. The state has a duty to protect its citizen against human rights abuses by third parties, including business enterprises, through regulation, policymaking, investigation and enforcement. But policymakers are also part of this profit-making business and are strong protectors of corruption mechanisms. Today, there's nothing but false promises and dirty politics from all parties. When the state itself protects the oppressors and limits access to judicial, administrative, or legislative protection and corporate responsibility, prevention of any infringement of rights remains a dream for many of the victims of serious and systemic human rights violations.

Is child labour always a bad thing?

The definition of child labour has evolved over the years; from including all productive activities, to equating child labour with paid employment and as distinctly different from unpaid work within the family. The International Labour Organisation’s (ILO) current interpretation of child labour is that it is work that deprives children of their childhood, potential and dignity, and is harmful to their physical and mental development. 

The ILO also states that not all work done by children should be classified as child labour. If work does not affect the child’s health and personal development negatively and does not interfere with schooling, there is no reason to label it as child labour. In such cases, work is likely to help children and adolescents to build skills and experience for their future. This interpretation is a significant softening of earlier stances on child labour. A child-centred approach is gaining ground, which looks more at the issues that motivate children’s work and how they perceive their labour force participation. It is based on the assumption that working children are best supported through protecting them against exploitation and hazardous working conditions. Standards concerning the worst forms of child labour (ILO Convention No. 182) are central to this standpoint.

 What affects your decisions as a consumer?

Following factors influence the decisions of a consumer:

Economic Factor

The most important and first on this list is the Economic Factor. This one is the main foundation of any purchasing decision. The reason is simple people can’t buy what they can’t afford.

Functional Factor

The factor is totally about needs, backed by a logic that what makes sense and also fits in the best interest of the customer. This one factor also plays a very important role in the buying decision.

 Marketing Mix Factors

There are 4 components in the marketing mix, i.e. product, pricing, promotion and place of distribution and each of these components have a direct or indirect impact on the buying process of the consumers.

 Personal Factors

The personal factors include age, occupation, lifestyle, social and economic status and the gender of the consumer. These factors can individually or collectively affect the buying decisions of the consumers.

Social Factors

Social factors include reference groups, family, and social status. These factors too affect the buying behaviour of the consumer. These factors in turn reflect an endless and vigorous inflow through which people learn different values of consumption.

 Are the negatives of this outweighed by the positives of the business brought to these economies?

The pros and cons of a market economy show that the forces between businesses and consumers can be beneficial, even if there are minimal controls or regulations in place to dictate that relationship. Although there is a risk for harm to workers and the environment, similar risks exist in other economy forms as well. With the emphasis on innovation and the chance for entrepreneurs to thrive, the positives of a market economy are often seen as outweighing the negatives. Normally, it is actually seen that the negatives are ignored for achieving the positives of a market or system. However, sometimes the negatives are more potent than the positive ones and they cannot be outweighed. In terms of this, it can definitely be said that the positives are outweighing the negatives and this will continue on until there are proper reforms.

Why does this keep happening over and over again?

The main player in this loop is Globalization. Globalization is supposed to be about free trade, but the reality of the situation is that only true globalization which removes national borders can do this. Under our current planetary structure, there are value-added taxes that can exceed 20% for some countries, which limits the access that people have to imported products. This means the rich can access what they want or need to become richer, but the poor get trapped in poverty because they don’t have the means to access success. In many developed countries today, there are large companies, lobbyists, and wealthy individuals who are highly involved in politics so that they can have a favorable set of regulations and laws. If national borders were to disappear, this issue would become a global problem. The largest businesses and wealthiest people could hoard global resources for themselves through whatever government was put into place, enhancing the social inequalities that are already being seen on smaller scales. If there is a race to the bottom for worker wages globally, then there would be nothing to stop organizations from exploiting workers so that goods could be created cheaply. Households in such a scenario would be earning less, so they’d be demanding lower prices. That could mean a change in global laws that could create more prison-based labor, changes to child labor laws, or changes in worker safety standards to meet the potential demands.

How could it be addressed in the future?

As a rule of thumb, the effect of globalisation is to increase inequality within countries but diminish it between them. There are exceptions: parts of sub-Saharan Africa may be losing ground simply because they cannot produce the products the rich world wants to buy, and not just because of corruption and civil war. Western banks and governments have also been extremely irresponsible in lending money to countries that wanted to borrow, but would always be unlikely to be able to repay. International financial markets are a facet of globalisation, and it would have been hard to deny countries access to them, even when that access was inappropriate. But lenders should always carry responsibility as well as borrowers, and when the relationship is unequal, the responsibility on the more powerful party is all the greater.

The alarming problem, surely, is rising inequality within countries. This has happened everywhere, showing in some places (such as the US and UK) in rising income and wealth differentials and in others (much of Continental Europe) in different employment prospects. Both are profoundly distressing, and it is a fine point whether it is worse to have people working on low wages or to exclude them from the job market altogether.

The problem is determining to what extent globalisation is responsible for widening differentials, and to what extent other economic changes have increased the relative demand for skills. Some of the reason for holding down the real wages of working people in rich countries must be greater imports from lower-wage countries abroad. But part is the result of the need for skills. Everything we can do to lift skills must be an effort well-directed.

 What is the role of business? Government? NGOs? Consumers? Others?

Increasingly, governments are called to form partnerships ranging from the ones with other levels of government to ones with civil society organizations (CSOs) and the private sector. In terms of advancing sustainability, the government can also play a significant role. The five roles are discussed as follows:

Governments need to provide vision and strategy to incorporate sustainability in public policy. Concepts such as natural capitalism, eco-economy, and green economy call for grand-scale transformations in systems dealing with energy, waste, water, and governance. Governments would need to develop strategies for a transition to an economy based on sustainability principles.

Governments can improve the environmental performance of public procurement, whereby public funds are used in construction of highways and buildings, power generation, transportation, and water and sanitation services. Green procurement can also provide impetus to innovative and environmentally friendly products. As an example, Japan used procurement of low emission automobiles to drive innovation. Governments need to create “open, competitive, and rightly framed markets” that would include pricing of goods and services, dismantling subsidies, and taxing waste and pollution, etc.”

Governments are exploring environmental taxes and market-based instruments for ecological fiscal reform. Though the market solutions can be more amenable to businesses for their flexibility, these approaches might not be the best at pricing cer pricing certain environmental assets such as clean water.

Is consumerism necessary in a capitalist economy? Why?

In theory, it could. In practice, not so much.

Capitalism as we know it is based on growth, and growing assets through investment in development.

Without consumerism the economy would be much smaller. Consumer gadgetry would certainly shrink, as people lived with old-fashioned means and methods that work just as well.

Status seeking would have to become a smaller factor for consumerism to shrink considerably. Think about autos. From a utilitarian standpoint, there would be a much different set of features, and cost/benefit ratio of options or features would be more influential. What other products/industries are dependent on gratuitous consumption? Use your imagination...

Reducing consumer hyperactivity would have far-reaching ripple effects.  Entire industries would be depressed from lack of demand. A more stable world might result. But, the human drive and ambition to flex one's intellect and ingenuity against the environment, and to gather as much stuff before dying, would likely allow someone to continue selling snake oil, or holy water.

Do you feel susceptible to marketing? Aren’t we passed this idea that we are gullible dummies?

With literally thousands of ads hitting us every day, it’s impossible to avoid being influenced.

Society has long been of two minds about advertising. On the one hand, it promotes marketplace efficiency by educating consumers about new products. On the other hand, people justifiably worry that its power to impart information may outmanoeuvre our rational controls.

Hütter and Sweldens’ research focuses on a technique that has long been employed by advertisers: evaluative conditioning (EC), which pairs things in hopes that the positive or negative associations of one will rub off onto the other. EC is the reason so many brands rely on celebrity endorsements, and cute animals often feature in television commercials, e.g. Coca-Cola’s polar bear spots. Advertisers have found that a quick way to win love for their product is to position it alongside something or someone people already love.

The researchers investigated whether the enduring success of marketing techniques such as EC could be partly due to automaticresponse. Drawing upon past research, they identified several conditions that would have to be satisfied for a response to be deemed uncontrollable or automatic. For example, it should appear regardless of a strongly motivated attempt to repress it, and it should be present even when the conscious mind is occupied with something totally different.

  What would capitalism look like without a consumerist economy?

Can Capitalism function without Consumerism?”

No, Capitalism cannot function without Consumerism. The wealth created by Capitalism comes directly from vast levels of consumption.

Without consumerism the economy would be much smaller. Consumer gadgetry would certainly shrink, as people lived with old-fashioned means and methods that work just as well.

Status seeking would have to become a smaller factor for consumerism to shrink considerably. Think about autos. From a utilitarian standpoint, there would be a much different set of features, and cost/benefit ratio of options or features would be more influential. What other products/industries are dependent on gratuitous consumption? Use your imagination...

Reducing consumer hyperactivity would have far-reaching ripple effects.  Entire industries would be depressed from lack of demand. A more stable world might result. But, the human drive and ambition to flex one's intellect and ingenuity against the environment, and to gather as much stuff before dying, would likely allow someone to continue selling snake oil, or holy water.

  Do you feel like you’re being manipulated?

Shiller claims that the theoretical defense of the free market depends on consumers being rational and well informed — a condition that doesn’t hold true in the real world. Drawing on behavioral economics, he argues that consumers are often possessed with cognitive biases that allow them to be systematically deceived by unsavory merchants. For this reason, Shiller argues, consumers need government regulation to protect their interests. The internal forces of the market are not sufficient.

But government regulation is not an infallible deus ex machina. The question is not whether the market fails, but whether the government is more likely than the market itself to correct those failures. Economist Harold Demsetz coined the term “nirvana fallacy” to make this point: it is not enough to find flaws in the real world; one must prove that some feasible alternative is likely to be less flawed. James Buchanan, one of the fathers of public choice economics, compared advocates of government regulation to the judges of a singing contest who, after hearing an imperfect performance from the first contestant, immediately award the second contestant, reasoning that he must be better.
No, the market is not perfect, and consumers are often ignorant and manipulable. But the real question is this: Will government do any better?

 What is an example of a negative externality?

A negative externality is a cost that is suffered by a third party as a result of an economic transaction. In a transaction, the producer and consumer are the first and second parties, and third parties include any individual, organization, property owner, or resource that is indirectly affected. Externalities are also referred to as spillover effects, and a negative externality is also referred to as an external cost.
Some externalities, like waste, arise from consumption while other externalities, like carbon emissions from factories, arise from production.

Externalities commonly occur in situations where property rights over assets or resources have not been allocated, or are uncertain. For example, no one owns the oceans and they are not the private property of anyone, so ships may pollute the sea without fear of being taken to court. The importance of establishing property rights is central to the ideas of influential Peruvian economist, Hernando De Soto, who has widely argued that successful market economies need a widespread allocation of property rights to enable economies to fully develop.

When certain goods are consumed, such as demerit goods, negative effects can arise on third parties. Common example include cigarette smoking, which can create passive smoking, drinking excessive alcohol, which can spoil a night out for others, and noise pollution.
For example, if an individual plays very loud music in their house they are likely to reduce the benefit to their neighbors of owning the house and living in it.
Another important example of a negative consumption externality if that of road congestion. As individuals 'consume' road-space they reduce available road-space and deny this space to others.

  What is an example of a positive externality?

An externality is an economic term referring to a cost or benefit incurred or received by a third party. However, the third party has no control over the creation of that cost or benefit.

An externality can be both positive and negative and can stem from either the production or consumption of a good or service. The costs and benefits can be both private—to an individual or an organization—or social, meaning it can affect society as a whole.

Some externalities are positive. Positive externalities occur when there is a positive gain on both the private level and social level. Research and development (R&D) conducted by a company can be a positive externality. R&D increases the private profits of a company but also has the added benefit of increasing the general level of knowledge within a society. So, while a company such as Google profits off of its Maps application, society as a whole greatly benefits in the form of a GPS tool. Positive externalities have public—or social—returns that are higher than the private returns.

Is pollution just something that we need to learn to live with?

It seems a bit self-centered to start with human concerns, but pollution has a direct effect on human health. Air, soil and water pollution cause roughly 40 percent of global deaths pollution. Air pollution contributes to respiratory diseases such as lung cancer, even in people who have never smoked a day in their life. Polluted water can carry diseases — and more than 1.2 billion people don’t even have clean water to drink or use to wash. Contaminated soil can transmit toxins and chemicals directly into our food.

Humans aren’t the only creatures on this planet that are negatively affected by pollution. Water pollution upsets ecosystems on both land and sea, either by directly killing plants and animals or encouraging the growth of toxic algae — such as the Red Tide outbreak that is currently ravaging Florida’s coastline.

Bees keep most of the fruits and vegetables that we eat alive — thanks to pollination — but they’re dying out because of the harsh chemicals we use on our crops. Without them, the primary pollinators, these plants are unable to produce the tasty fruits and vegetables that we love to eat.

Even light and noise pollution are dangerous to animals. Turtle hatchlings rely on the light of the moon on the water to direct them to the ocean after they emerge from their eggs — beachfront properties with electric lights often lead to them moving in the wrong direction, and getting eaten by predators. Noise pollution interferes with animals such as whales that use sound to communicate. What is more is that with increasing industrialization, the pollution will only increase and that is why, we have to reduce it or at least contribute in the efforts.

Should business be responsible for paying for the pollution they emit?

Yes companies should be held accountable for lead contamination and pollution.
 
Companies the use toxic processes and make products that are the cause of lead contamination and pollute the environment should be accountable and libel for the damages those processes and products cause. The taxpayers should not have to fund clean-up costs for companies that are making billions of dollars from their ongoing operations

Companies should be held responsible for lead contamination and pollution
  Companies should be held responsible for lead contamination and pollution. This is because of the fact that the lead contamination and pollution that companies produce harms the environment in serious ways. Companies should not be able to contribute to an environmental disaster without paying for it with their responsibility to fix these problems. Actually, if businesses or companies are made responsible and have to pay for the pollution that they are causing, it can contribute in the reduction of environment pollution. With high taxes, companies wouldn’t be able to pollute or at least purchase the materials which are responsible for it.

  What is the short-term and long-term?

Many businesses develop strategic planning within a short-term, medium-term and long-term framework. Short-term usually involves processes that show results within a year. Companies aim medium-term plans at results that take several years to achieve. Long-term plans include the overall goals of the company set four or five years in the future and usually are based on reaching the medium-term targets. Planning in this way helps you complete short-term tasks while keeping longer-term goals in mind.

Short-term planning looks at the characteristics of the company in the present and develops strategies for improving them. Examples are the skills of the employees and their attitudes. The condition of production equipment or product quality problems are also short-term concerns.

In the long term, companies want to solve problems permanently and to reach their overall targets. Long-term planning reacts to the competitive situation of the company in its social, economic and political environment and develops strategies for adapting and influencing its position to achieve long-term goals. It examines major capital expenditures such as purchasing equipment and facilities, and implements policies and procedures that shape the company's profile to match top management's ideas.

What is Short-Termism?

Short-termism refers to an excessive focus on short-term results at the expense of long-term interests. Short-term performance pressures on investors can result in an excessive focus on their parts on quarterly earnings, with less attention paid to strategy, fundamentals and long-term value creation. Corporations too often respond to these pressures by reducing their expenditures on research and development and/or foregoing investment opportunities with positive long-term potential. These decisions can weigh against companies’ development of sustainable products or investment in measures that deliver operational efficiencies, develop their human capital, or effectively manage the social and environmental risks to their business.

Management who can be described as "short-termist" tend to emphasise certain performance measures, such as:
Share price
Revenue growth
Gross & operating profit
Unit costs & productivity
Return on capital employed
As a possible consequence, other more longer-term measures of business performance might become less important, such as:
Market share
Quality
Innovation
Brand reputation
Development of employee skills & experience
Social responsibility & sustainability.

What causes it?

Management who can be described as "short-termist" tend to emphasise certain performance measures, such as:
Share price
Revenue growth
Gross & operating profit
Unit costs & productivity
Return on capital employed
As a possible consequence, other more longer-term measures of business performance might become less important, such as:
Market share
Quality
Innovation
Brand reputation
Development of employee skills & experience
Social responsibility & sustainability

 Why does short-termism matter for business and society?

We live in a world of short term thinking and it is damaging us. Many would say it is destroying us. Yet, it is a habit that persists.
Short-termism incentivises us to take shortcuts. We develop ‘hacks’ and make decisions to produce short term results without consideration of long-term consequences. It can cause us to focus on the wrong things.
Short-termism also creates unnecessary waste. Does your family home still have that working kitchen blender, purchased in the 80’s? If you mother is anything like mine, she’s not shy to remind us of how well things were built back in the ‘old days’.

Short-termism is not limited to the behavior of a few investors or intermediaries; it is system-wide, with contributions by and interdependency among corporate managers, boards, investment advisers, providers of capital, and government. Thus, effective change will result from a comprehensive rather than piecemeal approach. We present the following recommendations to focus attention and dialogue on the intricate problems of short-termism and what we believe are the key leverage points to return to a responsible and balanced approach to business and investment.

1. Market Incentives: encourage more patient capital

2. Fiduciary Duty: better align interests of financial intermediaries and their investors

3. Transparency: strengthen investor disclosures

 Overcoming short-termism

 The first step is to challenge the prevailing wisdom. If only a quarter of your peers believe sustainability will have a material impact on business performance in the short term, focus on the contradictory evidence. Start collecting cases, facts and figures that show how financially significant sustainability can be. No doubt when BP lost 50% of its share value in 50 days after the Deep WateHorizon spill or when Starbucks faced boycotts over perceived tax avoidance in the UK, these were material impacts.

The second step is to widen the scope of sustainability. Too many companies still understand sustainability only to be concerned with environmental issues, or with what a sustainability department is responsible for. However, when sustainability is recast as being fundamentally about the way a company does business – including how it recruits and retains talent, ensures security of resource supplies, and ensures customer satisfaction and good stakeholder relations – it becomes more difficult to argue that these have a marginal impact.

The third step is to change the market pressures for short-termism. In practice, this means identifying and promoting actions that question shareholder supremacy and financial speculation. Examples include Unilever's refusal to disclose quarterly performance, Warren Buffet's long-term investment philosophy, the global trend of socially responsible investment, and Puma's inclusion of externality costs through its Environmental Profit and Loss accounts.