EC CHUO class 2

The Ethics of Capitalism, Class 2
What are some of the possible alternatives to Capitalism?

1. Feudalism: any hierarchical political and economic system that restricts property ownership, employment,
and trade in order to keep in place some explicit legal and social distinctions of rank (social status). This status
in feudalism is usually determined through hereditary succession.
Protection for property depends on the continued goodwill of the reigning authority, who is likely to demand
loyalty and sacrifice in return. This arrangement is usually enforced in a rather violent way.
While private personal property may be widely owned in a feudal society, productive property and financial
assets will be controlled by a small elite. Property of the productive sort is much more widely dispersed in
capitalist societies. The most important distinction, however, between capitalist and feudal societies concerns
employment. Employment in feudal societies is typically not contractual and tends to be based heavily on one’s
status within the society.
2. Socialism as another well-known alternative:

1. Explicit planning of the economy; that is, most important decisions about who gets what and who owns what
in society are not made by consumers in markets.
2. There are limited or no opportunities to own private property, especially private property used for production.
3. Most major and minor industries are owned and run by the state.
4. Social class distinctions (particularly between workers and capitalist owners/employers) do not exist, or they
are on a path to being erased.
An Ethical Defense of Capitalism?
Socialism as utopian and Capitalism as more realistic. The reality is that humans are selfish creatures, who seek
to advance their own good over that of society. To get people to be productive in ways that benefit everyone,
we need to set up society with the right incentives. On this approach, capitalism simply has no “ethics,” in
terms of having moral foundations. Instead, it’s a sort of remedial way of organizing the economy, one that tries
to save us from ourselves and from each other, without aspiring to any higher moral goal or justification.
However, Capitalism was not always seen as a second-best option. Instead, it was seen as a force for justice and
prosperity. It was argued that a capitalist economy would result in less material poverty, less domination of
workers by bosses, increased leisure time, more peace and less war between countries, reduced levels of
arbitrary privilege, greater potential for the spread of education, democracy, and other values associated with a
rise of the middle class, and the erosion of a society dominated by a wealthy and largely hereditary political
elite. These are seen as moral advances.
The world’s most economically developed countries still have a combination of overly expensive housing,
inherited wealth on a large scale (but concentrated into a small portion of the population), government
willingness to use taxpayers’ money to pay for failures in financial industries, some degree of material poverty
alongside great wealth, failure to grant workers freedom of movement, massive corporations that sometimes
dominate their employees and exercise disproportionate political influence.
These problems are old. Capitalism was supposed to fix them. Leading question: is this the result of the ways
capitalism is unjust, or signs of the way it is still absent. Could these problems disappear without rejecting
Capitalism?
Starting point of the book: thinking about why capitalism was seen as a force for good will allow us to come to
a more sophisticated perspective on what’s wrong with the economic aspects of contemporary society and what
ought to be done about them.
Group Activity #2
Consider the following Political Economy Triangle chart from chapter 1:
Discuss the following questions:

1. In what ways are Capitalism and Feudalism the same and different?
2. In what ways are Socialism and Capitalism the same and different?
3. In what ways are Feudalism and Socialism the same and different?
Next class:
The rise and fall (and possible return) of Political Economy
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The Ethics of Capitalism, Class 2

What are some of the possible alternatives to Capitalism?

2. Socialism as another well-known alternative:

An Ethical Defense of Capitalism?

Consider the following Political Economy Triangle chart from chapter 1:

Discuss the following questions:

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