OBJECTIVES
As a person with knowledge of the free market, the author has always brought up to his superiors the viability of strategy formation regarding the analysis of this topic and at times fails to understand the reasons or logic behind certain strategic implementations imposed on it.
By delving into this project paper, the author intends to have better insights into how the numerous ethical arguments both for and against free markets are thought up, formulated and then imparted down. The author hopes to have an in-depth understanding as to how the ethical arguments both for and against free markets encourage competition among economies effectively and profitably in this era of internationalization where competition is extremely intense.
In order to reinforce the learning objectives, two key focal issues were focused upon, i.e. innovation and diversity. Innovation was discussed with regard to the ethical arguments both for and against free markets where they were renowned for their developmental capabilities to constantly innovate. Diversity came under strategic thinking and formation as the author considered the diverse culture, political climate, economic surroundings, social environment, technological settings, government policies and legal systems in order to better understand the issues being discussed.
EXECUTIVE BRIEF
This essay utilized the consequentialist and non-consequentialist theories as the model approaches to review the present ethical arguments both for and against free markets and how they dealt with critical situations. From the analysis, key trends in the ethical arguments both for and against free markets were then identified, how they worked and their effectiveness in dealing with critical situations was ascertained. The paper then moved on to assess these arguments with regard to their suitability to critical situations, during which the internal capabilities of these arguments in relation to the consequentialist and non-consequentialist theories being followed was determined also. An overall analysis of the impact and validity of the ethical arguments both for and against free markets was also conducted to assess and compare the validity of these arguments with those of others. Gaps in the validity of the ethical arguments both for and against free markets were then identified.
Finally, several choices of strategies to prove the validity of these ethical arguments both for and against free markets as effective means in critical situations were recommended and evaluated in terms of appropriateness to the issues reviewed, feasibility in carrying out the options and acceptability within the key stakeholders and decision makers. Several key implementation issues related to managing strategic change were also addressed as well.
INTRODUCTION
Free market pertains to a market where price is dependent on unregulated supply and demand. More often than not, this type of market leads to the efficient and effective implementation of the economic policies and tasks necessary to satisfy the customers and stakeholders. A free market also focuses on the careful management of the processes involved in the production and distribution of products and services (2001).
More often than not, small companies don’t really have the capabilities to actively participate in a free market. Instead, these companies engage in activities that various schools of economics typically associate with participating in a free market. These activities include the manufacturing of products, product development, production and distribution.
However, free markets deal with all operations done within companies and organizations. Activities such as the management of purchases, the control of inventories, logistics and evaluations are often related with free markets. A great deal of emphasis lies on the efficiency and effectiveness of processes. Therefore, free markets include the analysis and management of internal processes.
Arguments favoring Free markets
A. Utilitarianism
The occurrence of countries and governments favoring the existence of free markets nowadays reflects the growing difficulty for them during a certain period of time to freely express their actions and expressions in terms of economic transactions. And even ordinary people were no exception to these. This is the reason why the idea of free markets flourished so people can have the choice to determine the most effective ways to express their economic actions through the application of methods derived from various fields of studies.
Through the existence of free markets, problems involving freedom of expression in terms of economic decisions and transactions were solved in different ways and alternative solutions were then relayed to the people. The people then selected the appropriate course of action in line with their skills, actions and personal goals. More often than not, free market outputs and ideas in the 20th century were concerned with complicated issues such as top-level strategy, resource allocation, designing of facilities and systems, and the analysis of large databases (2003).
Free market ideas actually may vary according to the ideas and philosophy of the individual. But in the 20th century, the concept of free market was popularized by the help of mass media. This scenario brought the possibility of working closely with top level managers in order to identify and solve a variety of economic problems into reality.
The government control of businesses and economy can cause the limited access to important services. The establishment of market principles within businesses will certainly convert their products and services from a public to a private commodity. This will further result into the deprivation of basic products and services to the poor people, who obviously do not have the capacity to purchase expensive goods and services.
Aside from the issue of cost-efficiency, government control of businesses cannot be always enough to answer the needs of a particular economy. For instance, when bankruptcy among businesses becomes prevalent, the businessmen will definitely have to rely on the government services. Obviously, government control of businesses will be less effective in a nation where poverty is overwhelming, and it is sure that government control of businesses will not be able to provide ample solutions whenever bankruptcy among businesses spreads throughout the place ( 2000).
The government control of businesses and economy can also possibly establish social discrimination, bringing along with it economic and social inequalities.
Arguments against Free markets
Whenever a government makes measures to control a market or economy, it typically involves processes that implement the policies and tasks necessary to satisfy the business’ customers, employees, and management effectively and efficiently. The government focuses on the careful management of the processes involved in the implementation of government regulations for the control of businesses.
A. Egoism
Government control of businesses and economy offers several advantages to both the government and the private sector itself. On the part of the private sector, government control of businesses will certainly reduce its operating costs, and this can even enable the private sector to raise funds. The private sector can also benefit from the reduction of government expenditures as the government control of businesses will enable the private sector to convert financial losses into tax revenues. On the part of the government, controlling of businesses will certainly boost the growth and economic development of a particular country. This is caused by the establishment of an environment that enhances healthy competition resulting to high efficiency rates and significant reduction of costs ( 1981).
B. Kantian Ethics
The impacts on citizens and the general public from the government control of businesses and markets and other new developments in the business sector are being reflected in other countries in the globe, especially in Europe. Businesses in the UK, for instance, are in the process of continued transformation towards the government control of their products and services. It became obvious that the business owners had already grown tired of waiting for the profit out of their own concerted efforts. In the year 2000 alone, almost 200,000 businesses transferred under the control of the UK government to avoid further bankruptcy. There is a process in the UK, just like in most countries, of a very tedious government control process of businesses, wherein the business owners have the obligation to look out for alternative marketing strategies that can provide ample profit (2004). More often than not, this is the consequence of unjustified business marketing strategies, resulting to an even more degradation of the quality of the products and services being offered to the extent where they can no longer be given to those in need.
Technically speaking, government control of businesses and markets can be subdivided into four (4) main areas:
1. Financing mechanisms: many countries have transformed financing mechanisms into obligatory insurance funding. These can be classified as private, as these are primarily efforts made by the government rather than non-government organizations. Only a number of countries have allowed voluntary organizations to gain control of public financing.
2. Government ownership of business facilities: the holistic government control of business companies and organizations. There are instances where certain rehabilitated business facilities have been totally controlled by the government also, but with negligible total impact.
3. Employment: there have been a number of research studies conducted regarding government control of businesses, and it showed that the government control of employment contracts is not a big deal. When the government control of the business facilities is almost total, employment contracts may be transferred towards the jurisdiction of private business organizations where the citizen works.
4. Standard utilization of private contracts: this has become prevalent especially in businesses where there’s a possibility to utilize private contracts for other purposes. Evidence from UK indicates this is a potential source of problems where there have been consistent demands to reduce wages and working conditions.
Distributive Justice in a Free Market
In lieu of the present developments in free markets, there have been significant visions of learning regarding justice that evolved. A majority of these learning visions are based on the idea that obtaining justice involves a social process where knowledge is denied instead of being acquired passively. Obtaining justice, then, transforms into an interactive process. The interaction is being verified through the help of the participants in the process of obtaining justice such as the government and the public consumers. In this framework, high quality of justice would mean the continued guidance and support of the active learning process of the public consumers. Obviously, this would call for an intensive and phased guiding strategy.
When in the active pursuit of justice under a free market, the interaction of government with the public consumers forms an integral part towards its success. Collaboration as a method of obtaining justice is gradually being used nowadays. Through this approach, the public consumers can learn from their governments implementing free markets through the imitation of their techniques in the socialization processes. In the process, the public consumers are able to obtain the chance to see their own ideas in a different aspect and therefore be able to take alternatives into consideration. The relative effectiveness of this approach is determined with the capability of the public consumers to continuously challenge their pre-acquired knowledge by trying to adapt to the interpretations of the government.
Aside from the public consumers and the government, the different resources of learning regarding free markets belong to a third category of factors of an environment with justice. Moreover, learning methods have shown signs of significant growth over the past years. Consequently, obtaining knowledge becomes more complicated. This is because the transformation of all this information into knowledge requires the public to possess the appropriate reference frameworks. But governments can certainly help the public consumers transform information into valuable knowledge.
SYNTHESIS
Deriving from the analysis between the numerous ethical arguments both for and against free markets, many strategic options would become imperative. It is therefore essential to evaluate these strategic options as to whether they are appropriate to the issues addressed, whether they are feasible enough to be implemented and their acceptability to key stakeholders.
There is definitely a need to reconcile both the inside-out and outside-in capabilities. While the free market’s mechanism involves focusing on its core competencies with market position following its resource base, the countries practicing this type of economy will be put into a disadvantageous position should they choose to neglect both the macro as well as the micro industry environment. Therefore, these countries have to be aware of the latest free market changes, as well as changes in political, economic, legal and even demographic trends in order to develop the outside-in capabilities, such as market sensing, customer linking, channel bonding and technology monitoring (1994).
The advantages enjoyed by countries under a free market economy may come in the form of increased revenues. Knowing what the free market economy demands and the latest trends could help these countries fully exploit their research and development capabilities to come out with products which are not only cost-effective but also high in quality. The strategic option can even be used as marketing tool where the focus is on staying close to the citizens and listening to their feedbacks. On the flip side of the coin, there will be huge mobilization of resources involved, and the associated risks bestowed on the government.
Nevertheless, the mentioned strategic option seems the most practical in the wake of globalization, since there is a sudden shift towards a more integrated and independent world free market economy. The key stakeholders too should not have any objections so long as the country’s core economy is not threatened. By virtue of the country’s centralized control of its business under a free market economy, it is being expected that major barriers should not exist in carrying out such an option except additional time may be required given the scope and span of operations.
CONCLUSION
The results of the analysis carried out on the numerous ethical arguments both for and against free markets indicated very significant effects, even amidst the threats of unrest. Therefore, we could conclude that the concept of free markets could still be expected to be patronized by countries all over the world.
The review of the free market’s capabilities and resources revealed very little inconsistencies regarding its economic strategies. This is coherent with its traditional inside-out approach. However, the need to reconcile both the inside-out and outside-in approaches becomes imperative now for the countries practicing this type of economy.
The analysis among the numerous ethical arguments regarding free markets revealed certain gaps, most of which are biased towards the environment. However, these gaps paved the way towards determining a number of recommended strategic options to secure the competitiveness of the free market economy.
Also, countries under a free market economy have to find a balance between adherence to internal forces within the economy and to the changing forces of the environment in order to implement such strategic options.
Credit:ivythesis.typepad.com
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