Differences in American Society between Capitalism 2 0 and Capitalism 3 0

Document Type:Essay

Subject Area:Sociology

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” As seen in this dictionary definition, capitalism is understood by some to be a purely economic concept, that is, an economic system based on the market forces of demand and supply (which tend towards equilibrium) without considering the role of governance or governments ("The Concept of Capitalism"). However, certain authors do not agree with this separation of capitalism from governance or governments. One of the myths that one such author points out about capitalism is that it operates within the context of free markets. He points out that there is no such thing as a free market because governments and other regulators always get involved in what people can or cannot do within the market (Chang). For instance, there are laws in place that regulate child labor, and there are rules that govern what can, or cannot be traded (such as firearms and alcohol); and companies cannot just be listed on a stock exchange without meeting the requirements of certain regulatory bodies (Chang).

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customers demand products that are relevant to public welfare, e. g. environmentally sensitive energy saving bulbs and electric cars (to reduce emissions) (Henderson, and Malani). Consumers also wish to buy from companies that pay their workers in poor third-world nations a wage that is higher than average (Henderson, and Malani). Unlike shareholder capitalism, stakeholder capitalism is not solely based on the principles of free markets, competition, private property and self-interest (Freeman et al. As such, shareholders are seen to be the ones who care least about the long-term future of a company (unless of course, they are unable to dispose of their shares in the company for some reason (Chang). As a result, shareholders prefer companies to make decisions which are geared towards maximization of short-term profits at the cost of the long-term health of the company—shareholders maximize earnings from dividends issued out of profits thereby reducing the amount of retained earnings which may be used to grow the companies' long-term prospects (Chang).

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The Differences in American Society between Stakeholder Capitalism and Shareholder Capitalism 4. Executive management versus other employee remuneration: Since the 1980s, managers have been tasked with the responsibility of ensuring that the value of shareholders is maximized with the reward being that they would be paid in accordance with the value they created for shareholders (Chang). One of the ways in which managers have been remunerated since then is by tying a large proportion of their compensation packages to stock options so that they have the incentive to maximize shareholder value (Chang). Education is too expensive: Getting a college education in America is very expensive; many people struggle to pay their college debt. It is reported that American colleges are being run by college presidents who act as CEOs of education and who treat their students as consumers (Kasperkevic).

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In fact, the most expensive stages for parents are the preschool and college years, which are both very important in determining a child’s future success (Putnam). As noted during our class readings, education increases the chances of economic success for individuals (Putnam). Whilst a high school diploma is good, a college education is even better. We would do this regardless of the return on capital of these common assets (Barnes). Greater uncertainty for workers and the related health issues: For a long time in America, the working class enjoyed the benefits of working. The labor unions helped members to get fair remuneration, and people were entitled to a pension, good health insurance, and job security, among other things (Barnes). Nowadays, in the wake of companies’ desires to cut costs, people are faced with several threats including downsizing and outsourcing, both of which lead to job cuts.

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Further, high levels of unemployment mean that Americans have lost their bargaining power to get a fair wage for their labor (Wilkinson, and Pickett). Under shareholder capitalism, Americans have experienced economic growth, but also borne negative effects such as, stagnant wages, increased stress and disease due to economic uncertainty, and environmental degradation. However, under stakeholder capitalism, these negative effects would be lessened or at best, eliminated. Works Cited https://www. merriam-webster. com/dictionary/capitalism. Zucchino, David.  Myth Of The Welfare Queen. Scribner, 1997. Barnes, Peter. Capitalism 3. Freeman, R. Edward et al. Stakeholder Capitalism".  Journal Of Business Ethics, vol 74, no. researchgate. The Myth Of Shareholder Capitalism".  Harvard Business Review, 2010, https://hbr. org/2010/04/the-myth-of-shareholder-capitalism. Accessed 17 Dec 2018. Jahan, Sarwat, and Ahmed Saber Mahmud. forbes. com/sites/shelliekarabell/2018/02/14/executive-compensation-is-out-of-control-what-now/#7b885697431f. Accessed 17 Dec 2018. Kasperkevic, Jana. The Harsh Truth: US Colleges Are Businesses, And Student Loans Pay The Bills".

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Why Sky-High CEO Pay Is Bad Business".  Harvard Business Review, 2009, https://hbr. org/2009/06/why-high-ceo-pay-is-bad-business. Accessed 17 Dec 2018. Putnam, Robert D.  Springer, https://www. springer. com/cda/content/document/cda. c1. pdf?.

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