Business, Morality, and Capitalism - a Critical Dialogue on the Issues HU HA3P

Business, Morality, and Capitalism - A Critical Dialogue on the Issues [HU HA3P] ISUP Course 2013 - Copenhagen Business School

Department: ISUP

Course level: Undergraduate_X_ Graduate___

Study board: (ISUP will enter the appropriate study board for proposal review)

Course Main Category:

24. Economic and Organizational Sociology

Course Secondary Categories:

25. Philosophy and Philosophy of Science

5. Innovation and Entrepreneurship

Credits: 7.5 ECTS

Instructor: Bradley K Hobbs, Ph.D. E-mail address: [email protected]; [email protected]

Course coordinator: Patricia Plackett

Course prerequisites and restrictions:

There are no academic prerequisites for this course.

Course content, structure, and teaching: This course explores the junctures between economics, business, and philosophy. The driving impetus for the development of this course arouse from diverse experiences with all levels of students and my observation that they often struggled with the ethics of business. This applied not only to traditional "business ethics" issues at the micro-level but also to the ethics of capitalism itself. Students preparing themselves for a career in business within a commercial society often voice deep moral ambiguity, even disdain, towards their chosen career. Given that we are likely to spend a significant portion of our lives at work, it is important that we understand the positive aspects that capitalism engenders as well as its negative aspects. If students of business are to be fulfilled, self-actualizing, happy human beings they need some basis on which to defend their choice of career on an ethical basis. They ought to learn to explore and acknowledge not only the costs of capitalism but also its benefits.

That markets are inherently immoral seems to be widely-shared perception: often, as an a priori assumption. Yet market exchange makes available, to most of the people engaged in it, an availability, range, and depth of goods and services that they can never achieve under economic autarky. While many business schools have developed courses covering business ethics at the firm and individual level, few have developed courses addressing the fundamental issue of the ethics of capitalism itself. Thus, I developed this course in the grand tradition of political economy as an exploration into the morality of capitalism.

A broad range of issues and questions might be addressed including: Why is commercial activity viewed as ethically suspect? Is this assessment fair or unfair? Can a market system produce

1 results that are fundamentally just? Is justice possible without voluntary exchange? How is freedom in the economic sphere linked to freedom in other spheres of human endeavours, including politics? How do we, or should we, balance individual rights with a well-functioning society? What role do a priori assumptions play? Why do these assumptions exist? What role does power play? What is consistent about human behaviours that cross all human action: Commercial or Political? What role does trust play in commercial exchange? Who benefits under anti-capitalist regimes? Who benefits under capitalist regimes?

Readings include both classic and modern works addressing the causes, consequences, and morality of capitalism. Major critics of capitalism including Karl Marx, Frederich Engels and Georges Bataille on commercialism and materialism are covered. The defence of capitalism is formed in the readings of John Locke, Thomas Hobbes, Adam Smith, Frederic Bastiat, Ludwig von Mises, F.A. Hayek, and Milton Friedman. We will also look at the predicted collapse of capitalism through the analyses of Karl Marx and Joseph Schumpeter.

Preliminary Assignment: There are two books required for this course and you should come to Copenhagen with both of them. Please order these exact editions so that when we refer to the books in class we have the same pagination.

Prior to our first class meeting students need to watch a set of video's (listed below) and read this book: A Conflict of Visions: Ideological Origins of Political Struggles.

Watch the following five videos. The first four videos are about 10 minutes each. The last video is about two hours long. 1. Michael Strong - The Habit of Thought Chapter One: On Socratic Seminar

at this You Tube link: Chapter 1 - http://www.youtube.com/watch?v=_aaS90pfbo4

2. Michael Strong - The Habit of Thought Chapter Two: On Socratic Seminar

at this You Tube link: Chapter 2 - http://www.youtube.com/watch?v=eu_L-HuQDes

3. Michael Strong - The Habit of Thought Chapter Three: On Socratic Seminar

at this You Tube link: Chapter 3 - http://www.youtube.com/watch?v=Taz4u4oDL60

4. Michael Strong - The Habit of Thought Chapter Four: On Socratic Seminar

at this You Tube link: Chapter 4 - http://www.youtube.com/watch?v=vO9TVPs78PU

5. The Commanding Heights - Episode One: The Battle of Ideas NOTE: Episode One is the first of three in a series produced by the Boston Public Television station WGBU. This is a You Tube version – there is also a version at www.wgbu.org that is discontinuous.

In the first class meeting and part of the second we will discuss your answers to the questions found in this file: Study Guide for A Conflict of Visions: Ideological Origins of Political Struggles .

Author: Thomas Sowell Publisher: Basic Books Publication Date: February 19, 2002 ISBN-13: 978-0-46508-142-4 The book is available on Amazon at: http://www.amazon.com/Conflict-Visions- Ideological-Political-Struggles/dp/0465081428/ref=sr_1_1? ie=UTF8&qid=1353721864&sr=8-1&keywords=a+conflic+t+of+visions

2 The second book to order and bring to Copenhagen is: Liberalism: The Classical Tradition by Ludwig von Mises. You need not read it as a preliminary assignment - we will read and use this book towards the end of the course.

Author: Ludwig von Mises, Edited by Bettina Bien Graves Publisher: Liberty Fund Publication Date: 2005 ISBN-13: 978-0-86597-586-6 The book is available from The Liberty Fund at: https://catalog.libertyfund.org/home.html? page=shop.product_details&product_id=1182&flypage=flypage.tpl&pop=0

Mid-term Assignment: You will be required to write a 2-3 page paper which analyzes some current conflict concerning the economy, law, or justice within the constrained and the unconstrained frameworks set forth in Thomas Sowell’s book A Conflict of Visions: Ideological Origins of Political Struggle.

The course’s development of personal competences:

Personal and Interpersonal Competences  Self-motivation

 Ability to understand the sources of differing views and perspectives

 Ability to understand sources, purposes, and origins of conflict

 Ability to work in business with a broader understanding of commercial society Better understand and deal with ambiguity

 Build confidence in knowledge of the philosophical underpinnings of a capitalist economy Build confidence in knowledge of the philosophical underpinnings of a capitalism's critics

 Recognize a priori assumptions and their effects on articulated position

 Ability to explain/articulate the "big picture"

 Ability to meet deadlines

 Ability to work effectively with stake holders, peers, and subordinates (particularly those with different perspectives)

Teaching methods:

Each class will involve lecture and Socratic discussion. The lectures are designed to frame and introduce the readings for the day and then to clarify materials once we start into them. Answering Socratic questions inevitably requires us to refer directly to the readings. Therefore, students need to bring all of each day's readings for each class meeting. Paper or electronic formats are fine - if a book is being covered please bring that book. In addition to my questions, I will call upon students to ask questions, so form your own questions as you read and be prepared if called upon

3 to ask them. Student participation and engagement is key. I do not expect you to be an expert and to know every detail. The Socratic Method is about structured exploration so I do expect you to read carefully and to prepare questions.

Required course readings and literature:

Course Outline

Class Meeting 1 - A Conflict of Visions: Ideological Origins of Political Struggles Discussion of Preliminary Assignment which includes the video's on the Socratic method, The Commanding Heights, and A Conflict of Visions: Ideological Origins of Political Struggles * Here is a Study Guide for A Conflict of Visions Ideological Origins of Political Struggles .

Class Meeting 2 - A Conflict of Visions: Ideological Origins of Political Struggles and What is Capitalism? Opposing Perspectives

1.) Continued discussion of A Conflict of Visions: Ideological Origins of Political Struggles

2.) What is Capitalism? The World Socialist Movement Website

3.) Robert Hessen, The Concise Encyclopedia of Economics, Capitalism

4.) Robert Heilbroner, The Concise Encyclopedia of Economics, Socialism

5.) David L. Prychitkop, The Concise Encyclopedia of Economics, Marxism

6.) Bryan Caplan, The Concise Encyclopedia of Economics, Communism

7.) Ayn Rand, Capitalism: The Unknown Ideal , Chapter 1 – “What is Capitalism?” Source: Signet Books * Here is a Study Guide for this reading.

Class Meeting 3 - Hobbes and Locke 1.) Hobbes, Thomas. The Leviathan , 1660. Chapter XI - Of the Difference of Manners Chapter XIII - Of the Natural Condition of Mankind as Concerning their Felicity and Misery 2.) Locke, John. Of Civil Government - Second Treatise , 1662. Ch. IV - On Slavery Ch. V - On Property

Class Meeting 4 – Adam Smith 1.) Adam Smith, Book 1, Chapters 1-3 An Inquiry into the Nature and Causes of The Wealth of Nations found at http://www.econlib.org/library/Smith/smWN.html * Here is a Study Guide for this section. Book I - Of the Causes of Improvement in the productive Powers of Labour, and of the Order according to which its Produce is naturally distributed among the different Ranks of the People Chapter I - Of the Division of Labor Chapter II - Of the Principle which gives Occasion to the Division of Labour Chapter III - That the Division of Labour is Limited by the Extent of the Market STOP - DO NOT READ Chapter IV - Of the Origin and Use of Money

4 2.) Plus this selection from The Wealth of Nations (approximately 3 pages of selected short passages) * There is no Study Guide for this section. Read and summarize the major point(s).

3.) Adam Smith, Part IV Chapters 1 and 2 of The Theory of Moral Sentiments found at: http://www.econlib.org/library/Smith/smMS4.html * Here is a Study Guide for this section. Part IV - Of the Effect of Utility upon the Sentiment of Approbation Chapter 1 - Of the beauty which the appearance of Utility bestows upon all the productions of art, and of the extensive influence of this species of Beauty Chapter 2 - Of the beauty which the appearance of Utility bestows upon the characters and actions of men; and how far the perception if this beauty may be regarded as one of the original principles of approbation

4.) Plus this selection from The Theory of Moral Sentiments ( Chap. II - Of the order in which Societies are by nature recommended to our Beneficence) * Here is a Study Guide for this section

Class Meeting 5 - Frederic Bastiat 1.) Bastiat, Frederic, Economic Sophisms. A Petition The Foundation for Economic Education, Inc. 1996. Trans. and ed. Arthur Goddard. Library of Economics and Liberty. 1 August 2007. .

2.) Bastiat, Frederic, Selected Essays on Political Economy. What is Seen and What is Not Seen The Foundation for Economic Education, Inc. 1995. Trans. Seymour Cain. Ed. George B. de Huszar. Library of Economics and Liberty. 1 August 2007. .

3.) Bastiat, Frederic, The Law Pages 1-32 stopping at "Rousseau and Social Democracy"

Class Meeting 6 - Frederic Bastiat, Milton Friedman, and Bryan Caplan 1.) Bastiat, Frederic, The Law Pages 32-58 stopping at the end of "Let Us Now Try Liberty!"

2.) Friedman,Milton. (2002). Capitalism and Freedom. Chapter 1- "The Relation Between Economic Freedom and Political Freedom". Chicago: University of Chicago Press, 1962, pp. 7- 17 Here is a study guide for Capitalism and Freedom- Chapter 1

3.) Caplan, Bryan. 2007. The Myth of the Rational Voter: Why Democracies Choose Bad Policies, Princeton, New Jersey: Princeton University Press. Pages 23-49.

Class Meeting 7 – Schumpeter on Creative Destruction and the Fall of Capitalism, Hayek’s “Use of Knowledge in Society” 1.) Capitalism: Its Nature and Demise (Abridged version of the full reading below.) 12 pages

2.) McKinsey Report on Creative Destruction 18 pages

3.) Listen to ECONTALK with Russ Roberts and Thomas McGraw on Schumpeter, Innovation, and Creative Destruction

5 4.) Hayek, F. A., "The Use of Knowledge in Society". American Economic Review . XXXV, No. 4; pp. 519-30. September, 1945. Library of Economics and Liberty. 1 August 2007. .

Class Meeting 8 – Engels, Pope Leo XIII, Bataille, Tugwell - Critiquing Capitalism 1.) Engels, Frederick. “The Principles of Communism,” 1847

2.) Pope Leo XIII, “De Rerum Novarum,” May 15, 1891, paras. 1-15, 19-20 34-38, 43-53

3.) George Bataille. “The Notion of Expenditure”

4.) Rexford G. Tugwell " The Principle of Planning and the Institution of Laissez Faire "

Class Meeting 9 - Mises - Liberalism: The Classical Tradition Mises, Ludwig von. Liberalism: The Classical Tradition. Chapters Introduction, 1,2,3 through pg. 81 (Part 3 - The Political Foundations of Peace)

Class Meeting 10 - Mises - Liberalism: The Classical Tradition Mises, Ludwig von. Liberalism: The Classical Tradition. Remainder of the book.

Class Meeting 11 - Course Review Read: Buchanan, James M. (2005) Afraid to be free: Dependency as desideratum . Public Choice, (124): 19-31. We will use this article as a framework to review the themes of this course. We will construct that framework in about 20 minutes and then link it to the review materials. The review will be comprehensive with respect to the materials covered. All students would bring at least two questions that represent their introspection on this course and be ready to ask these questions of the class.

Learning objectives: At the end of the course the student should be able to:  Articulate the constrained and unconstrained visions laid out in Thomas Sowell’s book A Conflict of Visions: Ideological Origins of Political Struggles  Explain John Locke’s argument for the origins of private property  Explain why Thomas Hobbes supported a strong state  Address Adam Smith’s ambiguity towards business and ambition  Explain Adam Smith’s recognition of and advocacy for the division of labor  Articulate the themes Frederic Bastiat explores in “What is Seen and What is Not Seen”  Explain the major themes in “The Law” by Frederic Bastiat.  Articulate the differences between law and legislation as delineated by Bastiat.  Explain Schumpeter’s creative destruction  Explain the inevitable fall of capitalism as posited by Karl Marx  Explain the inevitable fall of capitalism as posited Joseph Schumpeter  Explain the criticisms of capitalism forwarded by Marx and Engels  Explain the criticisms of capitalism by Pope Leo XIII  Explain materialism and the criticism of it by Bastille and in The Story of Stuff

6  Develop the nature and effects of the fundamental tenants of classical liberalism laid out in Liberalism: The Classical Tradition by von Mises Exam format: The examination will be an individually written, open-book, take-home examination of approximately ten pages in length. All responses are to be typed and double-spaced.