Firm, market economy and social responsibility

In January 2005, The Economist published a survey on corporate social responsibility (CSR), joining a long-running debate on the meaning and need for CSR in a market economy. The British weekly's thesis, widely accepted among economists, was first stated years ago by Milton Friedman (1962): a firm that maximizes its profits while acting within the law and the ethical rules that are intrinsic to a market economy is fulfilling all of its social and moral responsibilities and need not abide by any other type of constraint or demand. However, this thesis is disputed by many other authors. This article seeks to answer the question of whether there is a role for CSR in the economic paradigm. Obviously, it does not pretend to give a final answer but simply to set forth the reasons that will enable each person to arrive at his or her own answer. The first part discusses the economic arguments about maximizing value for the owner and society and viewing the firm as a nexus of contracts. The second part discusses the different arguments about the possible role of CSR in the economic paradigm. The article ends with the conclusions.Contracts; Corporate social responsibility; Efficiency; Ethics; Value maximization;

Conclusion: Uncertain Outcomes of Conflict and Negotiation

[Excerpt] To elaborate on each of these points, the findings presented in this book can be summarized as follows. First of all, the German model, that is, a social partnership approach to the negotiation of terms and conditions for the organization of an advanced market economy has worked in the past. We believe, on the basis of extensive collective research on different aspects of the political economy of the Federal Republic, both before and after unification, that the preservation of a reformed social partnership in Germany is highly desirable as an alternative to less regulated forms of capitalism in the contemporary world economy. Thus we disagree rather sharply with both conservative and liberal analysts who see the social market economy as an expensive and outdated relic of a welfare-state past. The evidence presented in this book also shows not only that social partnership is desirable but that it remains relatively intact. We have identified problems that must be solved for this to continue to be the case, but whatever the future holds, the basic institutions and practices of social partnership have been transferred into eastern Germany and continue to characterize political-economic relations in unified Germany. This remains true even in the face of major challenges presented by European integration, intensified global competition, a rapidly appreciating deutschmark, market imperatives for production reorganization (driven by Japanese-style lean production), and escalating collective bargaining conflict. Both employer associations and unions continue to play pattern-setting roles in wage negotiations, to set the framework for firm-level codetermination, and to engage in national, regional, and local negotiations over important aspects of economic and labor-market policy

Transition towards a social market economy? Limits and opportunities

The quest for an appropriate development and transition strategy in less developed countries (LDCs) and post-socialist countries (PSCs) has been studied for a long time, and it has been subject to numerous controversies among academics and development practitioners alike. Disputes have existed with respect to sequencing, timing, and pacing reforms, regarding the components of stabilization-cumadjustment programs, and also relating to the question which actors can become effective drivers of transition and development. Today, a widespread consensus exists that institutions and governance matter for making market-oriented policy reform succeed and that governments, despite the general need for less state interventionism, remain central actors for institution building and rule enforcement. The following considerations focus on the question whether or not the concept of the Social Market Economy, as it was originally developed and designed by German academics and policymakers more than fifty years ago, will be appropriate to guide policy and institutional reform in LDCs and PSCs and to make market-oriented reforms a viable policy choice in such countries regardless of their political regime. --Less developed countries,post-socialist countries,transition,social market economy

A European Social Market Economy? - Index Results. Policy Brief #2013/03

The ‘highly competitive social market economy’ represents the targeted common economic order of the European Union as it is stated as a goal in the Lisbon Treaty. Yet, this endeavor requires a mutual understanding of which institutions constitute a modern social market economy. The results of the Index of Modern Social Market Economies (IMSME) show congruence around a liberal market economy, but great diversity in principles indispensible for a social market economy

Policy instruments’ adjustment for green economy

The author presents an idea of the Sustainable Development as a concept connected with social market economy and then the history and parallel programs of green economy. He also explains ideas of new economy and the knowledge – based economy as synonyms. At the end there are described instruments for the implementation of the green economy in USA, European Union and Poland.Wydanie współfinansowane ze środków Miasta Łodzi w ramach zadania “Współpraca z wyższymi uczelniami” – umowa 100/03/201

Market, Social Cohesion, and Democracy

This paper offers three guiding principles for a better relationship between the economy and democracy: democracy as the extension of citizenship; democracy as diversity; and democracy as complementary to clear, strong macroeconomic rules. This view, it is argued, implies that economic and social institutions must be subject to democratic political choice. In this context, it analyses the role of both national and international institutions in improving the complementarity of the market, social cohesion and democracy. The central role of economic and social rights serves as the overarching framework for the analysis.citizenship, democracy, social cohesion, market economy, inequality, property rights

Financial Crisis in Emerging Markets and the Optimal Bailout Policy

This paper develops a framework for analyzing optimal government bailout policy in a dynamic stochastic general equilibrium model where financial crises are exogenous. Important elements of the model are that private borrowers only internalize part of the social cost of foreign borrowing in the emerging market and that the private sector is illiquid in the event of a crisis. The distinguishing feature of our paper is that it addresses the optimal bailout policy in an environment where there are both costs and benefits of bailouts, and where bailout guarantees potentially distort investment decisions in the private sector. We show that it is always optimal to commit to a bailout policy that only partially protects investment against inefficient liquidation, both in a centralized economy and a market economy. Due to overinvestment in the market economy, the government’s optimal level of bailout guarantees is lower than in the social optimum. Further, we show that, in contrast to a social planner, the government in the market economy should optimally bail out a smaller fraction of private investments when the probability of a crisis increases.financial crisis; government bailout; emerging markets

SHADOW ECONOMY, ECONOMIC GROWTH AND LABOR MARKET. ROMANIAN CASE

The shadow economy is represented by the whole economic activities which arerealized at the border of the criminal laws, social laws or fiscal laws or which are skipping(massive) from the inventory of national accounts. The paper is intended to quantify andanalyze the impact of the shadow economy on the main variables that may characterizeeconomic growth and labor market, for the Romanian case.shadow economy, effects, economic growth, labor market

The Feasibility of Cuban Market Economy: A Comparison with Vietnam

In spite of the difficulties incurred by its people, Cuba has maintained a centrally planned economy with single party system. On the contrary, Vietnam has introduced a market economy under communist rule, and succeeded in generally improving living standards. The factors that contributed to the introduction of Vietnamese-style reforms are (1) severe economic crisis, (2) demonstration effects from neighboring countries, (3) poor social policy, (4) initiatives by ex-conservative leader/s, and (5) weak state capacity. The conditions to sustain high economic growth are (1) social sectors familiar with capitalist economics, (2) abundant labor forces with relatively low labor cost, and (3) investment by exiles. This paper analyzes to what extent Cuba meets these conditions.Cuba, Vietnam, Transition to market economy, Economic policy, Socialism, Economic crisis, Social policy, Economic reform, State capacity, governance, development strategy