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The purpose of this essay is to evaluate whether capitalism is a system that can be used to effectively manage organisations in modern day society. The scope is to assess the suitability of capitalism in corporate businesses. The first two themes will discuss the reasons why capitalism is not the most appropriate method for managing as well as highlight more evolved versions of the system that may be more suitable, and finally the last theme will address the fact that capitalism could potentially serve its original purpose of serving the society, if the system was stripped of its most harmful qualities. The stance taken is that although some aspects of a capitalistic management style is needed to efficiently manage an organisation, it is not likely that capitalism in general will survive through the evolution of contemporary society. To begin with, Capitalism creates wealth inequality and centralisation of power which is inefficient and, in some instances, dangerous.
Boxwell and Dixon (1993) clarifies that certain forms of capitalism relies on exploitation of the lower class, who are unlikely to rebel due to their status to create wealth for the upper class; which may provide more jobs and higher profits in the short run but have negative long-term consequences. A recent example of this would be the large corporation Amazon, mistreating and overworking their employees by denying them breaks and forcing them to work in ‘robotic, fast paced conditions’ (Sainato, 2018), in an attempt to improve productivity. This situation clearly exemplifies the negative consequences of a profit driven system such as capitalism which may indeed increase the net worth of companies such as Amazon but only at the expense of its workers who lack the power to rebel against such a large organisation and risk losing their livelihood. However, the impact of the negative effects of capitalism is not limited to one part of the society, but in fact society as a whole.
A very real example of this would be the Global financial crisis where lenders were providing money to clients without checking their abilities to repay these sums, as their main concern was the amount of profit made and not the sustainability of the systems they use to accumulate this wealth. Although Capitalism is not the only factor to blame for the crisis that affected the world, there is enough evidence to suggest that the inefficient accumulation and division of funds was a large factor that contributed to the situation. Therefore, it can be established that in the past and even in today’s society, companies who embrace the wealth maximisation element of capitalism above all other goals will not be efficient in the long run due to the division of classes within society and concentration of funds which could have detrimental effects on society as a whole. (Include the reference of Dobra, 2014)
Due to its impersonal nature and lack of attention on social responsibility, capitalism may not be accepted in contemporary society the same way it has been in the past. According to Fatehi & Baimuratov (2012) as mankind develops their thinking overtime, they will begin to revaluate the importance of human relations, in which case the “obsessive pursuit for efficiency” associated with capitalism will not be as easily overlooked. This theory is slowly becoming evident within present day society as society is increasingly becoming aware of the social injustices and acting against them. A few examples of this would be the formation of unions to protect rights of workers in an attempt to uncover instances such as the Amazon scenario discussed above as well as refusing to buy from unethical organisations who may unethically source their goods and holding them accountable for their actions.
For example, popular brand Nestle was found guilty of sourcing their cocoa beans from suppliers who used child labour as well as using Palmolive oil, the sourcing of which is destroying rainforests in Indonesia (Greenpeace, 2010). This resulted in customers choosing other brands, putting more pressure on the company and its competitors to source their supplies from 100% certified sustainable suppliers and using ethically sourced ingredients, which further exemplifies the argument that consumers in today’s society are more likely to insist on companies to accumulate wealth through sustainable methods instead of cutting corners to earn themselves the most amount of profit possible, which is a common characteristic of many forms of capitalism. Adopting a conscious capitalism structure however, may be a fitting compromise. (Schawbel, 2013)
Nevertheless, capitalism has provided success for many organisations for generations and with more emphasis on sustainable decision making rather than short term profit maximising strategies, it might be able to adopt into a system that can continue to do so in the future. Reiter (2016) argues that urging managers to practice social responsibility or implementing the ‘stakeholder theory’ may not be efficient in covering the ill effects bought on by capitalism, however the original objective of capitalism suggests otherwise. As capitalism is believed to be a system that allocates resources in a way that allows organisations to achieve their financial objectives whilst serving the society (Reiter, 2016), it can be argued that organisations can in fact find a way to imbed both elements into their business objectives. This method is proven to be successful by organisations such as Google and Facebook that have been focusing on making the platforms more socially friendly (Robinson, 2015) by taking steps to reduce cyber bullying amongst other issues to form a loyal customer base and in turn increase profits.
Other corporations could also emphasise a need to be accountable to not only their stakeholders who are only concerned about a return for their investment which is a short-term objective, but also to the wider society (Alvesson & Willmott, 2012) by highlighting the fact that social responsibility could also create more value for the business in the long run in the form of customer loyalty especially in a society that appreciates such traits within organisations that they deal with.
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