Question

Though the extent of its long-term impact is still unclear, it is increasingly believed by experts that the COVID-19 pandemic will change the world in a number of important ways. With respect to business and capitalism, COVID-19 poses a number of unique challenges that can already be observed. Based on this, please answer the following questions:

a. What assumptions of capitalism has COVID-19 fundamentally challenged? Pick any three assumptions of capitalism discussed in the course and explain how they are challenged by COVID-19. Use examples where possible. (9 points)

b. How are the debates around CSR, shareholders/stakeholder, short-term/long-term, and corporate power reflected in the COVID-19 pandemic? Pick any two debates discussed in the course and describe in detail how they are relevant to COVID-19. Use examples where possible. (8 points)

c. How will COVID-19 change business and capitalism? In this course we have discussed many of the key events in the recent history of capitalism (stock market crash of 1929, World War 2, OPEC oil shocks, financial crisis of 2008). How do you believe COVID-19 will change capitalism? What will change? What will stay the same? Why? Use examples where possible. (10 points)

+ (3 points for clarity of writing)

Answer 1

Solution a). Assumptions of capitalism has COVID-19 fundamentally challenged can be explained by the following points that are mentioned below:

1.Competition: Assumptions of free Market competition refers to individuals are free to enter any business and operate it as they wish. This impact on buying and selling of goods and services without financial burden by government rules, regulations, and planning which means strict laissez-faire policy. Covid-19 pandemic are severely impacting all over the world due to which various countries are adopting prevention strategies such as social distancing and lockdown. This impact will lead to fall in the employment rate, investment rate, consumption and income, which is the overall fall in the world growth rate. The result of this drastically fall in the aggregate demand in the world. To revive this free market competition the government has to focus on making supportive policies for competitive market to survive in this pandemic period.

2. Private Ownership: Private ownership refers to a person or corporation owns the means of production and the distribution of goods & services. Covid-19 are negatively affecting the aggregate demand at worldwide that leads to distrupt in the supply chain at world level, exports & imports are stopped temporary, people are staying at home, people lost their income and returning to their hometown or villages and international travelling are fully banned in most of the countries. The consequence of this has been extremely falling in the overall production of goods & services in every sectors.

3. Pursuit of Profit Motive: This assumptions of capitalism defines a system of trade in which those goods & services are permitted which are more cost effective due to which it generate more positive revenue for the business. The higher the business generate profit, the more the longer term it will sustain. These all business somehow depend and interconnected with each other business in the economy. Due to Covid-19, all business sectors are in worst condition and the most affected sectors are such as hospitality and travel & tourism all over the world. Further, it countinously impacting on other sectors as well such as construction, manufacturing, agriculture and public administration. This lead to fall in the production of business sector that is negatively affecting the profit margin of all business industries.

Solution b).

The debates around CSR, shareholders/stakeholder, short-term/long-term, and corporate power reflected in the COVID-19 pandemic which directly imapcted on a certain brand, the current crisis is unlike anything we have seen before. There is literally no business, no sector and no economy beyond the reach of this pandemic and every business sector are facing difficulty the new economic activities for its long-term survival. Businesses should first good care of their interconnected public whom they depend on most, their employees, stakeholders, corporate power. The top priority should be given to the employee for their comfort and safety. As we are seeing that nobody comes close because of this contagious disease threat which is dangerous for all over the world. Employers should be taken primarily steps with creating a safe workspace with all the reasonable precautions to their interconnected public in this pandemic period.

There is a need of monetary policy which will be impacted on the banking systems all over the world by their central banks to impose by reducing banks lending rate which will help to firms to sustain in this weak financial ecomomy. Additionally, bank will provide grace period for paying dues amount by their creditor that will help the small business to survive in this pandemic.

The debate can be affected by the intervention of Govt which can implement such kind of policy which will help informal sectors workers such as daily wages workers who are the most drastically affecting because of this pandemic disease. Govt. can help to provide various subsidies on their various previous govt. schemes where the most of the people belongs to below poverty line.

Solution c).

Covid-19 pandemic will change in the business and capitalism as it impacted negatively on business which are facing problems due to travel restrictions and quaratines. People from all over the world have lost their jobs due to short of labour and parts, distortion in supply chains and fall in production in every industries such as construction, manufacturing, agriculture and public administration. This has impacted negatively on business activities and capitalism. Additionally, World have to ready for major crises due to Covid-19 pandemic include health crisis, economic crisis with yet unknown consequences for financial stability and climate crisis which will be addressed with business point of view.

The 2020 crisis impacted due to Covid19 disease which was started from China's seafood market. It has drastically impacted  in the aggreage demand all over world. Due to its contagious impact the virus are spreading faster in the people. This pandemic affected on the demand syste in the whole economy where almost all industries became impacted in this crisis. But in 2008 Financial crisis, it was started from Unites States Financial System where it was impacted due to collapse in the housing prices and production in the United States. But we can't differentiate in between these two crisis because both crisis majorily impacted on the international banking system and worldwide activities.