Question

Explain free market capitalism

Describe creative capitalism

Explain the three advantages of creative capitalism in relation to businesses

Explain the concept of corporate social responsibility using two examples of socially responsible companies

. Clearly and concisely support your examples and explain why these companies are considered socially responsible.

Comment on Gates’ creative capitalism.

Do you think that creative capitalism can become the future of capitalism in the U.S.?

Answer 1

Free-market capitalism is an economic system where government has no role and over which government has no power. As such, the idea is really a platonic ideal that may be approached but never quite reached. If you can imagine economic freedom as something that can be quantified and placed on the abscissa of a graph, pure free-market capitalism would be on the extreme positive end of the graph with socialism on the extreme negative end. In a pure free-market economy, no buyer would be coerced into buying any good or service, and no seller would be coerced into selling a good or service.

As it turns out, economic systems that more closely approximate free-markets are more stable and offer higher economic growth than economies with less individual economic freedom. Consider what the most basic problem that any economy must solve is. Economies are concerned with the production of economic goods and services and their distribution to their consumers. Therefore, an economy's most basic problem is to balance the supply of each good, i.e. the different produced quantities all the suppliers of that good would be willing to sell at different prices, with the demand for that good, i.e. the different amounts of the good all the consumers would be willing to buy at different prices. This must happen for each and every good and service in the economy.

If supply is in imbalance with its demand, either economically wasteful surpluses must be warehoused, or buyers will be denied the exact quantity of goods they require. In the first case, not only must the producer warehouse unsellable goods, he must lay off some workers to reduce the amount he is producing. He may even go out of business! If a buyer is producing some other good and he can not buy enough raw materials to produce his own good, then he must lay off idled workers. He may even go out of business! Now government is a necessity for civilized life. Some human organization must ensure that contracts are enforced, that protects us from each other with a police force, and that protects us from foreign threats with armed forces.