Question

Moral Issues in Business 11th Edition Chapter 4 Reading 4.2 Markets and the Role of Ethics in Capitalism Question 1

Sen believes that the market is valuable both for the freedom it provides and for the results it delivers. Give examples of each. Which is the more important rationale for capitalism -- freedom or efficiency?

Answer 1

Example of freedom provided by the market based on capitalism, is the people demanding goods and that is being delivered by the suppliers. It means that demand is creating its own supply and once the trend changes, supply of goods also changes. It brings freedom. The example of results delivered by the market is that it brings competition and it makes consumers get benefited. Due to competition among the different sellers, quality improves and price level decreases. It brings efficiency in the market.

The more important rationale for the capitalism is freedom. It is the freedom of choice that brings liberation of thought, demand, needs and wants. It is the freedom that lets market forces to work and bring equilibrium. Even the source of efficiency is also driven by freedom. With freedom, people make choice, bargain and according to market structure, price & quantity is set. It brings efficiency. So, freedom is more important rationale for the capitalism based  market & economy.