Saturday, April 13, 2013

Ethics in The Marketplace

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Markets are a system, and systems have structure. The structure of a well-functioning market is defined by the theory of perfect competition. Well-functioning markets of the real world are never perfect, but basic structural characteristics can be approximated for real world markets.

There exists a popular thought that free markets would have a structure of a perfect competition. The logic behind the thought is that market failure are thought to be caused by other exogenic systems, and after removing those exogenic systems ("freeing" the markets) the free markets could run without market failures.

As an argument against such a logic there is a view that suggests that the source of market failures is inside the market system, so the removal of other interfering systems would not result in markets with a structure of perfect competition: capitalists don't want to enhance the structure of markets, just like a coach of a football team would influence the referees or would break the rules if he could while he is pursuing his target of winning the game. The capitalists are not enhancing the balance of their team versus the team of consumer-workers, so the market system needs a "referee" from outside that balances the game. The role of a "referee" of the market system is usually given to a democratic government. (We're still learning)

The Mind of The Market Place is a book by Michael Shermer,  he considers the morality of markets in a discussion of what he calls virtue economics. Although we are selfish and altruistic, cooperative and competitive, peaceful and bellicose, in the main the balance is heavily on the side of good over evil. For every random act of violence that makes the evening news, there are 10,000 nonrandom acts of kindness that go unrecorded every day. Markets are moral and modern economies are founded on our virtuous nature. The Enron model of business is the exception and the Google motto of 'Don’t Be Evil' is the rule.

Google Code of Conduct:

"The Google Code of Conduct is one of the ways we put 'Don’t be evil' into practice. It’s built around the recognition that everything we do in connection with our work at Google will be, and should be, measured against the highest possible standards of ethical business conduct. We set the bar that high for practical as well as aspirational reasons: Our commitment to the highest standards helps us hire great people, build great products, and attract loyal users. Trust and mutual respect among employees and users are the foundations of our success, and they are something we need to earn every day".

Many companies use the phrases 'ethical code' and 'code of conduct' interchangeably but it may be useful to make a distinction. A code of ethics will start by setting out the values that underpin the code and will describe a company's obligation to its stakeholders. The code is publicly available and addressed to anyone with an interest in the company's activities and the way it does business. It will include details of how the company plans to implement its values and vision, as well as guidance to staff on ethical standards and how to achieve them.

Our market is evolving as much as we are, New York was inhabited by various tribes of Algonquian and Iroquoian speaking Native Americans at the time Dutch settlers moved into the region in the early 17th century. Henry Hudson's 1609 voyage marked the beginning of the European involvement in that area. Sailing for the Dutch East India Company and looking for a passage to Asia, he entered the Upper New York Bay on September 11 of that year. After his return word of his findings quickly spread and Dutch merchants began to explore the coast in search for the profitable fur trade.

We've come a long way and not to have it ruined by a couple of bad apples. Remember, we're once a tribe, all of us, anywhere. 

Enjoy this clip.

Cameron Michael

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