7.0.2 Business and Economic Obligations - Overview

Version 1.2 December 2013                                         (Previous Version)

From the times of hunter-gatherer groups we have had trade, business and economies.

Up until recently, economics was based on scarcity: most people had too little, and what was available was distributed unevenly.  Attempts to address inequality through totalitarian communism and centrally controlled economies failed to increase prosperity and led to corruption and oppression.  Communist countries such as China and Vietnam now have capitalist economies. 

On the other hand, in both the East and West there have been numerous anachronistic restraints imposed on business, some protecting favoured businesses from fair competition.  We need to remove restraints that no longer provide a social benefit, and stamp out cronyism and nepotism.

Now in affluent societies there is no shortage of goods but there is still an unfair distribution, in all but a few nations.  Well targeted social welfare and industrial relations policies dramatically increase national wellbeing, reducing poverty and crime, while still allowing for successful and prosperous societies.  Properly regulated, open and transparent, financial systems and markets promote equality and minimize financial crises.  Capitalism has triumphed, but the idea that freer markets promote widespread prosperity has been tried over the past few decades and failed. 

Keynesian economics was successful in the post war period (from about 1945 to 1975) in generating wealth, providing full employment and dramatically increased equality, as well as saving a few nations from the 2008 Global Financial Crisis. Hayek’s monetary policy was successful in containing inflation and stabilizing economies from the mid-1970s until recently. 

Small business often drives innovation and provides the most employment, but big business drives efficiency.  We benefit from the cheaper prices delivered by global corporations, in resources, agriculture, manufacturing and finance, but must educate ourselves to be responsible consumers.

Medical breakthroughs, including new pharmaceutical drugs, often don't originate from big business, but from academic research funded by government and philanthropy.  Similarly, the internet originated as a (USA) government funded initiative, and its usefulness greatly enhanced by web browsers and personal computers, originally developed in universities and small businesses.

Big business naturally seeks to dominate markets and influence global and national politics to suit their need for profit.  Natural monopolies – networks of roads, railway lines, water and sewerage pipes, electricity and telecommunications grids – must be managed for the benefit of all people.

Professional business lobbyists supporting free markets must be countered by independent academics, empowered government bureaucrats and committed, educated “professional� activists.  We must avoid government support for business that entrenches inefficient practices, corrupts, and leads to “moral hazard� – unwarranted risky investments counting on a government bailout.

We work through the next level of detail on each of the above issues (more).  After considering this evidence, we’ve looked for a way to state our conclusions briefly, and we come to the following summary.

Is this the best way to state our conclusions in this area?  Click on feedback, or add a comment below, if you can improve the substance or the phrasing.

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Well regulated but otherwise relatively free economies promote all our core values.