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Free Markets of the Modern Economies

Free Markets of the Modern Economies

According to Adam Smith, Wealth was fixed and finite. Man’s tendency towards self-interest promoted prosperity. In coining the term “invisible hand,” Smith referred to the ‘free trade market’ where labor was believed to be adequately divided (Canaan, 3). There was freedom to produce and exchange goods as they pleased. In believing in the invisible hand, Smith noted that through enlightened self-interest of the sellers, limited government activity, and a reliable currency to check spending (Canaan, 19). The market was able to regulate itself sufficiently and efficiently, hence providing both goods and services to consumer satisfaction at prices reasonable for the costs of production (Canaan, 35). This paper examines how Human rights and Ecological awareness/protection influence the free markets of Modern Economies.

A lot has changed since the ideas by Smith were conceived. Such changes have attracted various voices of disquiet from among activists in different spheres of life. Kathleen Dean Moore is one of such voices. In her disquiet, she lamented at the manner in which the ‘Invisible hand’ as perceived by Adam Smith in his proposals had failed the test of time and was to an extent being undermined by the forces of corporate influence than market forces of demand and supply as it was the norm back then. She notes that “the superpower was in the iron grip of the invisible hand.” Such influences from outside the free trade market conditions have resulted from greed leading to ecological and social disasters in pursuit of economic prominence. Establishment of monopolistic markets through business mergers and unfair trade operation regulations have led to the inability of the market forces to regulate trade and dictate market structures of productivity and consumerism.

Adam’s presumptions of free market driven by the market forces of demand and supply; the cost of production and division of labor (Canaan, 64) has been regarded as inconsistent with the current global situations of socioeconomic and ecological issues. This issue by far has brought the world to a dangerous position (Great Tide Rising, 67). The inconsistency is a result of the inadequacy in considering the factors that dictate the economic effectiveness of business ventures geared towards achieving their financial targets. The factors include economic profitability, social justice, and ecological awareness. In our world today, it is only by the mentioned criterion that an enterprise of any sort can be considered to be of sound economic sense.

Ruggie and Smith’s analysis of market forces can help in ensuring market forces prove beneficial to the economy, in the long run; various measures need to be taken into consideration. Having highlighted the areas of primary concern in the current global market, the three pillars of sustainable development need to be taken into account. The pillars of economic sustainability through social responsibility and ecological awareness.

The economic viability of an initiative is recognized not when businesses make profits regarding monetary value, but how it impacts on the immediate surroundings. This recognition is through ensuring that the market forces provide opportunities to both the business and the society as a whole. By this, matters of ‘Purpose’ for the firm are examined and analyzed if met. Another critical aspect of profits is how the ‘People’ within the business benefit by providing services (labor) to the firm. This aspect mostly makes up the workforce remuneration and working conditions. Better working conditions regard worker security and comfort in their workplaces.

Social justice as a factor of consideration plays out in the context of the social responsibility and protection of human rights. How the business integrates those around it into being part of the venture also play a key role here; responsible advertising, marketing strategies, quality in product production, better welfare and rights of those working in the business. The societies living in the immediate surroundings of the firm must be seen to benefit from the fact that the business is located next to them. They should be given priorities of job opportunities, better pricing/subsidies, and allowed to identify with the products of the business.

Ecological awareness is the most integral of the above two. For a very long time, the ecological integrity of operations was not much regarded. It is even notable that most economists like Adam Smith, Karl Marx, and Aristotle ignored the critical role of ecology and how important it was in the development of any economy. Because of this, economic sustainability on a global scale if facing a significant threat. Just like the other factors of production, the ecosystem, and the environment are critical. So until ecological awareness is created and upheld, challenges of raw materials for production and pollution will slow down the economic development.

In his work, Ruggie appears committed to the idea he coined on the ‘Soft Law’ which comprises the guidelines and principles of protecting human rights in the corporate world. The laws clearly had three pillars that acted as the core principles of rights protection. They included; the obligation of the state to protect, fulfill and respect human rights and fundamental freedoms; business enterprises had to comply and follow the laws that upheld human rights and the necessity of duties to be remedied when breached (Ruggie, 81).

Through these guidelines, the Ruggies soft law provides various avenues of addressing the issues of human rights by involving all the involved parties in the market (Ruggie 89). Though a major player in rights protection, the government is seen to take a more indirect role and much is left to the primary stakeholders who are the enterprises and the labor/consumers to manage their affairs. As a regulator in the economic state takes much of regulatory role through prevention legislation with adequate policies to ensure free access to information as to the activities of government and businesses. Proper oversight is another way that provides supervision on the part of government is sound on matters human rights and the remedy was availed in cases of breach (Ruggie, 132). It is through this rather hands-off approach that Ruggie saw best in ensuring that the human rights were met and if violated, there were processes to remedy the offended.

In suggesting improvements to the market functionality, it is important to consider both the human rights issues and the environment as contributors to the effectiveness of the market capability. Achieving this can be through; ensuring businesses invest in consultations before rolling out new projects or ventures (local community engagement) and promoting development initiatives to improve the living standards of the locals. Such measures ensure that the locals understand how the enterprise operates and how beneficial it is to them. Ecologically, businesses should engage in environmental management strategies as partners to promote goodwill in conservation. Measures should include ensuring proper waste management and natural resource use by the companies to promote system sustainability. Finally, pollution control and compensation should be part and parcel of business administration plans and strategies.

Economics of market forces has by far changed and are no longer a preserve of demand and supply. The dynamics in markets keep shifting depending on the global business situations (climate change and labor laws taking center stage). This change calls for clear-cut strategies as highlighted in this paper to tackle the uncertainty arising from Social and Ecological factors, which traditionally were not considered in models of economics.

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