MGMT 341 Lecture Notes - Lecture 5: Corporate Social Responsibility, The Communist Manifesto, Bounded Rationality
Marx
• Marx is not an utopian thinker
• He does’t sa ho the soiet should e
• He was against saying how the society should be
• Immanent critique: start with the society we have now, based on that idea reflect if we are living
up to these norms/values and if we should abolish them (opposite of utopians)
• Talks about capitalism in the Communist Manifesto
• Talks about the market saying it has (values and norms):
o Freedom: to do what you want to do
o Equality: all be recognized as the same Liberalism- Liberal rights
o Property: buy and sell property
o Bentham: Jeremy Bentham, founder of modern utilitarianism
• When the factory starts working all the ideals of liberalism and utilitarianism disappear
o Freedom and equality change when you exchange labor power (doing what they said,
eig soeoe’s eploee
o The only way to be profitable was to exploit people
• Ma’s aguet is saig that futue soiet is alead hee ad e a see it i podutio
o Market is sort of EDEN that is corrupted by the snake(firms)
• Firms represent how the world is managed by higher hierarchies and bureaucracy
• Labor theory of value: the only thing that creates value is labor (he was wrong)
• Coarse: what coordinates activity
o Markets are a way of cooperating
▪ Coordination by prices, competition
▪ Price-mediated transactions
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o Firms are people cooperating between them, are standardized with a set of norms,
suspend the price mechanism.
▪ Firms are coordinated by entrepreneurs
▪ Firms exist because they correct market failure, because markets are inefficient
just by them
▪ Administered transaction
o Transaction costs: costs of doing business. When they are high we see managerial
coordination in price modifications
▪ Behavioral Traits
• Bounded rationality: we are rational upon our limitations (jumping of a
building)
o Imperfect rationality: buying a lottery ticket, youtubers
• Opportunism: taking advantage of something
o Self-interest and guile: not reveling the info you know for
something you want
▪ Transactional features
• Uetait: e do’t ko eethig there is to know
• Frequency:
• Asset specificity investment: there are some things where you put your
money that is going to be stocked in it (intellectual (investing time in
learning things), physical(tools), site)
o With opportunism and asset-specificity investment we get market failure
o Price Discovery
o Contracts
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• Libertarianism
o Free markets economics
o Copoate soial esposiilit: aages pusuig shaeholde’s pofit
▪ Community
▪ Environment
▪ Workers vs. Profit
▪ Social issues
▪ Triple bottom line
• Berle and Means- “epaatio of oeship fo otol
o Obsessed people in the 20th century because of how unfair was for private property
(shareholders are in control, not managers)
• Principal agent relationship (Principal=stockholders) (agent=CEO)
o When one with principal wants to get another agent with his/her interests
o Lawyers=agent, us=principal
o Charitable orgs
o Higher people who act on this behalves
o Creates a problem
• Fiduciary Duty
o Common law concept-oe pat has a oligatio to pusue othe pat’s iteest i a
faithful manner (Managers to stockholders) (Doctors to their patients) (lawyers to
clients)
o Corporate Managers have a fiduciary duty to the shareholders
o A way to address the problem
• PAR and FD are related but different
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Document Summary
Marx: marx is not an utopian thinker, he does(cid:374)"t sa(cid:455) ho(cid:449) the so(cid:272)iet(cid:455) should (cid:271)e, he was against saying how the society should be. When they are high we see managerial coordination in price modifications: behavioral traits, bounded rationality: we are rational upon our limitations (jumping of a building) Instrumental efficiency: p(cid:396)o(cid:271)le(cid:373)s (cid:449)iith f(cid:396)ied(cid:373)a(cid:374)"s a(cid:396)gu(cid:373)e(cid:374)t, monopoly maximizes profit, as long as it is not illegal, go for it, market failure, assumes shareholders care more about 17904 Industriousness (ascetism): the way you pave the way towards heaven is by working hard in this world. Comes from the idea of genesis, the way you get to. God is by being productive here, which kind of contrasts with other religions and believes: encourages saving because you must work hard and be productive, but it is not. Insurance: encourages the investment of capital, cultures help us understand the economic/social institutions.
