Question 1

With regard to justice as fairness, three (3) categories of justice are distinguished as:

1. Distributive justice: fair distribution of society's benefits and burdens;

2. Retributive justice: fair imposition of penalties on those who do wrong;
3. Compensatory justice: fair repayment for losses suffered due to others’ misconduct or
mistakes.

Principles of distributive justice are normative principles designed to guide the allocation of the
benefits and burdens of economic activity. The first relatively simple principle of distributive
justice examined is strict egalitarianism, which advocates the allocation of equal material goods
to all members of society. Egalitarian conceptions allow no distinctions and hold, consequently,
that every person should be given an equal share of society's benefits and burdens: egalitarianism
seems better suited to the apportionment of political benefits and burdens than economic ones
(as sourced from http://www.wutsamada.com/alma/bizeth/manual/mod1.htm).

John Rawls' alternative distributive principle, which he calls the Difference Principle, is then
examined. The Difference Principle allows allocation that does not conform to strict equality so
long as the inequality has the effect that the least advantaged in society are materially better off
than they would be under strict equality. However, some have thought that Rawls' Difference
Principle is not sensitive to the responsibility people have for their economic choices. Resource-
based distributive principles, and principles based on what people deserve because of their work,
endeavor to incorporate this idea of economic responsibility (as sourced from
http://plato.stanford.edu/entries/justice-distributive).

Whereas retributive justice is means that people who work hard deserve the fruits of their labour,
while those who break the rules deserve to be punished. In addition, people deserve to be treated
in the same way that they voluntarily choose to treat others. If you behave well, you are entitled
to good treatment from others. Retributive justice requires that the punishment fit the crime and
that like cases are treated alike. Wrongdoers deserve blame and punishment in direct proportion

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to the harm inflicted. Retribution can therefore be seen as vengeance curbed by outside
intervention and the principles of proportionality and individual rights.

Immanuel Kant1 uses a debt metaphor to discuss the notion of just desert. Citizens in a society
enjoy the benefits of a rule of law. According to the principle of fair play, the loyal citizen must
do his part in this system of reciprocal restraint. An individual who seeks the benefits of living
under the rule of law without being willing to make the necessary sacrifices of self-restraint is a
free rider. He has helped himself to unfair advantages, and the state needs to prevent this to
preserve the rule of law Rachels & James (1997:466).

In the context of international affairs, there is a need to give wrongdoers what they deserve, but
in a way that avoids further escalation of the conflict. War Crimes Adjuration carried out by
international courts is one avenue of retributive justice. In addition, Truth Commissions play an
integral role in the investigation of past crimes.

Compensatory justice refers to the extent to which people are fairly compensated for their
injuries by those who have injured them. Just compensation means fair compensation,
considering the nature of the injury and the extent of the negligence. The fairness that obtains
when an agent adequately compensates a party whom he or she has injured for the losses that
party suffered Rachels & James (1997:468-469). Compensatory justice is sometimes wrongly
confused with retributive justice, which is the fairness that obtains when a person is adequately
punished for wrongdoing. Just compensation is limited to the losses suffered by the injured party,
may imply no wrongdoing, and is focused on making the injured party whole, but just retribution
may be more or less severe than the injuries inflicted on victims, always implies wrongdoing,
and is focused on punishing the wrongdoer.

1
an 18th-century German philosopher (of many philosophies, incl. the most popularly know as: The Kantian Ethics)

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In Conclusion; Distributive justice refers to the extent to which society’s institutions ensure that
benefits and burdens are fairly distributed among the populace. If unequal distribution is felt to
prevail, with criteria such as status or social standing meaning the difference between a benefit
and a burden, it doesn’t matter how eloquently the society describes itself, such a situation is one
of unfairness. 

And, Retributive justice refers to the extent to which punishments are fair. Relevant criteria are
the seriousness of the crime and the intent of the criminal. Irrelevant criteria are features such as
wealth and race, which should be discounted.

Whereas; Compensatory justice refers to the extent to which people are fairly compensated for
their injuries by those who have injured them. Just compensation means fair compensation,
considering the nature of the injury and the extent of the negligence.

Question 2

Hill (2007:141) states that most moral philosophers see value in the utilitarian and Kantian
approaches to business ethics. These approaches were developed by in the 18th and 19th centuries.

Hill further states that the utilitarian approach to business ethics dates to philosophers such as
David Hume (1711-1776), Jeremy Bentham (1784-1832), and John Stuart Mill (1806-1873).
Utilitarian approaches to ethics hold that the moral worth of actions or practices is determined by
their consequences. An action is judged to be desirable if it leads to the best possible balance of
good consequences over bad consequences, some of which are good in a social sense and some
of which are harmful. As a philosophy for business ethics, it focuses attention on the need to
carefully weigh all of the social benefits and the costs of a business action and to pursue only
those actions where the benefits outweigh the costs.

At this juncture, to cite an example; safety features of cars are good subjects of ethical inquiry
because they involve a person’s valuation of human life. Ford Motor Company has always been
in the middle of discussions regarding car safety , beginning in mid-1960s , when the
corporation 's president , Arjay Miller , figured in a car accident which made him witness to the
susceptibility to fire of Ford cars. He thus vowed to passionately pursue the development of
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safety mechanisms for Ford cars. Unfortunately, a Ford Pinto car figured in a car accident seven
years thereafter, which led to the death of a woman and very severe injuries in a thirteen-year-old
boy Dowie (1977:46). The disaster involving the Ford Pinto would, at first sight, appear to be far
from any ethical considerations. However, the facts and events that led to the car accident brings
to fore certain opportunities for ethical deliberation.

The Ford Pinto was designed, developed and manufactured at a time when competition and
pressure were intense from Volkswagen and other Japanese companies for a dominant share in
the market for small cars. To rise to the challenge, Ford rushed the production of its Pinto model.
Thus, instead of taking the usual forty-three months in producing the car, Ford finished
production of the Pinto in just twenty five. The deliberate haste with which Ford pushed
production of the car casts a shadow on the adoption of appropriate procedures in production.
Another relevant fact pointing to responsibility in the car accident was the discovery made by the
Ford engineers that there was a major flaw in the car’s design. They discovered that the Pinto’s
fuel system is highly susceptible to rupturing, which could lead to explosion (Wills, et al. Despite
this, Ford proceeded to manufacture the cars because
they were already in the assembly line and they wanted to meet the non-negotiable specifications
set by its designer, Iacocca. Thus, Ford threw caution to the wind and went ahead, just to beat
competition. The Ford Pinto case could be analyzed by applying the utilitarian
principle in the various stages of its development where the opportunity for moral deliberation
presented itself. Utilitarianism holds that utility is the foundation of morals. Utilitarianism
proposes the `Greatest Happiness Principle' as the determinant of the morality of an action or
decision. Under this principle, human action shall be judged according to its tendency to promote
happiness or pain. Thus, an action that tends to promote happiness to the greatest number shall
be considered morally right.

Conversely, an action shall be considered morally wrong if it tends to promote the opposite of
happiness, which is pain. Applying this principle in the given scenario, it could be concluded that
Ford did not comply with the utilitarian principle of morality in speeding.

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QUESTION 3

There are two polar opposite approaches to an economy's operation.  The command/planned
economy is the top-down, centrally planned economy of socialism.  The market economy is the
decentralized economy of the free market.  The most fundamental distinction between the two is the
existence of private property in the free market and the absence of private property in the command
economy.

Hill (2007:49) states that in a pure market economy all productive activities are privately owned, as
opposed to being owned by the state. The goods and services that a country produces are not
planned by anyone. Production is determined by the interaction of supply and demand signaled to
producers through the price system. If demand for a product exceeds supply, prices will rise,
signaling producers to produce more. If supply exceeds demand, prices will fall, signaling producers
to produce less. In this system, consumers are sovereign.

The term free market economy primarily means a system where the buyers and sellers are solely
responsible for the choices they make. In a way, free market gives the absolute power to prices to
determine the allocation and distribution of goods and services. These prices, in turn, are fixed by
the forces of supply and demand of a respective commodity. In cases of demand falling short of the
supply of a respective commodity, the price will fall as opposed to a price rise when the supply is
inadequate to meet the growing demand of a good or service. Free market economy is also
characterized by free trade without any tariffs or subsidies imposed by the government.

The role of the government of a nation is only limited to controlling the law and order of a country
and to ensure that a 'fair price' is charged by the sellers. That is to say, the government, having no
role in administering the price of a commodity, has to see that the prices taken by the sellers is true
and commensurate with the price determined by the forces of demand and supply.

The basic feature of the free market economy is that only people with sufficient control over
resources, and wealth, in particular have the privilege to purchase goods and services, often priced
very highly in a free economy. Prices, which are the only allocating and distributing factor in a free

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market economy, place the poor in an unenviable situation who are gradually thrown out of the
system without any access to wealth and the basic needs of subsistence.

Thus, it deems absolutely imperative that a country like India and a few Latin American countries
like Brazil, Peru and Nicaragua having a large number of poor have a public distribution system in
place with subsidized prices being fixed by the government to protect the poor. Free market
economy is considered to the most efficient or optimum device to allocate a country’s resources,
with wealth or income being the only yardstick. Free market economy is often associated with a
Capitalistic Economy with means of production being privately owned (as sourced from
www.economywatch.com).

Whereas, in a command economy, the goods and services that a country produces, the quantity in
which they are produced, and the prices at which they are sold are all planned by the government.
Consistent with the collectivist ideology, the objective of a command economy is for government to
allocate resources for “the good of the society”. In addition, in a pure command economy, all
businesses are state owned, the rationale being that the government can then direct them to make
investments of the nation as a whole, rather than in the interests of private individuals. Historically,
command economies were found in communist countries where collectivist goals were given
priority over individual goals.

The alleged virtue of the command economy is that, it is planned in contrast to the unplanned
market economy.  The error in this view is that the market economy is actually very rationally
planned by means of consumer demand through the price system.  Additionally, for four reasons the
command economy will be deficient.

First, an attempt to plan an entire economy by a central committee is bound to be inefficient just
because the task is so large.  There is no way that a committee of say, 300 planners can know the
needs, conditions of resource availability, and localized knowledge spread throughout an economy.

Second, the command economy ultimately rests on coercion as its means of motivation.  Socialists
will typically claim that the resort to coercion (the Berlin Wall, Russian gulags, etc.) is not part of
their system, but only an unfortunate bad choice in political leaders and that socialism only attempt

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to control the economy, not people's individual liberties.  Nevertheless, the main element in an
economic system is in fact people; therefore controlling an economy is primarily control of people. 
Suffice it to say further that human motivation is diminished when coerced.

Third, the command economy is a collectivized system.  All work for the benefit of their quotal
share of total production.  Individual incentives are absent.  As an example, with 100 workers in an
economy each will receive 1/100 of total production.  If one worker shirks, his loss is only 1/100 of
the production he otherwise would have generated. 

And fourth, the incentive of production is to please the political authorities who have life and death
control over the workers.  In contrast to the market, where production is predicated on consumer
demand, the consumer is the forgotten being in a command economy.

Apart from the free market and planned economy, there is the Mixed economy comprising a mix of
these two economies.

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REFERENCES

Book References:

 Charles W.L. Hill (2007) International Business: Competing in the Global Marketplace.
6th Edition. International Edition. McGraw-Hill.
 Rachels & James. (1997) "Punishment and Desert." In Ethics in Practice. Malden,
Massachusetts: Blackwell Publishers.
 Rawls, J., A theory of justice: USA: Harvard University press, 1972, p.14.

Online References:
 http://motherjones.com/politics/1977/09/pinto-madness (accessed on 13-03-2011)
 http://plato.stanford.edu/entries/justice-distributive (accessed on 13-03-2011)
 http://www.beyondintractability.org/essay/retributive_justice (accessed on 13-03-2011)
 http://www.economywatch.com/market-economy/free-market-economy.html (accessed
on 13-03-2011)
 http://www.wutsamada.com/alma/bizeth/manual/mod1.htm (accessed on 10-03-2011)

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