This section will reflect on the political framework that underlies our economic system. We often assume that an open society is based on the interplay of democracy, market economy, and modern science. The values of individual freedom, equality, and participation are the uniting elements for these three dimensions. The political system is concerned with the organization and use of power, and therefore there is always a tension between politics and economics. Both sides try to influence each other, and both sides have to some degree different objectives. Companies don't want to be regulated and taxed too much, and they want to maximize their profits. The government wants businesses to function, but it needs revenue, which it can only get from extensive taxation. In addition, the government has macro-economic objectives, like low unemployment, low inflation, and balanced trade. How does this tug-of-war play itself out?
The central problems of political philosophy are the questions of how to legitimatize political power and authority, and how to create a system that is economically fair for everyone (distributive justice.) These questions are also central problems in business ethics. Therefore, one can ask if political theories should also be applied to problems in business ethics?
If some form of egalitarianism is the correct theory of justice for states, for example, does it follow that it should also be used as a theory of justice for businesses? If states should be democratically governed by their citizens, for example, should businesses be democratically governed by their employees? The famous political philosopher John Rawls, in his book "Political Liberalism," has answered this question negatively, and many other theoreticians have followed suit. They argue that states and businesses are different kinds of entities, and therefore require different approaches to justice. But once can also argue that the difference between businesses and states is not as fundamental, and that applied business ethics can learn much from political philosophy.
How can we protect the democratic process from the influence of economic power?
What is the role of the state in economic affairs?
How should political power be exercised in the economic realm?
Since the state has the monopoly for the creation of money, it also oversees all economic activity. To what degree, then, are markets really free?
From the standpoint of universal human rights, education, or health care, are non-negotiable rights, not products or services that should be bought and sold. From the standpoint of business, education and health care are huge markets in advanced societies. How do you reconcile this clash in perspectives?
Another foundation of the capitalist system are strong property rights. Are property rights a way to secure a free society, or are they an obstacle to equality and innovation?
Businesses can also be seen as social organizations. They have a culture that consists of rituals, hierarchy, and a unifying purpose. Should they be organized more democratically?