The human world in which ethics advances and in
which there is justice operates through reward and punishment. But reward and
punishment are not one-dimensional. They can be very subtle and yet still very
effective. For example, a glance of disapproval from a beloved friend or family
member can be a very powerful punishment just as an encouraging and loving pat
on the back can be a very powerful reward. With this in mind then it is easy to
come to agreement that ethics advances and justice operates through reward and
punishment.
Another example of reward and punishment that occurs
naturally and that should not be interfered with is the reward and punishment
of profit and loss as part of the market process. Absent the distortions caused
by interventionism this is a sufficient condition for ethical economics and
economic justice. For example, incentives and disincentives tied to
productivity in any and all of its manifestations within the framework of the
division of labor create an honorable work ethic. Those who have a weak work
ethic would feel first-hand the disincentive from being unproductive and if it
happens that their lack of productivity is truly because they have a weak work
ethic then it is only justice that they can make their complaints against. The
incentives and disincentives will help them to strengthen their work ethic.
Within a firm the same thing applies. Inside the
firm there is a structure within which reward and punishment operates in all of
its subtleties. Unlike with an individual the firm may have internal layers
that move the productive efforts of the individuals away from direct
interaction with market prices. Within the firm the incentive and disincentive
strategy may or may not be reflective of the real world market. The further
away the incentive/disincentive strategy of the firm is from the real world
market the more likely there will be errors that will ultimately affect the
viability of the firm.
And so it is necessary for the firm to create a
culture of entrepreneurship in such a way that there are ties to the market
process ideally at every locus of decision/action. Alertness must include detecting
the closeness to market prices and discovering ways to stay close. If a firm
has this as its goal it will inherently be innovative and a source of bounty
for those within the firm. At the same time this kind of firm will be able to
render service optimally to those people who desire what the firm has to offer.
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