2. The Credit crunch and the future
of capitalism
• Should the individuals be free to earn
whatever the market pays them?
• What are the economic arguments for big
differences in earnings?
• Why might high salaries in the financial
sector give cause of concern?
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3. The Credit crunch and the future of
capitalism
• Individual remuneration
–2008 recession
• How governments intervene in
financial markets to make them
more efficient?
–Tony Blair speech (2003)
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4. The Credit crunch and the future of
capitalism
• Banks too big to fail
– RBS, Lloyds group and others bailout
• How do you think an economic
recession generally impacts on
businesses and which businesses will
be likely to cope best in such difficult
trading times?
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6. The Credit crunch and the future of
capitalism
• Assets gambling by the bankers
• American sub-prime mortgage market
– People with low credit ratings given loans
• Interest rate hike 1% to 5.35% (2004- 2006)
• Global meltdown
– Inter-bank lending decreased or disappeared
– Large deductions in demand and supply of money
• Recession
• Capitalism at bay (The Economics, 2008)
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7. Echoes from the two sides of Atlantic
• I made a mistake in presuming that the selfinterest of organizations, specifically banks and
others, were such that they were best capable of
protecting their shareholders and their equality in
the firms. I have found a flaw.
(Alan Greenspan, 2008)
• Reduction in bankers’ salaries, greater control
and limiting the size of banks is the way forward.
(Mervin King, 2010)
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8. Recap
•Write 3 things you have
learned from last week’s
lecture and today’s
tutorial about economic
environment
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9. Politics & Business
• Introduction
– A clear paragraph to set the background and introduction
• Structure of the essay
• Context of discussion
• Aims and objectives
•
Main body
–
–
Definitions of political ideologies, presentation with criticality
Discussion about interdependence between politics and business
•
–
Brief historical perspectives of ideological frameworks
•
–
Impact of political systems on regulation, taxation, public services, government, economy, (interest rates), international
issues, (relationships) and legal framework
Left-right debate ( early concepts of Edmund Burke, Adam Smith, Marx Engel leading to work of Robert Owen towards to
working conditions and trade unions)
Each party’s main belief in relation to the business
•
Accompanies by examples of left, centre and right
–
•
How they are applied in contemporary situations (privatisation of RM and Northern Rock and energy price freeze from
Labour, increase in corporation taxes and cut taxes for small, business )
Conclusion
–
–
–
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A clear paragraph to summarise the ley points from discussion
Restating the main question and/or aim of the essay
Summary of what has been discusses (attributes, relationships and associations discussed)
10. Economic Environment: market
systems
•
Introduction
– A clear paragraph to set the background and introduction
•
•
•
•
Main body
– Exploration the nature of economic environment in which the business operates
•
•
–
–
Demonstration of understanding of the competing perspectives about the market systems
– The ways to create ideal economics environment
Discuss four competing schools of economic thought
– Neoclassical view (Free market)
– Interventionist view
– Radical (Marxist) and
– Environmentalist (Green) view
» Adam Smith the beginning of the free-market, capitalistic economic system
» Marx’s critique of classical political economy, views on the impact of class and class struggle on economic and
political processes
Explanation of the concept of government intervention and regulation of markets and the rationale behind
•
•
Interventionist arguments and regulation of markets
The role of the state to eliminate obstacles and safeguarding the competition
Specific exploration of market failure to give insights into the advantages of government intervention with specific
examples with reference to
•
•
•
•
•
Structure of the essay
Context of discussion
Aims and objectives
Allocative (value for money” or “in accordance with consumers’ preferences)
Productive (producing at lowest cost)
Distributive efficiency (output is distributed by achieving equity, fairness)
Laws on minimum age for buying cigarettes and alcohol and national minimum wage
Conclusion
– A clear paragraph to summarise the ley points from discussion
– Restating the main question and/or aim of the essay
– Summary of what has been discusses (attributes, relationships and associations discussed)
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