College of Business Administration

Seminar in Business Ethics and Social Institutions

Discussion Questions for September 14, 1999:

1) In `The Capitalist Threat', George Soros points out that...

The main scientific underpinning of the laissez-faire ideology is the theory that free and competitive markets bring supply and demand into equilibrium and thereby ensure the best allocation of resources. This is widely accepted as an eternal verity, and in a sense it is one. Economic theory is an axiomatic system: as long as the basic assumptions hold, the conclusions follow. But when we examine the assumptions closely, we find that they do not apply to the real world.

What are the assumptions underlying the free-market model? Do these assumptions hold in the 'real' world? To the extent that they do not, what public policy recommendations are implied?

2) Distinguish the constructs of effectiveness and efficiency. Provide a definition for efficiency. What is the virtue of efficiency? What would the practical implications were Rice to become more efficient? What would you recommend in situations in which gains in efficiency were to come only at the expense of organizational effectiveness?

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