Different economic systems provide dissimilar kinds of incentives for economic behavior. Most pre-

industrial organized economies relied heavily on enforced class hierarchies based on strength, conquest,

coercion and enforced obligations. Similarly, various utopian schemes (regardless of whether they are

based on fascism, communism or religious authority) that were supposed to be based on respect for

human dignity and equality,instead usually ended up relying on brute force when people did not act in the

way that the utopian planners wanted.
In this context, Niskanen, in his essay on “The Undemanding Ethics of Capitalism,” argues that through

free exchange, capitalistic economies tend to provide us with direct monetary rewards for activities that

benefit other people. As a result, according to Niskanen, capitalistic systems are less reliant than other

economic systems on the existence of benevolence,or general good will towards our fellow humans,for

overall decency and behavior that benefits everyone. Niskanen’s point is that, sincethese other systems

are less likely to provide direct rewards for simply providing others with the things that they want and

value, those systems are also less likely to see behavior specifically designed to provide others with such

things. Adam Smith famously put it thus: “It is not from the benevolence of the butcher, the brewer, or the

baker that we expect our dinner, but from their regard to their own interest.”
Others, for example Marx, Proudhon, Engels, and Polanyi, have argued that capitalism reduces some

human interactions to formal exchange and that in the process something of value has been lost.
In this context, your assignment is to write a short essay criticallyevaluating Niskanen’s arguments on this

issue.

Sample Solution

This question has been answered.

Get Answer