One of the most significant corporate trends of the last decade is the growth in activities associated with Corporate Social Responsibility (CSR). While definitions of CSR vary, the term generally refers to actions taken by firms with respect to their employees, communities and the environment, that go beyond what is legally required of a firm. Indeed, the alignment of business operations with social values is a well-developed industry. The relation between CSR expenditure and firm value is non-monotonic. When CSR expenditure is low, we expect that it should contribute positively to firm value, for example, by increasing the productivity of employees or by avoiding reputational or pollution-related costs and fines. But at some point, however, the marginal effect of an additional dollar of CSR expenditure must decrease shareholder wealth as there is no limit to the amount that a firm can transfer to its stakeholders.
elite, while the majority of Soviets were suffering; the standard of living in the Soviet Union was one third of the standard of living level in America and less than half of West Germany and France (Johnson & Raynes, 1984, page ii). Low standards of living generally guarantees unrest with populations because people are likely unsatisfied with their economic situation. The downfall of the Soviet Union is evidence of the fact that governments are unstable when their preferred system of economics is not capitalism.
Capitalism supports equality in nations, because capitalism supports equal opportunity vice versa. Capitalism is sustainable because it is often accompanied with socialist political policies. Equal opportunities give more people the means to support themselves. Though there may be economic inequality in capitalist states, there isn’t widespread poverty at the same level as in communist nations. This is because the people who are motivated enough to sustain themselves will find a way to achieve what they want.
Major financial support is provided under communist governments. Theoretically this is a beneficial policy, but realistically it isn’t as beneficial as it is intended to be. At least 20 percent of Soviets lived in poverty compared to 14 percent of Americans in 1988 (Fein, 1989). The average Soviet only has to dedicate 6 percent of their income to paying rent, whereas Americans dedicate 26 percent of their income to living expenses (Fein, 1989). The Soviets denounced the existence of poverty in their country up until Gorbachev’s leadership, and instead claimed that poverty was only brought on by capitalism. The large number of people who were experiencing economic hardships sought for change in the USSR. Despite Soviet officials claiming that the poverty was caused by laziness, many believe that poverty was brought on by the economic state of the USSR. The economy under Gorbachev suffered immensely, causing over 20 million people to live impoverished lives (Fein, 1989). The communist Soviet Union crumbled soon afterward.
A defining factor of a capitalist economy is its economic freedom. The five most economically free nations are Hong Kong, Singapore, New Zealand, Switzerland, and Australia according to the Index of Economic Freedom (2018). Hong Kong is a part of China, yet the only things the Chinese government controls in Hong Kong is foreign relations and the military. The population grew in Hong Kong from 600, 000 to 6 million in fifty years (Friedman, 1998). This population growth was due to people fleeing from the communist state of China to Hong Kong. A major downside to reduced economic freedoms, is the reduced political freedom that typically comes with it. Both issues have gradually diminished in China since the heig
