Chapter 1 CORPORATION AND CORPORATE GOVERNANCE

Corporation
● An artificial being created by operation of law, having the right to succession and the
powers, attributes and properties expressly authorized by law or incident to its
existence (The Corporation Code of the Philippines, Sec. 2

Characteristics of Corporation
● Artificial being
● Created by the operation of Law
● Right of succession
● Powers, attributes and properties

CLASSES OF CORPORATION CREDITORS

● Stock corporations are those which have capital stock divided into shares and are ● This refers to the party who lend to the corporation goods, services or money
authorized to distribute to the holders of such shares, dividends, or allotments of the
surplus profits on the basis of the shares held. EMPLOYEES
● All other corporations are nonstock corporations. ● These are the people who contribute their skills, abilities, and ingenuity to the
corporation
STOCKHOLDERS and MEMBERS
● those who compose a corporation, whether as stockholders or shareholders in a stock CLIENTS
corporation or as members in a nonstock corporation. ● They are the buyers of the corporations products and services

Number and Qualifications of Incorporators. Government

● Any person, partnership, association or corporation,singly or jointly with others but not ● It is the duty and responsibility of the government to provide the people the basic
more than fifteen (15) in number, may organize a corporation for any lawful purpose or ways and means to survive and the government gets the biggest help from the
purposes. corporation
● A corporation with a single stockholder is considered a One Person Corporation PUBLIC
● The result of responsible or irresponsible conduct of corporations can affect public in
CORPORATE NAME so many ways
● No corporate name shall be allowed by the Commission if it is not distinguishable from
that already reserved or registered for the use of another corporation, or if such name POWERS OF A CORPORATION Corporate Powers and Capacity
is already protected by law, or when its use is contrary to existing law, rules and ● To sue and be sued in its corporate name;
regulations. ● To have perpetual existence unless the certificate of incorporation provide otherwise;
● To adopt and use a corporate seal;
Management: ● To amend its articles of incorporation in accordance with the provisions of this Code
● Refers to the party given the authority to implement the policies as determined by the ● To adopt by laws, not contrary to law, morals or public policy, and to amend or repeal
Board in directing the course/business activities of the corporation. the same,in accordance with this Code;
 ● In case of stock corporations, to issue or sell stocks to subscribers and to sell treasury WHAT GOOD GOVERNANCE PROMOTES?
stocks,in accordance with the provisions of this Code; and to admit members to the
corporation if it,be a nonstock corporation; BENEFITS OF GOOD GOVERNANCE
● To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage, and ● Reduced Vulnerability
otherwise deal with such real and personal property, including securities and bonds of ● Marketability
other corporations. To enter into a partnership, joint venture, merger, consolidation, or ● Credibility
any other commercial agreement with natural and juridical persons; ● Valuation
● To make reasonable donations, including those for the public welfare or for hospital,
charitable, cultural, scientific, civic, or similar purposes: ROLES OF NONEXECUTIVE DIRECTORS
● To establish pension, retirement, and other plans for the benefit of its directors, ● Is a member of the board of directors of a company who does not take part in the
trustees, officers, and employees; and executive functions of the management team.
● To exercise such other powers as may be essential or necessary to carry out its ● Strategy-offer creative contributions
purpose or purposes as stated in the articles of incorporation ● Establishing networks
● Monitoring Performance
STOCKHOLDERS OR SHAREHOLDERS RIGHT ● Audit- ensure that the company report properly to its shareholders
● The right to vote on matters such as elections of the board of directors
● The right to propose the shareholder resolution ROLES OF CFO
● The right to receive dividends ● Implements internal control- convey important financial,control
● Pre-emption right which is right to purchase new shares issued by the company ● Supervises major impact,Projects
● The right to liquidating dividends ● Develop relations with,financial sources
● Advisor to management
BOARD OF DIRECTORS ● Drives major strategic issues
● Refers to a collegial body that exercises the corporate powers of all corporations ● Risk Manager
formed under the Corporation Code. ● Relationship role
● Objective referee
DUTIES OF THE BOARD OF DIRECTORS
● Establishing Policies and Objectives Examples of issues that the audit committee,should consider:
● Selecting, appointing, supporting and receiving the performance of the chief executive ● Risk identification and response
● Ensuring the availability of adequate financial resources ● Pressure to manage earnings
● Approving annual budget ● Internal controls and company growth
● Accounting to the stakeholders the organizations performance
Audit committee duties, a a minimum, should include two key elements:
CORPORATE GOVERNANCE ● Oversight of the quality and integrity of financial reports and the process that produced
● Structures or process by which companies are directed and controlled that will help them
them to operate more efficiently, mitigate risk and safeguard against mismanagement ● Oversight of the management of risk
External Auditors Objectives of an Organizational Structure
● Used extensively by business organizations to cast away doubts on the information ● Accountability for areas of work undertaken by groups and individual members of the
given by the management which are also generated under its direct control organization
● Coordination of different parts of the organization and different areas of work
● Effective and efficient organizational performance including resource utilization
Chapter 2: Organizations: their political, structural and economic environment ● Monitoring the activities of the organization
● Flexibility in order to respond to changing environment factors
Organizations ● The social satisfaction of member of the organization
● are complex adaptive systems that use people, task and technologies to achieve goals
and objectives. DIMENSIONS OF ORGANIZATIONAL STRUCTURE
Structuring the organization Child (1988) suggest six major dimensions as components of an organization
● represents the division and distribution of work among members of the organization, structure:
and the coordination of their activities in such a way that they are directed towards ● Allocation of individual task and responsibilities, job specialization and definition
achieving the declared goals and objectives of the organization. ● Formal reporting relationships, levels of authority and spans of control
Management ● Grouping together of sections, departments, divisions and larger units
● is about how the organization manages the structure, the resources and the activities ● Systems for communication of information, integration of effort and participation
within the organization and how it measures and monitors the resulting performances ● Delegation of authority and procedures for monitoring and evaluating the action
towards achieving the declared goals and objectives of the organization. ● Motivation of employees through system for performance appraisal

Organizational theory CONSEQUENCES OF STRUCTURAL DEFICIENCES (CHILD)

● attempts to explain how organizations work by defining the common features that ● Low motivation and morale
organizations or groups of organizations share, by collecting data about them, and by ● Late and inappropriate decisions
analyzing them, assessing 'what works where - and why! ● Conflict and lack of co-ordination
● is especially useful for people who manage organizations, or who aspire to do so in ● Poor response to new opportunities and external change
the future. ● Rising cost –e.g. diseconomies of scale

Drucker suggests three criteria for effective organizations: Principles of Organizational Design and Diagnosis
● They must be organized for business performance. Mintzberg suggests that organizational structure fall into five basic categories:
● Their structure should contain this least number of management levels. ● Simple structure: a centralized, perhaps autocratic arrangement typical of the
● Organizational structure should facilitate training and testing of future organization entrepreneur-founded company.
leader. ● Machine bureaucracy: best at mass produced task and is characterized by many
layers of management and formal procedures.
Organizational Structure ● Professional bureaucracy: likely to include some parts of the administration is set by
● Is the pattern of relationships among positions in the organization and among independent professional buddies. It tends to be more democratic and more highly
members of the organization. Structure defines tasks and responsibilities, work roles motivated, with its lines of authority less clearly set.
and relationships and channels of communication. ● Divisionalized form of bureaucracy: applies more to multinational or industrial
corporations where a small central core controls key guidelines for a number of
otherwise autonomous units.
 ● Adhocracy: often found in new technology industries, which need constantly to Levels of the Organization
innovate and respond to quickly changing markets. ● According to Drucker, organizations are layered into three main levels:
○ The technical level of the organization is concerned with specific operations
Types of Organizational Structure and defined tasks, with actual jobs to be done, and with performance of the
● This is essentially the process by which the organization’s missions is divided into technical function.
discrete roles and tasks of individuals within the organization. ○ The managerial level ( or organizational level) is concerned with the
● These can fall into the following categories : coordination and integration of work, at the technical level.
○ Functional- grouping of major functions ○ The community level ( or institutional level ) is concerned with the broad
○ Product/Service – grouping by service or product. objectives and the work of the organization as a whole.
○ Geographical – a nationalized service develops regions, areas or district
authorities. Mintzberg’s Nine Design Parameters
○ Divisional – grouping of services and/or geography and functionality. ● Design assumes discretion, an ability to alter the system. In the case of the
○ Matrix – grouping of projects and functions. organizational structure, design means 'turning those knobs' that influence the division
of labor and the coordinating mechanisms thereby affecting how the organization
Centralization functions.
● When all the power for decision making rests at a single point in the organization ● Consider the following questions, which are the basic issues of structural design:
ultimately in the hands of one person or group, the structure is centralize. If the power ○ How many task should a given position in the position in the organization
is dispersed among many people/groups , it is known as decentralized or distributed. contain, and how specialized should each task be ?
● Centralization and decentralization should not be treated as absolutes, but rather as ○ To what extent should be the work content of each position to be standardized
two ends of a continuum. ?
○ What skills and knowledge should be required for each position?
Advantages ○ On what basis should be grouped into units and units into larger units?
● frees top management of routine every day decisions to concentrate on strategic ○ How large should each unit be; how many people should report to a given
responsibilities manager ?
● decisions are more local, quicker, more responsive to clients (patients) ○ To what extent should the output of each position or unit be standardized?
● increased awareness of cost effectiveness through the organization ○ What mechanism should be established to facilitate mutual adjustment among
● increased motivation and satisfaction by junior management positions and units?
○ How much decision power should be delegated to the managers of line units
Disadvantages down the chain of authority?
● requires good communication and adequate control to and from the center ○ How much decision making power should pass from the line managers to the
○ need for center to coordinate/integrate staff specialists and operators?
○ can lead to inequity in treatment of clients/patients
○ need individuals willing to take on additional responsibilities These nine design parameters are the basic components of organizational structure - that
fall into four broad groupings:
In general, large organizations lean towards: ● Design of positions
● Less centralization ● Design of superstructure
● More specialization ● Design of lateral linkages
● More rules and procedures to be followed ● Design of decision making
Organizational Relationships Advantages of Planned Economy
Work Design ● Driven for Collective Benefits
● Work can be combined in various forms. Decisions on the methods of groupings will ○ Government decided economies can be proposed to serve communal rather
consider : than individual needs. Following that system, rewards, and other benefits are
○ The need for coordination to be distributed according to the price that the state credits to the service
○ The identification of clearly defined divisions of work performed. A planned economy eradicates the individual profit motives as the
○ The economy driving force of production and rests it in the hands of government planners to
○ The process of managing activities determine the appropriate production of different sets of goods.
○ Avoiding conflict ● Economies of Scale
○ The design of work organization which takes account of the nature of staff ○ A government run economy would endeavor to replace a number of firms with
employed, their interests and job satisfaction a single firm for the whole economy. This makes the business the sole
beneficiary on the advantage of single market, arbitrary pricing and unilateral
Formal product offering.
● Line – vertical flow of authority ● Inherently Protected
● Functional – between specialist in advisory positions and line management teams ○ Government planned economy is not subject to major downside of market
● Staff- personal assistants to senior members economies and market-oriented mixed economies. A planned economy,
theoretically, does not suffer from business cycles; it does not experienced
Span of Control- number of direct reports. Influencing factors: crisis of overproduction.
● Nature of organization, complexity of work, range of responsibilities ● Stability
● Ability and personal qualities e.g. capacity of manager ○ When the government is in charge, long term venture can bemade without fear
● Time available to spend with subordinates of a market downward spiral which can easily lead to abandonment of a
● Ability and training of subordinates project. This is especially important where return are risky, in some advanced
● Effectiveness of coordination, communication , control systems economies. One of the examples would be running a prison which decisions
● Physical location of subordinates vary and are dependent from one administration to another.

REGULATION Disadvantages of Planned Economic Activity

● Is the administrative process of writing and passing laws that, to a certain extent, ● Inefficient Use of Resources
restrain some fundamental rights of businesses. ○ Critics of planned economies are pushing the idea that planners cannot detect
consumer preferences, shortages, and surpluses within the ideal level of
Centrally Planned Economy accuracy and therefore cannot efficiently coordinate production.
● All resources are owned and managed by the government. ○ Surpluses magnify waste of labor and materials that could have been useful to
● There is no Consumer or producer sovereignty. more pressing needs of society. Critics of central planning,assert that a market
● The market forces are not allowed to set the price of the goods and services. economy prevents long-term surpluses.
● Profit is not the main objective, instead the government aims to provide goods and ● Restraint of Democracy in Trade
services to everybody. ○ Given that central planning overcame its built-in inhibitions of incentives and
● Government decides what to produce, how much to produce and for whom to innovation, it would nevertheless be unable to maximize economic democracy
produce. and self- management, which some believes are concepts that are more
rationally consistent, reliable and just that ordinary ideas of economic freedom.
Imposition of Legal and Administrative Barriers Employment and Labor
1. Disproportionate Licensing and Regulatory Requirements ● Among the ever-changing regulations in business are employment laws. These laws
○ Once a firm is registered and does manage to operate, administrative barriers pertain to minimum wages, benefits, safety and health compliance, working conditions,
are reinforced by constant inspections. They serve to exhaust the firm’s equal employment opportunity, and privacy regulations cover the largest area of
owner(s) and virtually facilitate the firm’s transition into the informal sector. subjects of all the business regulations. The Department of Labor and Employment
Indeed, inspectors themselves openly hint that should bribes be paid from the through the Regional Tripartite Wages and Productivity Board set the minimum wage
start, everyone will be spared time and aggravation. for workers in the Philippines.
2. Excessive, Complex, and Arbitrary Taxation
○ Because the tax system is complicated, voluminous, confusing, and rapidly Environmental
changing, businesses are driven into the informal sector either by not ● The carbon footprint of businesses on the environment is regulated by the Department
registering or by conducting part or all of their activities in cash, not reporting of Environment and Natural Resources. The DENR enforces environmental laws
most of their activities for tax purposes. passed by the government. This is done through frequent inspections and
3. Inadequate Banking System and Poor Banking Practices environmental audits. The Environmental Management Bureau and other offices and
○ Inadequate banking system can also impose impossible demands on bureau exist to help businesses small and large alike achieve environmental
entrepreneurs. Issues involving timeframes, and terms credit for repayments compliance, and should serve as a resource more than an enforcer.
are sometimes prohibitive, collateral is difficult to provide, and finding a
guarantor to help secure a loan is very difficult. However we cannot blame this Privacy
banking practice considering that one of the underlying reasons also for the ● Sensitive information is usually collected from employees and customers during hiring
poor banking practices is the high risk of delinquency or bad loans. and business transactions, and privacy laws prevent businesses from disclosing this
4. Lack of Government's Commitment to Reduce Administrative Barriers information freely. Information collected can include social security number, address,
○ A good mass within the business community and even those outside of name, health conditions, credit card and bank numbers and personal history. Not only
business recognizes that the governments are doing little to reduce do various laws exist to keep businesses from spreading this information, but people
administrative barriers impeding investment and trade. Some entrepreneurs can sue companies for disclosing sensitive information.
are even silently blaming the governments for having little and poor
understanding of the importance of addressing these problems. Safety and Health
● The safety and health laws ensure that employers provide safe and sanitary work
REGULATIONS RELEVANT TO CONDUCT OF BUSINESS environments through frequent inspections and a grading scale. A company must
Advertising meet specific standards in order to stay in business. In accordance with legal
Every business is required to comply with the advertising laws and could face lawsuits for provisions, employers must provide hazard-free workplaces, avoiding employee
violation. Advertising laws are made up of dozens of tidbits under three main requirements: physical harm and death, through incorporating these in procedures manual.

● advertising must be truthful and non-misleading POLITICAL ENVIRONMENT OF BUSINESS

● businesses need to be able to back up claims made in advertisements at any time ● The political environment in which the firm operates will have a significant impact on a
● advertisements must be fair to competitors and consumers. company’s international operating activities. The greater the level of involvement of the
company in a foreign markets, the greater the need to monitor the political climate of
Additionally, in compliance with the packaging and labeling requirements, all product labels the countries where the business is conducted since the political climate will affect
must include information about the product, such as nutrition, size, and distribution and among others the marketability of the company’s product, the inflow of investments
manufacturing information. and more importantly valuation of share price.
 ● Changes in government more often result in changes in policy and attitudes towards Research suggests that those corporations that develop a reputation as being socially
foreign business. responsive and ethical enjoy higher levels of performance. However, the ultimate motivation
for corporations to practice social responsibility should not be a financial motivation alone, but
Corporate Social Responsibility and Organizations rather inclusive of moral and ethical dimension.
● Corporate Social Responsibility (CSR) can be defined as the “Economic, legal, ethical,
and discretionary expectations that society has of organizations at a given point in Contemporary Social Issues
time”. ● Three contemporary issues that are of major concern the environment, global issues,
and technology issues.
The concept of corporate social responsibility means that organizations have moral, ethical,
and philanthropic responsibilities in addition to their responsibilities to earn a fair return for Environment Issues
investors. ● Corporation have long been criticized and even lambasted by some pressure groups
for their negative effect on the natural environment in terms of wasting natural
Stakeholders – the various groups affected by the actions of an organization. resources and contributing to environment problems such as pollution and global
warming.
Corporate Social Responsibility
● encompasses the economic, legal, ethical, and discretionary responsibilities of Global Issues
organizations. ● Corporations increasingly operate in a global environment. The globalization of
business appears to be an irreversible trend, but there are many opponents to it.
Business Ethics Critics suggest that globalization leads to the exploitation of a developing nation's
● usually focuses on the moral judgments and behavior of individuals and groups within worker's destruction of the environment, and increased human rights abuses.
organizations.
Technological Issues
Carroll and Buchholtz’s four part definition of CSR ● Another contemporary Social issue relates to technology and its effect on society. For
● Economic Responsibilities: refer to society’s expectation that organizations will example, the internet has opened up many new avenues for marketing goods and
produce goods and services that are needed and desired by customers and sell those services, but has also opened up the possibility of abuse by corporations
goods and services at a reasonable price.
● Legal Responsibilities: relate to the expectation that organizations will comply with the Ethical Behavior in The Enterprise
laws set down by society to govern competition in the marketplace. ● Paying attention to ethics makes good business sense. This can create goodwill for
● Ethical Responsibilities: concern societal expectations that go beyond the law, such as the corporation and enhance the chances of success. Meeting it's obligation and
the expectation that organizations are expected to do more than just comply with the treating customers, suppliers, employees and other stakeholders fairly is a sure shot
law, but also make proactive efforts to anticipate and meet the norms of society even if investment of a brighter future for the company in the long-run.
those norms are not formally enacted in law.
● Corporate social responsibility: few companies totally disregard social issues and There are six foundation of trust upon which ethical business practice is built:
problems. Most purport to pursue not only the goal of increased revenues and profits, ● CHARACTER: Character drives what we do when no one is looking.
but also the goal of community betterment. ● ETHICS: Ethics refers to a set of rules that describes what is acceptable conduct in
society.
● INTEGRITY : Integrity is defined as adhering to a moral code in daily decision making.
 ● LAWS :The law is a series of rules and regulations designed to express the needs of Permission
the people. ● Most businesses need to register with a government to operate. Corporations need a
● VALUES: Values are defined as the acts, customers, and institutions that a group of character, and other forms of businesses, such as limited liability companies or
people regard in a favorable way. partnerships, need other forms of registration.
● MORALS: Morals are a set of rules or mode of conduct on which society is based
Taxation
ROLE OF THE STATE AND ITS IMPACT ON BUSINESS ORGANIZATIONS. ● Governments at all tax businesses ,and the resulting revenue collected is an important
part of government budgets
Role of Government in Business
● The government's role in business is as old as the country itself; the constitution gives Role of Government Policy
the government the power to regulate some commerce . ● Government policies can also promote businesses. Another is the tax benefit the
government is giving to Board of Investment ( BOI ) registered companies. At present,
Consumer Protection BPO's because our government set policies to make it work.
● When a product causes harm to an individual, the courts may hold the vendor or
manufacturer responsible. PRESSURE GROUPS
● Is an organized group that seeks to influence not only government policy but also
Contract Enforcement private enterprises’ operating policy.
● If one party fails or refuses to meet it's obligation under a contract, a company will turn ● Are also concerned in the protection and advancement of a particular cause or interest
to the government's legal system for enforcement.
Types of Pressure Groups
Employee Protection ● Economic Pressure Groups
● Many agencies work to protect the rights of employees. This rights covers the ○ Giant Private Corporations (the Giant Connection)
following, regularly employment, probationary employment minimum employable age, ○ Professional Organizations
prohibition against stipulation of marriage, anti-sexual harassment law and many ○ Trade Associations
others. ○ Trade Unions
○ Public Pressure Groups
Environmental Protection ○ Sectoral Pressure Groups
● When a marketing transaction impacts a third party besides the marketer and ○ Religious/ Attitude Pressure Groups
purchaser the effect is called an externality. Thus ,it is the government role to regulate ○ Governmental Units Pressure Group
industry and thereby be protect the public from environment externalities.
Economic Pressure Groups
Investor Protection ● GIANT PRIVATE CORPORATIONS
● Government mandates that companies make financial information public, thereby ○ The relative size and power of these companies can sometimes rival to that of
protecting the rights of investors and facilitating further investment. the government and therefore, bring massive influence on political and
economic decisions which affects variety of business activities.
PROFESSIONAL ORGANIZATIONS RELIGIOUS/ATTITUDE PRESSURE GROUPS
● This is a powerful group bound by the common interests of it’s members. ● They are considered as one of the most powerful groups.
● They share universal beliefs and objectives on one issue and they believe that their
Examples: major role, aside from endorsing a politician and lobbying Congress, is to mobilize
● Philippine Institute of Certified Public Accountants (PICPA) support in the country for what they believe in and to support for political office those
● Philippine Medical Associations (PMA) who share their beliefs.
● Integrated Bar of the Philippines (IBP) ● Catholic Church in general led by the Cardinals, Iglesia ni Cristo (INC) are some of the
examples of this group.
TRADE ASSOCIATIONS
● are associations of businesses with common interest to protect to. GOVERNMENTAL UNITS PRESSURE GROUPS
● They are more on a defense mode rather than being active in crafting the policies ● It talks about the freedom and power of the Local Government Units (LGU) to be
which affects them. involve in decision making.
● Chamber of commerce, business clubs, and other commercial associations are ● It has now ordinary for provinces and individual cities to have their own permanent
classified under this group. fixture or at least a close contact in the national level in particular for them to be at the
beat of decision making so that they can represent their beliefs and stands.
• TRADE UNIONS
● This unions are more concern on labor and management. INCOME AND WEALTH DISTRIBUTION
● Partido ng Manggagawa (PM), Associated Labor Union-Trade Union Congress of the ● Income Distribution is defined in economics descriptively as how a nation’s total
Philippines (ALU-TUCP) are examples. economy is dispersed amongst its population.
● Labor groups certainly have influence on policies considering the vast sector it covers. ● Classical economists such as Adam Smith, Thomas Malthus and David Ricardo were
This sector can be considered as the common denominator of all business endeavors. mainly concerned with income distribution, that is the distribution of income between
the main factors of production, land, labor and capital.
PUBLIC PRESSURE GROUPS
● These are groups that represent a cluster of the public on certain issues. Economic Inequality
● The public have turned to pressure groups since they are visibly vocal on issues that ● is the unequal distribution of income and opportunity between different groups in
pat the hearts of certain individuals. society. It is a concern in almost all countries around the world and often people are
● Example of groups with advocacies on environment are the Haribon Foundation in trapped in poverty with little chance to climb up the social ladder.
local setting while there is Greenpeace in the International level.
Major Causes:
SECTORAL PRESSURE GROUPS ● Culture and Religion
● Refers to groups which work to protect and advance the interest of specific social ○ This catches some notion that this is two play a role in creating inequality by
groups in a certain society. encouraging or discouraging wealth-acquiring behavior.
● Examples of this is Gabriela which is for women and children specifically on promoting ● Development
equal opportunity for women. ○ According to Simon Kuznets, levels of economic inequality are in large part in
● Other examples are Urban Poor Groups and LGBTQ. result of stages of development. He points out that countries with low level of
development have relatively equal distributions of wealth. As a country
develops, it acquires more capital which leads to the owners of this capital
having more wealth and income introducing inequality.
● Diversity of Choices
○ When confronted with the choice between working harder to earn more money
or enjoying more leisure time, equally capable individuals with identical earning
potentials often have different choices. This leads to economic inequality even
in an environment where perfect equality and abilities exists.
● Education
○ Education, especially in an area where there is a high demand for workers,
creates high wages for those with education. As a result, those who are unable
to afford an education, or choose not to pursue optional education, generally
received much lower wages.
● Globalization
○ It is a progression by which the worlds are unified into a single society and
functions. It has been asserted that globalization supports productivity, cultural
mix and cash flow into the developing countries; however, there are some
drawbacks of globalization that should not be overlooked: unemployment,
social degeneration and difficulty of competition.
● Inflation
○ The economist says that inflation of the money supply is a coercive measure
that favors those who are already have an earning capacity, disfavoring those
on fixed income or with savings, thus aggravating inequality.
● Labor Market
○ One of the major causes of economic inequality in modern market economies
is the determination of wages by the market. Inequality rooted from the
difference in the supply and demand for different types of work. In an ideal
world, workers’ wages will not be controlled by the labor and by the employer
but rather dictated by the market.
● Wealth Condensation
○ IT is a theoretical process by which, under certain conditions, newly created
wealth concentrates in the possession of already-wealthy individuals or
entities.
○ According to this theory, those who already hold wealth have the means to
invest in new sources of creating wealth or to otherwise leverage the
accumulation of wealth thus are the beneficiaries of the new wealth.