The involvement of government, business and civil society institutions in the diagnosis and solution of societal problems has been in existence for ages, but the concept has gained more supports in the international development arena in recent times
The relationship between government and business is complex, with both positive and negative aspects in terms of what can be called “the public good”. This notion of “public good” changes depending on one’s ideology and this makes the appreciation of the phrase even more complex. Therefore, an accurate understanding of the relationship that exists between the three requires an examination of the three main theories of political economy – the ...view middle of the document...
N&N Chocolates' main business objectives are to keep their costs low, increase sales, and maximize their profits. Society's objectives focus around survival, clean environment, access to food, health care, education, shelter, and opportunity to succeed. Lastly, government's objectives are to provide regulation to instill a fair, safe use of resources and to protect citizens against things like unethical business.
Each of the objectives is interrelated. For example, society wants food, and N&N wants society to choose their products as their food objective. The government has to ensure that N&N operates ethically to not harm the environment or the consumers. There are three different models that can explain how business, society, and government's objectives interact.
The first model is called market capitalism. The definition is based on an economy that is focused on supply and demand, where the prices of goods and services are set through an open free market system. For example, N&N would love to sell their chocolate bars for $20.00 each. Unfortunately, society's demand for chocolates is high, and consumers are not willing to pay such a high price, especially since society can eat many other options to fulfill their food objective. They could order two pizzas for $20.00 instead or purchase a competitor's chocolate bar for only $1.00. In market capitalism, the objectives for businesses are determined by society's demand, as well as government's added costs, such as taxes.
Efficient operation based on a number of assumptions
* Government interference in economic life will be held to a minimum
* Market performance is the only acceptable measure of performance
* It is the function of government not free enterprise to minister to social problems
* The primary contribution to society made by business is to create jobs and wealth through jobs
* Individuals have perfect knowledge
* Markets clear
* Individuals are rational
Dominance is the second model that can be used to explain business, government, and society. This model is based on the idea that a few people are rich at the expense of many. It is also known as populism, where the common man views business and government as something to be protected from. Government's part in the dominance model is the idea of heavy regulation and owning big business. Business and government are ranked at the top of the pyramid, while the rest of society is beneath them.
Government Responsibility towards Business
As the business has to discharge certain responsibilities towards the government, similarly the government has to discharge several responsibilities towards the business. Government is the most powerful and sovereign authority in the country. It can do or undo anything. The government can use that power to regulate and to stimulate business.
In particular the responsibilities of the...