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SOCS-325 Week 2 Discussion: Externalities (GRADED)
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  • SOCS 325
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SOCS-325 Week 2 Discussion: Externalities In Ch.3 Bakan takes up the economic idea of externalities (i.e. effects of transactions on third parties) and argues that the corporations’ tendency to externalize costs is at the root of many of the world’s social and environmental problems. He present...

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  • May 17, 2022
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  • 2021/2022
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  • socs 325 week 2 discussion externalities graded

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SOCS-325 Week 2 Discussion: Externalities


In Ch.3 Bakan takes up the economic idea of externalities (i.e. effects of transactions on third parties)

and argues that the corporations’ tendency to externalize costs is at the root of many of the world’s

social and environmental problems. He presents interesting examples, of cost-benefit analysis in the car

industry (ex. General Motors) where passengers’ safety is concerned, of sweatshop labor in the clothing

industry, and, interestingly enough, of the disregard of maintenance and safety regulations in the petrol

industry (focusing on BP, long before the recent environmental disaster). He argues that unlawfulness in

the corporate activity is systemic, and results a) from the amoral character of the institution, and, b)

from failure of the regulatory system, because of lax regulations and ineffective enforcement.


Chapter 3 continues the pattern set in the first two: it reveals an important aspect of the corporation

that is often not seen or understood, but then it provides an analysis that steers us away from grasping

the nature of the problem. Here the issue is that “the corporation’s built-in compulsion to externalize its

costs [that] is at the root of many of the world’s social and environmental ills” (61). ‘Externalities’ are all

those costs that are accounted for indirectly in environmental degradation or in a debased standard of

living; to put it another way, all those costs in production, transportation, usage, and disposal that are

borne indirectly and unequally by everyone but for the benefit for those who own the means of

production and distribution.


Bakan makes the point clearly and forcefully over several pages. “A corporation,” he says, citing a

businessman “ ‘tends to be more profitable to the extent it can make other people pay the bills for the

impact on society’ ”(70). He continues: “the corporation…is deliberately programmed…to externalize




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