Verified Document

Risk In A Capitalistic Society, Risk Is Essay

Risk In a capitalistic society, risk is often associated with reward. In many instances, it takes risk to garner the large profits and wealth that many entrepreneurs amass over time. It is through this risk that society overall benefits. The vast ecosystem embedded within a capitalistic society requires innovations to better compete in a global environment. Technology, energy, and banking all require new and unique products to cater to a growing international dynamic. Inherently, these activities can be risky. New product launches, for instance, must cater to changing consumer sentiments. The forecast of these changes could have been in error resulting in a monetary loss as oppose to a profit for the company. By taking the risk however society improves by having new and innovative products available when they are demanded. It is therefore my contention that risk, when controlled, is good for society overall. There are however, negative aspects of excessive risk taking as it relates to society at large. One need not look any further than the recent economic catastrophe of 2008. In this instance, excessive risk ultimately jeopardized individual's institutions as well as society at large.

To begin, due primarily to the global nature of the worlds market economy, adverse risking taking in one area of the world, could have grave consequences for another area of the world. Likewise, a collapse in one area of the world could have dramatic consequences for other areas of the world, as evident by our current economic circumstances. Our current economic situation could be partially attributed to a juxtaposition of both fraud and integrity as it relates to risk taking. Without the aid of IFI's...

This is due primarily to securities know as mortgage backed securities (MBS) and collateralized debt obligations (CDO). Both of which heavily contributed to the current economic cycle.
In the early 2000's housing prices were rising at an incredible pace. Many Americans were becoming wealthy by simply "flipping" houses on the market. This activity of flipping houses has many inherent risks. Some of which include the inability to sell the home at the desired price or rapid decline in home prices resulting in an underwater mortgage. The prevailing sentiments at the time, believed that these risks were few and unlikely to occur. As such, many individual attempting to get rich quicker, elected to borrow money to purchase homes. This activity is known as leverage. The benefit of leverage is that it amplifies gains. The negative aspect of leverage is that it can also amplifies loses as well. The prevailing sentiments during this period indicated that housing prices could not fall, but instead would only rise. Society, at the time, did not properly acknowledge many of the risks within the housing market. As such, individuals continued to purchase homes and garner wealth. With this wealth, came an increase in prosperity and a standard of living for many Americans. However, this practice soon came to an end when the housing market bubble burst in late 2006. Much of the blame can be attributed to the excessive risk taking on the part of the investment banking and financial institutions. Investment banks were essentially giving loans to individuals who they knew could not afford the payment. This activity was risky, as the propensity for…

Cite this Document:
Copy Bibliography Citation

Related Documents

Businesses Are the Cornerstone of a Capitalistic
Words: 2907 Length: 8 Document Type: Research Paper

Businesses are the cornerstone of a capitalistic society. Businesses often drive economic growth and overall societal prosperity. In many instances, business can enhance the overall quality of life of those living in civilization. Looking back briefly at history, provides a unique perspective of business as it relates to societal development. Currently, looking at a minimum wage individual living in America today, they are able to perform tasks and activities that

Ethical Issues in Business and Society: Enron:
Words: 622 Length: 2 Document Type: Essay

Ethical Issues in Business and Society: Enron: The Smartest Guys in the Room Enron manipulated the energy market in a manner that hurt consumers and did not reflect the state of real economic demand and supply. This was not capitalism, rather it was criminal behavior. It also used underhanded accounting measures that did not reflect its real losses to delude investors, including employees that had sunk their savings into the company. The

Functionalists Sociology's Concern With Social Order and Stability...
Words: 3197 Length: 10 Document Type: Term Paper

Functionalism in Sociology The history of sociology is essentially a series of various competing paradigms and views of society and about how society is constructed as well as its nature and function As Thomas Kuhn pointed out in his groundbreaking work The Structure of Scientific Revolutions, all paradigms are to a certain extent influenced by subjective predilections and views and are therefore never truly objective. However functionalism, as one of the

Piaf, Pam Gems Provides a View into
Words: 46193 Length: 125 Document Type: Dissertation

In "Piaf," Pam Gems provides a view into the life of the great French singer and arguably the greatest singer of her generation -- Edith Piaf. (Fildier and Primack, 1981), the slices that the playwright provides, more than adequately trace her life. Edith was born a waif on the streets of Paris (literally under a lamp-post). Abandoned by her parents -- a drunken street singer for a mother and a

What Is Needed to Start a Small Business
Words: 6715 Length: 25 Document Type: Term Paper

Small Business Uncovering Critical Success Factors for Starting a Small Business Venture Small businesses have been considered the mainstay in countries around the world. In many European countries for example, the small business has been considered crucial to the success and flourishment of the country in general. Most individuals embark upon a small business venture in the hopes of realizing ownership, independent profits and personal success. Small businesses can prove extremely successful

Modern Political Thought
Words: 4396 Length: 12 Document Type: Term Paper

Politics Modern Political Thought The transition from a feudal serf economy to a capitalist market economy was one of the fundamental shifts which have produced modernity as we know it. This essay aims to understand how the authors of The Prince and Leviathan, Niccolo Machiavelli and Thomas Hobbes would think about the transition and how these two great minds would relate to the issue of capitalism. Capitalism is a funny game that

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now