Capitalism and Socialism Case Study – Uber

Capitalism and Socialism Case Study – Uber

Economic Systems

Capitalism and socialism are the main economic systems that exist in developed nations; the main difference between the two is the extent to which the government controls the economy. Socialism is both an economic and political system where the means of production are publicly owned. The term publicly owned means the government owns the means of production (Longly, 2020). In this type of economic system, the government controls the production and consumer prices to ensure that they best meet peoples’ needs. Moreover, the socialist system is usually characterized by social services and programs requiring high taxes that may affect the economy.

On the other hand, capitalism is a system where production is privately owned (Longly, 2020). Thus, production and goods’ prices and services are based on the free market and the law of demand and supply. In addition, capitalism is always criticized for its tendency to allow income inequality and socio-economic stratification where the few rich have amassed huge wealth while the majority are poor.

Laws Affecting Uber Operations

The emergence of Uber Taxi Company caused disruption and is still causing confusion in the many countries in which the company operates. The company has grown to become a $1 billion company, but it is facing many legal challenges in the many states in the U.S. and other countries such as Germany. The fact that Uber operates on a contractor model, which means that its drivers are not employees, has rattled many authorities, some of whom claim that this business model is wrong (Heather &Dan, 2015). In California, Uber drivers have filed legal suits against the company demanding payback, but according to the company, these drivers are not employees to be paid, but they are contractors with their own vehicles and expenses (Heather &Dan, 2015). There are various laws that support and limit the operation no Uber based on the contractor model. Labour laws protect Uber’s operations because it excludes contractors from being recognized as employees. The second law that supports Uber’s operation is fair competition laws. These laws encourage fair competition and prevent other industry players from hindering others from progressing (Diamandis, 2014). The move by authorities in various countries to ban or restrict Uber’s operations is considered unfair under the fair competition laws. This is because Uber is not being unfair, but it has come up with the best solutions for people’s challenges, and hence, it is becoming much better than other taxis.

The laws that limit Uber’s operations and the contractor model area are the foreign exchange laws. In India, Uber is accused of violating foreign exchange laws. Thus, they are using foreign exchange laws to limit Uber’s operation in India (Heather &Dan, 2015). The second law that limits Uber’s operation is protectionist laws; each country tends to have protectionist laws that favour local firms and restrict foreign firms. Thus, many countries use protectionist laws to ban or restrict Uber from operating in their markets to allow local firms to grow (Heather &Dan, 2015). Uber has proved to be a serious competitor; hence, many taxi companies in many cities are worried about not being thrown out of business sand. This is why they have filed numerous legal cases against Uber to limit its operation and allow the local firms to thrive.

Economic Systems and Laws’ Effects on Uber Operations

Uber is well suited to a capitalist society where there is a free market. In most cases, Uber is finding it hard to operate in socialist societies such as Germany. Socialist societies will always use protectionist laws to make things difficult for foreign firms and nurture local firms (Diamandis, 2014).  Despite the many protests and legal suits in the U.S. against Uber, this company has seen big success in the U.S. being a capitalist society. Capitalist societies encourage competition and have led to protectionist laws (Diamandis, 2014). The laws supporting Uber have energized this firm and allowed it to continue pursuing its goals despite the many setbacks. The laws limiting Uber’s operations have greatly affected its expansion strategy and its revenues.

Personal Moral Position Regarding Uber

My moral position on Uber’s business model is that the company has not violated either common laws of the land or gone against corporate ethics. The issue is that Uber has just come up with a unique way of doing business that surpasses the conventional way of travelling and, thus, gaining much attraction from customers. Utilitarianism theory can best explain what Uber is doing. According to Utilitarian theory, it advocates for actions that maximize the happiness and well-being of many people in society, and this is what Uber has done. Uber offers flexible drive schedules; it is app-based, meaning that one can order a drive online. Uber offers a fair process and is a convenient way of travelling. All the benefits maximize happiness and improve the well-being of many people in society.

References

Diamandis, P. (2014) Uber vs. the Law (My Money’s on Uber). https://www.forbes.com/sites/peterdiamandis/2014/09/08/uber-vs-the-law-my-moneys-on-uber/?sh=39ccb1045b5c

Heather S &Dan, L. (2015). U.S. states are passing laws that back Uber’s view of drivers as contractors. Retrieved from https://www.businessinsider.com/r-exclusive-us-states-pass-laws-backing-ubers-view-of-drivers-as-contractors-2015-12?r=US&IR=T

Longly, R. (2020). Socialism vs. Capitalism: What Is the Difference? https://www.thoughtco.com/socialism-vs-capitalism-4768969

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Capitalism and Socialism Case Study – Uber

Prepare: Your initial post in this discussion must be informed by the required material. The required material for this discussion will introduce you to what is new about Uber as a business model, the profit incentive in business, and how laws can make or break innovation in business. Your preparation should focus on the characteristics of capitalism and socialism, as well as other business concepts presented in the required material. Since your initial post in this discussion will examine the relation between running a business such as Uber and the laws and economic system of the nation(s) in which it operates, make sure to comb the material on Uber for laws, regulations, and the economic setting that affect its operations. You are encouraged to research relevant laws and regulations to make sure that you have current information. You will also need to review the material on the three ethical theories employed in the Week 1 Discussion, as you will draw from that material for this week’s discussion, too.

REFLECT
Reflect: Keep in mind that Uber has presented itself in the market not as a transportation service but as a service that pairs consumers with ride-sharing services by means of a unique phone app. However, some sources, including the taxi industry and one California court finding (details in the required material), as well as the characterization of Uber presented in Section 2.5 of the textbook, seem to challenge this branding. According to these sources, Uber is avoiding laws that apply to the transportation industry and, thereby, usurping a rightful place that the taxi industry has carved for itself. Consumers, on the other hand, have shown their preference for Uber because of the high demand for its services in the USA and abroad, including in countries where Uber has been banned. Compared to taxis, Uber offers consumers an efficient system for procuring a ride even in remote areas where taxis do not frequent, a convenient payment method (no need for cash, and fares can be split among different users on the same ride), and significantly cheaper fares compared to taxis. In many instances, Uber cars come equipped with water, candy, and magazines, all for free. Uber drivers are also better off because they keep the majority of the fares for the rides that they service, which is exactly the opposite case of taxi drivers, and they can choose when they want to work. Clearly, this is a controversial case and, thus, very apt for the examination of this discussion.
Keep in mind that a nation’s economic system is shaped by the laws that are in place. Accordingly, laws (including state regulations and local ordinances) will give you a clue about the kind of economic system that exists. Keep in mind also that most nations have mixed economies, and there is probably no economic system that purely represents socialism or capitalism. So, you will find a different combination of both socialism and capitalism in any nation that you are examining.

Write: You have four tasks for your initial post. In order to present an organized post, address each one of these tasks in a separate paragraph and in the following order. Your first task is to articulate the economic system (or combination of characteristics of both socialism and capitalism) that such laws depict. Your second task is to examine the laws that either support or limit Uber’s operations. Your third task is to analyze how the findings from your first and second tasks affect Uber. Your fourth task is to present your moral position regarding Uber. For this latter task, you will need to identify one of the three ethical theories covered in Week 1 (utilitarianism, deontology, or virtue ethics) as support for the moral position that you are taking. For example, you may hold the moral position that Uber is morally justifiable because it provides a good for consumers and fills a gap that has not been met by the taxi industry. You may also take the position that Uber’s positioning in the market is morally wrong.