Business

In order to ensure that businesses operate fairly with regard to, and in the best interests of, their owners, their customers, their competitors, and the economy as a whole, numerous laws have been passed to regulate business. These cover areas such as takeovers of one company by another and actions that inhibit competition, such as the formation of cartels or business monopolies. This kind of regulation varies from country to country, though some international legislation exists, as within the European Union. In general, the more economically developed the country, the more developed are the rules governing corporate behaviour.

Business is the dominant form in the modern free market economy, following the principle of the “invisible hand” developed by Adam Smith, whereby individual businesses seeking their own benefit in the form of profit tend to provide the greatest general benefit if left free to do so. Most business regulation, such as legislation on product safety, is designed to enhance this principle. Business ethics are determined by the competition system, which makes it profitable to satisfy the consumer. Businesses are sometimes tempted to make a profit by doing harm to others, and occasionally they do; but planned economies, command economies, and other forms of economic organization developed to restrict or even eliminate business have proven far less able to maximize general benefit.