Business Philosophy in the Case of Facebook Essay Example

role in the creation of an economic blueprint that outlined the natural mechanisms of a free economy. Due to his significant theoretical contributions, he became one of the most influential economists of his time. Adam Smith is widely recognized as the father of modern capitalism due to his book The Wealth of Nations (Yearwood, 2013). One of his main ideas was the concept of the invisible hand, which explains how individuals pursuing their own interests ultimately benefit society as a whole.

Adam Smith's philosophy revolves around the interconnectedness of the economy. In his examination of wealth, he proposed that a free market, where manufacturers and producers have the liberty to set their own prices, would result in the most desirable and efficient outcomes for both producers and consumers. Smith referred to this phenomenon as the Invisible Hand (Ross, 2015). The core rationale behind Smith's proposition was that individuals would strive to maximize their own benefits. Consequently, consumers would make purchases based on the value they received from goods, while producers would only sell based on the costs incurred during production. As a result, an ideal economy would never experience a deficit or surplus in demand or supply, as markets would always remain in equilibrium and both producers and consumers would maximize their benefits. The Invisible Hand would guide and regulate the economy, with limited intervention from the government. Additionally, due to the motivation for personal gain, individuals would exert greater effort in a society characterized by competition, resulting in higher quality goods and services as well as more job opportunities (Yearwood, 2013). Smith continues to be regarded as a modern champion of freedom and capitalism by

contemporary conservatives.

Karl Marx

Karl Marx, born in Trier, Germany in 1818 (Pantland, 2014), was a scholar who studied philosophy, law, and history at the University of Berlin, Jena, and Bonn. He gained fame as a communist theorist due to his revolutionary ideas. Marx argued that the logical and empirical evidence supports the notion that production is necessary for society. He believed that once capitalists control the means of production, the value of goods is determined by the labor involved, resulting in exploitation and profit. Marx viewed capitalism from a pessimistic and revolutionary perspective, making him opposed to profit-oriented companies.

According to Karl Marx, the capitalist system inherently disadvantages the poor and advantages the wealthy, leading to exploitation of employees by employers (Pantland, 2014). Marx identified the proletariat and bourgeoisie as the two classes that are trapped within their respective roles due to capitalism's nature (Jurgenson, 2011). He argued that in civilized societies, production must focus on meeting the needs of the community, as people only produce through cooperation and this cooperation leads to social interactions and changes in human lives and the environment. Marx believed in practical activities that fulfill people's desires and needs, ultimately resulting in production (Pantland, 2014).

Comparisons and Contrasts

According to Adam Smith, capitalism is a flawless economic system. However, Carl Marx disagreed and believed that capitalism leads to injustice and instability because of its association with inequality and greed. Unlike Marx, Smith valued stability and order over relief from oppression and was against the idea of revolution. Marx argued that the best economic and political model is one that involves cumulative production, ownership, and planning in order to distribute wealth equitably and overcome

the disparity between the proletariat and bourgeoisie. Smith, on the other hand, focused on how individuals could benefit economically from their efforts and contribute to aggregate wealth in a free market economy where they can freely spend and earn.

Marx's philosophy on capitalism is characterized by a society marked by inequality and class division. He believed that individuals' social standing is predetermined at birth, with the proletariat remaining in their social class while the bourgeoisie continuously benefit at their expense (Pantland, 2014). Additionally, Marx argued that the working class would always strive to maximize profit by keeping wages low, resulting in a never-ending cycle of poverty from which they cannot break free.

Though Carl Marx and Adam Smith had differing political ideologies, their economic theories were similar. Both firmly embraced the labor theory of value, which posited that when labor hours are invested in a product, it generates value that determines its worth. However, this theory was later challenged as it became clear that a product can only possess value when there is a valuer. The customer's perception of value is what ultimately confers worth upon a product.

Facebook Inc.

Facebook, one of today's most popular social networking sites, was founded in 2004 by Mark Zuckerberg, Chris Hughes, Dustin Moskovitz, and Eduardo Saverin, who were students at Harvard University at the time. The website initially started as a platform for Harvard students, but later expanded to other universities in Boston, the United States, and Canada. In 2005, Facebook.com became functional and by 2006, it extended its reach to individuals with email addresses. Today, Facebook remains free to join and generates profits through advertisements. The site continues to evolve, allowing

users to connect with friends, play games like scrabble and graffiti, and even post classified ads.

Facebook, the most commonly accessed Social Networking Site worldwide, is currently utilized by approximately 37.5% of all internet users on a daily basis (Phillips, 2007). This means that there are approximately 754 million Facebook users across the globe. Statistical data reveals that the company generated revenues of around $US 1000 million in 2014 (Phillips, 2007). It is projected that by 2020, the company's revenues will exceed 1 billion US dollars. Due to its immense popularity, Facebook retains a strong position in both the social networking industry and the online advertising market. Its widespread appeal can be attributed to its robust brand image, which provides it with the largest customer base and brings about beneficial externalities. Hence, Facebook competes successfully in the market by maintaining its allure and leveraging its competitive advantage within the online advertising market.

The company is experiencing continuous growth due to the available opportunities in the global social media business. To expand beyond its core advertising and social media services, Facebook Inc. is taking various steps such as acquiring Oculus VR, a virtual technology that enhances the company's social networking offerings (Jurgenson, 2011). This diversification strategy not only reduces business risk but also generates additional sources of revenue, contributing to the company's ongoing growth. Furthermore, Facebook Inc. is committed to conducting research and development activities aimed at combating cyber crimes that target users (Phillips, 2007).

Analysis of Facebook from the perspective of Karl Marx's philosophy.

Carl Marx's labor theory encompasses the economic and political framework that incorporates the combined aspects of production, ownership, and planning to ensure the equitable distribution

of wealth and eliminate the divide between the working class (proletariat) and the capitalist class (bourgeoisie). Consequently, Marx's philosophy on capitalism is intricately linked to an inherently unequal society characterized by class divisions.

The value of goods in the capitalist system is determined by the labor involved, leading to profits for capitalists through exploitation. This occurs because the capitalist system inherently disadvantages the proletariat while benefiting the bourgeoisie, creating a problematic situation where only the rich benefit and the poor are exploited.

The introduction of new Apps in Facebook Inc. is changing the norms surrounding privacy and services. Over time, Facebook users will share new and diverse types of information. Since Facebook relies on its users sharing information, it utilizes their personal data to attract advertisers who can target their ads more effectively. For instance, by changing your relationship status to engaged, you quickly become a target for wedding-related ads (Jurgenson, 2011). As a result, Facebook treats its users' data as a commodity, often leaving them feeling manipulated. It's as if Facebook is attempting to sell something by capitalizing on users' connections. In this sense, it functions like a parasite that exploits users' relationship statuses to promote products and map their ideas and connections within society through the pages they like.

As one of the largest databases ever created, people willingly add their personal information. The access that spies in GCHQ and NSA have to our personal information means that users of the database inadvertently assist these agencies in their surveillance efforts by reporting and monitoring themselves and their friends (Pantland, 2014). According to Carl Marx's theory that exploitation occurs when individuals are not fully compensated for their

labor, our sharing of personal data is what makes Facebook Inc. valuable, contributing to its current valuation of $84 billion (Daniels, 2016). Facebook actively works to decrease the value of our information in order to maximize its own profits. Consequently, Facebook users receive no compensation for their contributions.

Facebook asks its users to translate the site into different languages for free because they want to have a global presence. They crowdsource the translation to their users, like Valentin Macias, a 29-year-old woman from California who volunteered for a non-profit Internet encyclopedia but declined to do so for Facebook (Daniels, 2016). It is important to note that people should not be deceived into donating their time and energy to a multimillion dollar company without compensation. According to Carl Marx, the proletariat always seeks to maximize their profit by keeping wages for the working class as low as possible, which results in trapping them in a cycle of poverty they cannot escape. Marxism advocates for equality and predicts that as capitalism grows, more change will occur.

Hence, Facebook users are often exploited as they do not receive any financial compensation for using the site, such as for socializing and self-expression. It could be argued that social attention and personal connection act as a different form of currency, one which Carl Marx did not fully consider. Nevertheless, there are opposing views stating that Marx's theory does not directly apply to Facebook Inc. because he did acknowledge that workers were compensated, although the monetary value of this compensation did not match their true value to the employer.

Facebook Analysis influenced by Adam Smith Philosophy

Adam Smith introduced the concept of the Invisible hand,

which refers to the unintended positive consequences of individual actions. This idea comes into play when individuals pursue their own interests or passions, which can have an impact on the entire community. In today's society, actions performed on Facebook are part of the collective efforts that aim to enhance and create new outcomes for the benefit of everyone. The more people utilize, engage, and exchange through Facebook, the greater the overall improvement. Reflecting on Adam Smith's philosophy, the focus primarily revolves around the interconnected nature of the economy. Adam Smith proposed that individuals should seek to maximize their own benefits. As a result, consumers make purchases based on the value they derive from goods, while producers sell goods based on their production costs. This ideal economic scenario ensures that there is no deficit or surplus in demand or supply, as markets continuously remain in equilibrium and both producers and consumers experience maximized benefits (Ross, 2015). The Invisible hand guides and regulates the economy, with the government playing a limited role in such an economic system.

According to the concept of the Invisible Hand, Facebook operates without a controlling force determining whom users connect with or what they share. There is also no visible hand guiding the company in deciding which apps to develop for business growth and additional revenue. Both the company and the users function within a command-style economy. Facebook aims to enhance its services through the creation of new apps and advertisements, and it is the users who determine what offerings the company provides based on their preferences. This influences their decision to continue using or abandon the site. Additionally, users are impacted by

the invisible hand when they engage in competitive bidding for various services provided by Facebook, such as choosing which personal information to disclose. The company competes with other platforms to organize its services profitably. Consequently, the economy is restructured to maximize efficiency. Therefore, there exists an invisible hand that determines user activity on the site, as no government dictates this. It is the invisible hand of users that attracted advertisers to utilize Facebook and made it more viable globally, without any external directive (Daniels, 2016).Facebook is an influential platform that enables communication, consumption, and connection among individuals. It possesses the crucial quality of the invisible hand, making it essential for everyday activities. The invisible hand aspect also drives technological progress through Facebook. As the platform advances, its users become increasingly aware of its silent influence and how it shapes global interactions.

Conclusion

The current economy was primarily influenced by the ideas of Karl Marx and Adam Smith. Marx had insights into the workings of the economy and delved into mathematical economics. However, his philosophy on violent communists cast a negative shadow on his study and beliefs. Marx proposed a revolution by the proletariat against the bourgeoisie to achieve equality in society. On the other hand, Smith advocated for peace and stability in an ideal society that would bring about equality among different classes. According to Marx, a perfect economy would distribute resources based on the needs of society and eliminate class distinctions, which is not possible in a capitalist society. The teachings of Marx and Smith on economic theories are now employed, respected, and taught in modern economic systems.

According to the philosophy of Karl Marx, Facebook Inc.

and its users engage in the sharing of various types of information, which attracts advertisers seeking to enhance the targeting of their advertisements. Facebook views the data generated by its users as a commodity that can be sold, resulting in their exploitation, as they are not fully compensated for the value of their labor. Despite contributing to the value of Facebook Inc., users do not receive any financial reward for their use of the site. This aligns with Marxist principles, which emphasize equality and predict that increased capitalism will lead to change. On the other hand, Adam Smith's philosophy of the Invisible Hand suggests that individuals pursuing their own interests or passions can generate improved outcomes that benefit everyone. In terms of economic structure, Facebook operates within a more centralized command-style economy. While Facebook enables communication, consumption, and connection among individuals, its most significant attribute is akin to the concept of the Invisible Hand.

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