Mr. Vital Schaap

Topics: Innovation, Capitalism, Industrial Revolution Pages: 13 (2152 words) Published: November 20, 2013
ltd company and self interest

* "it would attract the lowest sort of people"
* ltd could weakened the power of self-interest

Adam Smith: against mercantilism

Lesson 3:

Industrial revolutions

1st industrial revolution: 1780-1830
- Agrarien revolution based on scientific revolution during enlightenment - Use of non-animal/human energy, by way of steam coal

2nd industrial revolution: 1880-1930
- Increased and improved transport and communication
- Railways, telecom, cars
- Enlarged national markets
- People moved from farms to the cities and new cities were born

* Big businesses

- Horizontal and vertical integration
- Managerial capitalism, proffesional leader

3rd industrial revolution: 1970-20??

the great divergence (1500-1800)

Why Great Britain?

- Worlds richest country
- Many capitalists in london
- Coal and iron, canals and harbors

-Rule Britannia - most powerful country

Names to remember:
Alfred Chandler, worked at Harvard. He said that big businesses acted as a visible hand and drove the economy. The Candlerian firrm
- Heavy investments in R&D
- 3M's (Manufacturing, Marketing, Managing)

American big businesses
- merger wave (1897-1904, 4227 firms merged into 257 firms)
- Horizontal and vertical integration
Horizontal integration is buying a competitor (e.g. Statoil buys shell and esso) Vertical integration is buying a supplier

Managerial capitalism
- Owners lost control

3rd Industrial revolution (flexible specialization)
FDI: Foreign Direct investment

1. Digitalization
2. Liberalization
3. Globalization

Short product cycles and unstable markets
Higher unit costs
Lower cost of adjustment and alteration

Shareholder capitalism
- Companies are valued after shareholders value
- The shareholder is the only stakeholder
- Principle-agent theory (- aligning the interest of the manager with the owner) Lesson 4

The emancipatory and civilizing effect of trade and market

- Self interest, markets and trade make rule of law necessary. Capitalists were positive about rule of law because it makes the country more stabile. Lesson 5

5 corporate arguments for Corporate Social responsibility

1. Moral (or ethical)
2. Reputation (or brand image)
3. Social license to operate (or legal)
4. Sustainability
5. Ward off (future) government intervention (Companies want the government to believe that they don't need regulations in the future because they show that they conduct CSR)

Ethical vs. Law

Some people find it better that companies don't need laws and use CRS by itself, others want the government to make laws and companies only focus on making profit.

- Laws cannot address all the topics or issues that businesses may face - Laws reflect the interests, rather than appropriate ethical justifications - Companies often argue opportunistic

Paternalism (A father person leads the society) (Government) before 1st industrial revolution (middle ages) but still exists

- Pater familias -patriarchy - patronize
- Emerged from the manorial economy
- CSR to secure activity employment

In the beginning of the 19th century there were some families who owned companies and start building cities and the company was responsible to build infrastructure, churches, schools etc..

- Noblesse ablige = french for Nobility obligation (Some people were lucky to have companies and have much money and they're responsible for the society) - Business based on Mercantilist privileges (The king gave privileges to some families to allow them to build fabrics and make stuff at some place) - Estate society (The loyalty line was vertical e.g.: General - Soldier)

The 2nd industrial revolution - Stakeholdership

- Formative structures were laid down
- Idea of visible hand is that small companies compete and the best ones survive - Big businesses with many stakeholders
- Big companies needed stable...
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