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Lecture

BUS 100 Lecture Notes - Nick Leeson, List Of Indian Spices, Mercantilism


Department
Business
Course Code
BUS 100
Professor
Louis Pike

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Outline of James Fulcher’s “What is Capitalism?”, in Fulcher, Capitalism: A
Very Short Introduction (Oxford, 2004), pp. 1-18
Fulcher defines capitalism as the investment of money or resources by
individuals or business entities in the expectation of making a profit and
examines three types of capitalism that have emerged over the past
four centuries
1)Merchant Capitalism
East India Company used as the example, with the first Company
voyage in 1601
Traded internationally and manipulated the market, which made it
difficult for competitors to enter the market
They send ships to the east indies to trade gold for spices, and as
the market became larger in demand, diversity of spices were in
need.
Highly unstable trade in Indian spices with voyages either ending
in disaster or returning with a fortune in cargo
You were at risk of being killed, also you would face the
dangers of the weather which made it a risky voyage
company since it wasn’t 100% success rate.
EIC granted a monopoly by the British monarchy in return
for customs duties
This was not free market capitalism, since the monopoly
was the preserve of a select few and most of the English
population was unaffected by the activities of merchant
capitalists
Not comparable to modern society because in modern
capitalism you have the ability to create free trade
and have numerous options

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The company was a monopoly because it had the
power to control prices and set its own trends within
the market.
2)Industrial Capitalism
M’Connel and Kennedy cotton firm used as the example
Cotton industry was keenly competitive and relied on wage labour
Was not a monopoly because if you had capital or cotton mills
then you had the power to enter the market
Children were essential because they offered employers cheap
wages, and had the small hands needed to operate a textile
company
Exploitative conditions and rigid, monotonous working conditions
But industrial capitalism also regularized the working routine of
workers and created the concept of leisure
Sports and tourism blossoms due to leisure and ability to
spend money.
3)Financial Capitalism
Nick Leeson used as the example, with this single individual using
unethical methods and modern technology to bankrupt the Barings
Brothers bank
Financial capitalism the ultimate form of capitalism and relies on global
integration of stock markets
Computers become a breakthrough

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Fulcher concludes by emphasizing three major features of capitalism:
1)capital is money that is invested to make more money, with the whole
economy becoming dependent on this investment; 2)capitalist
production is based on wage labour, which promotes consumption
increases throughout the economy; and 3)markets are essential in
modern capitalism and consumption and production are divorced in
capitalists systems
Outline of McCraw and Tedlow, “Henry Ford, Alfred Sloan, and the Three
Phases of Marketing”, in McCraw, ed., Creating Modern Capitalism (HUP,
1997), pp. 266-300
McCraw and Tedlow examine the progress of the automobile industry
through three phases of marketing and examine how the Ford Motor
Company and General Motors were able to dominate the last two phases
US automobile market boomed for three reasons: 1)population growth;
2)consumer wealth; 3)product price declines
Three phases of marketing in the automobile industry
1)Fragmentation—274 small car companies in 1909 producing high-
priced, unreliable products
2)Unification—one major company (Ford) perfects high-volume
production processes and builds low-priced cars available across the
country
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