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Lecture

WHAT IS CAPITALISM.doc

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Department
Sociology
Course
SOC 202
Professor
Louis Pike
Semester
Fall

Description
WHAT IS CAPITALISMSHINDUcapitalism is essentially the investment of money in the expectation of making a profit and huge profits could be made at some considerable risk by longdistance trading ventures of this kindprofit was the result of scarcity and distancelarge amount of capital needed for the trade of spices and other productsEast Indianman ships of the East India company were named this they were armed with a cannon to ward off the Dutch and Portuguese There were at least 280 people on the third expedition needed enough sailors to get back after hazards of the expedition had taken their tollMost of the capital of East India Company was obtained from rich London merchants some came from Aristocrats and some from Dutch merchants who were not allowed to invest in the Dutch East Indies CompanyEach of the first 12 voyages were financed separately which brought some risk and uncertaintyThe company sifted to a method of finance that spread risks over a number of voyages and then became a fully fledged jointstock company with after 1657 continuous investment unrelated to specific voyages stocks started to being traded on London Stock Exchange by 1688Had monopolistic practices within England that allowed them to reduce risk govt gained from duties on imports etcMarkets were manipulated by buying up on all these goods and holding back sales Dutch had warehousesIt was not free market capitalism as the secret of making high profits was to secure monopolies by one means or another exclude competitors and control markets in every way possible the impact of merchant capitalism on society was minimal as gains were made through trading of scarce products rather than rationalizing production1780stwo Scots James MConnel and John Kennedy traveled to the south and became apprentices in the Lancashire cotton industry after gaining exp They set up their own firm in 1795 with 1770 poundsCapital had grown from 20000 pounds in 1800 to 80000 pounds in 1810 established as the lead cotton spinner in ManchesterHowever it became a competitive industry as high profits brought in new entrants and profits could not be sustained The costs of high investment in buildings and machinery as well as downward pressure of increased productive capacity on yarn prices depressed the industrys profitability to low levels in 1830sProfit depended on the labour force for the two Scots company the labour force grew by fivefold to 1500 by 1830s much of these were child labourWages were main expense for the companyThey were minimized by replacing craft workers with less skilled and cheaper labour because of automatic machineryInability in the industry led employers to reduce wages and working hoursUnions started to be organized because of this and there were strikes in 1810 1818 1830 but were defeated by the employers with the help of the state company created associations to blacklist union militants answer strikes with lockouts and provide mutual financial supportMachinery had to be persistently used to reduce costsCotton mills had trouble hiring workers as people did like close supervision and long shifts such as fines and threat ofUsed crude and negative sanctionsdismissal but developed more moral ways of punishmentCurfew that required everyone inside by 1030pm in the winterTime became a battleground as employers put clocks forward in the morning and back at nightIndustrial capitalism not only created work it also created leisure in the modern sense of the termSeparation of work and leisure There was a development of the entertainment industry and established holidaysNick Leeson hid the losses that had incurred from his bosses He continued to invest in futures and derivates derive their value from something else such as shares bonds currencies or commoditieshid these losses in the special error account no 88888 it allowed Leeson to gamble with Barings money built his reputation by taking risks and trading aggressively on the futures markets since any losses could be hiddeneventually his losses accumulated to the point where they could not concealed by switching money aroundHe plunged into selling options which could raise immediate money to cover monthly shortfalls in account 88888After all his investment the losses he accumulated was greater than the total capital of BaringsBarings allowed Leeson to be a trader and the manager of the Singapore back officewhich checked the trades and balance the books big mistakeThe mainelements of capitalism are merchant capitalism accumulation of profits capitalist production huge impact on society changing every aspect of it and financial capitalism various vehicles futures options etc that try to reduce the risksMain elements of capitalisminvestment wage labour and dependence on the marketCapitalist production stimulated more capitalist enterprises like steel and iron industries Some elements of capitalism are capital labour and markets Capital and labour become mobileFinancial capitalism is useful and gives the investor some security However he depicts that there is a lot of risk and insecurity in the financial market High risk the attempt to control and much more economic instability and a lot more speculation futures etcStudy Questions for Fulchers What is Capitalism 1What is the overall theme of this article and what is the definition of capitalismRisk is an important element that was emphasized in the article about capitalism Capitalism is investing to make a profit The articles overall theme is about capitalism and how it developed in history Capitalism is essentially the investment of money in the expectation of making a profit and huge profits could be made at some considerable risk by longdistance trading ventures of this kind2What was the East India Company and how did it operateThe East India Company is a company that is involved in the trade of pepper and other spices They got state approval to have a monopoly They stockpiled and flooded the market and had huge warehouses
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