MGMT 1030 Lecture Notes - Merchant Capitalism, Wage Labour, Industrial Revolution
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Study Questions for Fulcher’s “What is Capitalism?” – sept.8
1)What is the overall theme of this article and what is the definition of capitalism?
I think the overall theme comes to the overall growth of capitalism over the years and how vital it is to
the economy. Emphasizes importance of capitalism in all era’s and how growth of society is
interconnected with it. Merchant capitalism led to basic need to earn a profit and thought of investments.
Capitalistc production, grw on that by allowing society to benefit as well. With industrial revolution, lead
to the importance of wage and in turn created a whole leisure market for society to prosper. Finally, now
due to the need for markets in order to buy and sell good, financial markets allow investors to control risk
and loss through speculation. All in all, theme is how capitalism is key factor in the growth of society.
- Growth of capitalism,
Capitalism: system of investing money in order to earn a profit, risk association (risk/reward),
2)What was the East India Company and how did it operate?
Eas India company was a company based on sending fleets to foreign destinations in order to bring back
goods that could be sold at a profit in the homeland. Fleets wee financed by investors and shareholders,
and once goods were sold at a higher price in homeland, profit was distributed to all involved. Later,
began to reduce its risks by sending out more than one voyages in case a ship did not return.- had
monopoly in market, manipulated market,
3)Was merchant capitalism governed by principles of the free market?
No. Merchants manipulated the market by stocking up on products in order to drive prices up and then
sell for later at higher prices. Free and fair competition didn’t occur. Also used to drive out foreign
competition, by flooding foreign markets with their excess resources. In addition, merchants relied on
monopolistic business practices, as royal favour influenced a merhcants ability to earn a profit. Rather
than competing with merchants within own country, competition was interational, country vs. country.
Therefore, in each country there was always one large firm that held a large/monopolistic hold over the
countrys market; there is gov. intervention from the state,
4)What were the industrial capitalist activities of James M’Connel and John Kennedy in the cotton
They invested capital in order to create own cotton mill, and as it grew with the industry they made a
significant profit. However, due to popularity of industry profits they got involved with certain capitalistic
activities such as investing in larger and more advanced machinery, trying to reduce labour costs with
child labour, and increasing effiencey by driving a disciplined work force. (Child labour)
5)How did the rise of the factory system impact workers in Britain during the eighteenth and
Due to the factory system, skilled workers were replaced with cheap and less skilled labour that needed
only to operate the machinery. Due to need to maintain profit, were subject to continuous and hard work
with little leisure time. Unable to fight for their rights as unions were attacked by both the employer and
the state. Either suffered corportal punishment, threat of dismissal, or fines.SIgnifance aout time, fought
for, standardized, ….leisure time became to monetize,
6)What activities did Nick Leeson engage in and how did they lead to the collapse of Baring
Nick Leeson took part in “casino capitalism” with the purchase of futures for purely speculative reasons
believing price changes would come out in his favour. Lead to collapse of Baring Brothers as he
continued to buy futures, and would come out with a loss and he would hide his losses in a special
account 88888. It hit a catalyst with the collapse of the Nikkei aftr the Kobe earthquake, the avlues of his
derivatives were too great to make up for. In the end, his losses were more than the capital of Barrings
Brothers and since both the bank and Barrings Securities joined together, financial loss of Barrings
Securities was also the Bank’s loss. Managers are not experiences with knowledge and technical stuff to
know about financial trading, Leesons bosses didn’t understand what he was doing so couldn even stop if
they wanted to
- Leeson was “rogue trader” but that doesn’t stop casino capitalism,
7)What are the three primary components of capitalism, according to Fulcher?
Merchant Capitalism: has little impact on society, and used by merchants who use voyages nd
shipments of goods to manipulate the market and earn a profit. Does not fall under free market
capitalism due to its manipulation, lack of competition, and fair trade.
Capitalistic Production: Along with industrial revolution, it incorporated capitalistic production
and left a huge impact on society. Due to the strength and importance of labour, work and leisure
were distinctly separated leading to new laws, and the creation of a leisure market that society
paid for by the very capitalistic enterprises they worked for. This worked because ‘people did not
consume what they produced or produced what they consumed’.
Financial Capitalism: The financial markets created and manipulated by buyers and sellers in
order to control and reduce risk when investing capital. Also used to make quick profit off captal.
Incorporates act of speculating to reduce risk. Includes purchasing of futures, derivatives, and
1)investment of money to make money
2)Production depends on exploitation of wage labour
3) Market flucations as a whole
Study questions for fulcher"s what is capitalism? sept. 8. I think the overall theme comes to the overall growth of capitalism over the years and how vital it is to the economy. Emphasizes importance of capitalism in all era"s and how growth of society is interconnected with it. Merchant capitalism led to basic need to earn a profit and thought of investments. Capitalistc production, grw on that by allowing society to benefit as well. With industrial revolution, lead to the importance of wage and in turn created a whole leisure market for society to prosper. Finally, now due to the need for markets in order to buy and sell good, financial markets allow investors to control risk and loss through speculation. All in all, theme is how capitalism is key factor in the growth of society. Capitalism: system of investing money in order to earn a profit, risk association (risk/reward),