The History of Business Introduction to Business

Feudalism Definition The business or economic system in which one class of people (aristocrats) control the property rights to all valuable resources, including people Lasted throughout the Middle Ages (A.D. 500 – 1500) Based on property rights The claims by people to own, use, and sell the rights to valuable resources Earliest times based on brute force In most societies, ordinary, land-less people had no property rights; they themselves were simply resource owned by the estate as laborers and slaves in bondage In Russia, the slaves who worked the estates were called serfs On large estates, there might be 100,000 serfs whose rights were determined at the whim of the land owner

Mercantilism Definition Business or economic system in which merchants and bankers organize the trade of products across markets and countries until they are put to their most valued use Merchants are traders who notice a discrepancy between the value and price of a product in one market and its value and price in another; they recognize the opportunity to profit from the price difference Merchants borrowed money to purchase products in a market where they were plentiful, and then transport them to another market where they can be sold at a higher price History Lesson: The attempt by British merchants to artificially control the price of tea led to what famous event?

The Growth of Enterprise The growing supply of profits and capital through mercantilism (brought about by combining land, labor, and trade) led to a rapid increase in the productive resource known as enterprise This brought about the advent of bankers The people who estimate the risks associated with a new venture and determine the way profits from a venture should be shared Promote enterprise

Craft Guilds and Occupational Specialization At the time of the signing of the Magna Carta, major changes were taking place in the world of business Craftspeople began to spring up Workers or artisans with the skills to produce higher-quality goods and services Craft guilds were formed to protect the property and wealth of these craftspeople These guilds were a group of skilled artisans organized to control and govern different aspects of a trade

The Industrial Revolution Technology led to the next major change in business systems Late 18 th – early 19 th century saw the advent of the Industrial Revolution Marked by improved production and trade brought about by advances in technology The crucial event of the Industrial Revolution was the invention of the steam engine

Capitalism and the Modern Class System Capitalism is the economic or business system in which private ownership of resources becomes the basis for the production and distribution of goods and services Capitalists are the people who personally own or control the physical capital of industrial production such as machinery, factories, distribution networks, raw materials, and technology Today the term capitalist carries a negative overtones because of the actions of industrialists on the late 19 th and early 20 th century who ruthlessly pursued their own self-interests at the expense of others

Internet Exercise Each of the three main kinds of business systems – feudalism, mercantilism, and capitalism – is associated with a particular ethical or moral position; for example the rights workers should have relative to the owners of land and capital. 10 minutes – research one of the three business systems and find at least one other ethical or moral position