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Economic Philosophies
Adam Smith and Capitalism:
"The Wealth of Nations" (1776): Adam Smith argued that humans are naturally transactional, supporting capitalism and private entrepreneurship. This work shaped the economics and politics of the industrial age and beyond.
Laissez-Faire Policy: Replaced mercantilism, promoting minimal governmental involvement in commerce and encouraging reduced tariffs on trade.
Transnational Institutions:
Emerging Institutions: Banks like the Hong Kong and Shanghai Banking Corporation (HSBC) and manufacturers like Unilever supported and reflected these economic ideas.
Consumer Goods: Increased trade led to greater availability, affordability, and variety of consumer goods.
Business Organization
Corporations:
Formation: Corporations, chartered by governments as legal entities owned by stockholders, minimized risk for investors.
Stockholders: Could receive dividends from profits but were not liable for losses beyond their initial investment.
Monopolies:
Market Control: Some corporations, like Alfred Krupp’s steel company in Germany and John D. Rockefeller’s oil company in the U.S., became monopolies, eliminating competition.
Transnational Companies:
De Beers Diamonds: Founded by Cecil Rhodes, attempted to connect British colonies in Africa through a railroad, but the project was never completed.
HSBC and Unilever: HSBC focused on finance and global banking, while Unilever, a British and Dutch venture, produced household goods, sourcing raw materials like palm oil from colonies.
Features of Corporations
Four Key Features:
Limited Liability: Capital suppliers are not subject to losses greater than their investment.
Transferability of Shares: Voting rights can be transferred easily between investors.
Juridical Personality: The corporation can sue, be sued, make contracts, and hold property as a legal "person."
Indefinite Duration: The corporation's existence can extend beyond the participation of its founders.
Impact:
Dominance: Corporations dominated many areas of business, gaining significant economic and political power.
Risk Reduction: Investments became safer and more attractive by spreading risk.
Banking and Finance
Insurance:
Marine Insurance: Lloyd’s of London established the insurance industry, reducing financial risk for merchants and entrepreneurs.
Banking Growth:
Deposits and Loans: Banks provided reliable places for deposits and sources of loans, essential for building factories and hiring workers.
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