Introduction to Business
The History of 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 18th – early 19th 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 19th and early 20th 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
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