The historical evolution of the concept of business: mercantilism, capitalism …


In the prevailing economic system, the company is, together with consumers and the State, one of the three agents of economic activity. The company, as a fundamental driver of the economy, has fulfilled various roles throughout history that are worth reviewing in the History of the Economy section of El Blog Salmón.

Although it is now when the company has acquired its most complete meaning, the truth is that this business figure has existed for a long time. We’ll see now its historical evolution, corresponding to the economic systems in force at all times.


Mercantilism

The ages XVII and XVIII they will be remembered as those in which mercantile capitalism was established, which had its main reason for being in commerce as a basic economic activity. In this context the trading company emerged, which was an organized unit that was mainly dedicated to developing international trade.

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Furthermore, it was at this time that banking activity developed strongly, which based its main activity on financing the war campaigns of the powers of the time. The Companies of the Indies are the first commercial companies that are known. Their objective was none other than to trade with territories far removed from Europe, which were opening their doors to the commercial world for the first time.

Industrial capitalism

In the century XIX economic systems were carried away by the effects of the Industrial Revolution that took place during the previous century. This promoted a type of economic activity not as simple as the previous one, but much more complex. In this context the so-called industrial business, which, as its name indicates, were basically engaged in transforming activities, so that most of the companies of the time were factories, whose basic reason for being was to behave as economic units of production.

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The factories assumed a total transformation of the production processes of the time. The work became more mechanical than manual and that brought with it the need for more and more workers in companies. The small artisan workshops gradually disappeared and their activity moved to the factories themselves. The economic growth of companies at this time accelerated and the first large companies were created, as well as monopoly and oligopolistic markets in which one or a few companies shared their total share.

Financial capitalism

From the beginning of the 20th century, production ceased to be the only concern of societies. The growth of companies had been such that for the first time in history the need to differentiate between the figures of the entrepreneur and the owners of capital.

In this context, the company ceases to be exclusively a production unit to become a financial and decision unit. Financial capital arises from the need to find new sources of financing, since companies needed a greater volume of capital to incorporate technological innovations and to achieve market concentration in the hands of large cartels, trusts and corporate holding companies.

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Capital needs brought with them the development of bank credit. In addition, to get the large capital that companies needed to be viable, people were grouped together, thus creating the Public Limited Companies, whose capital was divided into shares that were bought and sold on the stock exchanges

The company today

Today, the role of companies has become much more complex due to phenomena such as globalization or the incessant advance of new information and knowledge technologies. In today’s company, and especially in large ones, the figures of the entrepreneur and the owner of capital are clearly defined.

The current company integrates a set of production factors (natural resources, people and capital), which have to be organized by the employer and directed to obtain business objectives, such as ensuring that a profit is obtained, but without forgetting its social responsibility with the environment that surrounds it and conditions their activity.

The company is not, therefore, an isolated entity, but rather be part of a much more complex environment It is made up of interrelated elements with each other and with the company itself, over which it has little or no influence but which condition its activity. We refer to demographic, technological, legal factors, competitors, intermediaries or financial entities, to name a few examples.

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