New Methods and Business Organizations
New Methods and Business Organizations Mr. Love Chapter 22 Section 3 Capitalism and Changing Production methods The late 1800’s in western Europe and the US were characterized by individual enterprise we know as capitalism. Capitalism – an economic system in which individuals or corporations, rather than governments, control the factors of production. Commercial capitalism (pre IR) v Industrial cap (post IR) CC – merchants bought and sold goods IC – became involved in producing and manufacturing goods. Division of labor and interchangeable parts Factory owners divided the manufacturing process into steps. Hired unskilled labor to do a simple job. Also used machines This greatly increased production and profits for the owner. Eli Whitney used division of labor to make muskets in the late 1700’s. His gun had interchangeable parts. Why have this? The Assembly Line The system of producing large number of identical items is known as mass production. Three things needed for mass production: Division of labor, interchangeable parts and the assembly line. Henry Ford used the assembly line in America to produce a cheaper good. Rise of the Corporation Before the IR, most businesses were very small. During the 1800’s many businesses grew into corporations. Businesses that were owned by stockholders. What are some advantages to corp v private ownership? JP Morgan was a famous founder of US steel. A multi-billion dollar corporation. Rise of the Corporation The large corps caused many small business to fail. Corps had to compete with each other to sell their products. Sometimes corporations dominated an entire industry. These were called monopolies. What is good and bad about a monopoly? Rise of the Corporation By 1900 several giant corps in Germany had combined to control every stage of entire industries. EG) Steel – owned the mines, factories, steel mills. These were known as cartels. Business Cycles Industry began to heavily influence the economies of each nation. No longer is it just how much money a country has in its coffers. Every country has ups and downs in its economy – a pattern called business cycles. The bottom of the down cycle is known as a depression. How can certain industries affect other industries? That’s ALL!