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Lecture 1:
3 main perspectives:
Neo classical theory:
The representative firm= a model firm not necessity in existence, which as an abstract construction is used to illustrate the operations of a markets as a whole, transforms input in output and maximizes profits given prices and technology
Under perfect competition, the producers are price takers. First marginal cost decline (specialization) but they increase after time (called the law of diminishing marginal returns)
New institutional theory:
Asks why firms exist and why not leave all transactions to the market
The firm is hierarchical and the market is voluntary
But the market is not frictionless:
The firm (is costly as well) reduces transaction cost:
The size of the firm is determined by the marginal costs of hierarchical transactions (Inefficiencies) and marginal cost of market transactions (frictions). But also by technology
The entrepreneur:
Where does technology come from, beyond determinism, change come from within (the top) of the firm. The entrepreneur is the agent of technological change
Technology can broadly be defined as new consumer’s goods, new methods of production and transport, new markets and new forms of organization. The entrepreneur is motivated by monopolistic profit. Creative destruction is the essential fact of capitalism
Proto industry:
Putting-out systems/cottage industry
The merchant entreprenourer uses a network of households:
Craft guilds:
The industrial revolution made sure that economic growth was possible, besides that there is a demographic transition, firstly the death rate declines and then the birth rate declined. After wars the death rate increases for a short amount of time and after the 2nd WW, the birth rate went up for a little time as well.
There was also a structural transformation, people working in the agricultural sector declined an in the industrial and services increased
But wat is the industrial revolution:
Industrial revolutions are sharp transitions in technological paradigms, clusters of interventions and associated with new general purpose technology. There was a steam and first industrial revolution, electricity and second industrial revolution and a ict and third industrial revolution.
After the first industrial revolution more steam energy was used and so the total energy increased
New technologies during industrial revolution, advanced spinning wheel (more cotton was produced) and the steam machine
Coal and industrial location:
At first the steam engines were driven by water, so the steam engine was placed by water. Therefore the steam engine was dependent on water and workers. When this does not have to be the case anymore, firms can move outside the side to suitable locatons near coal. New urban cities were created, but now the firm depended on coal.
The factory timeline:
Early 1700: few big factories employeed 300-800 people, almost all work done at home or next to it
1800-1900:900 cotton spinning factories, but only with 300 peopke
1830s: between 400-500 workers
1914: most of the people did not work from home anymore
Benefits of factory system:
Downsize of the factories:
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benefits vs downsize sanderP contributed on 30-11-2020 16:59
Seems like most benefits are for the employer and the negative aspects of factories for the workers. I would say that working in a more structured work environment also benefits the worker. Work/leisure is more separated - competition favours the best workers.
What would you define as a factory Luc Berger contributed on 13-12-2021 23:34
Hey Aline, I read your summary and I was wondering what defined a factory in the early 1700s and for what kind of manufacturing these were used. Do you know any good articles about the rise of factories and how they looked before the introduction of the steam engine? Thanks for this very clear introduction to the history of businesses.
Dear Luc, alinehooiveld@g... contributed on 15-01-2022 14:57
Dear Luc,
A factory in the 1700s was defined by this: few big factories employeed 300-800 people, almost all work done at home or next to it. Actually only the easy thins were done, like stuff that involves cotton or wood.
I unfortunatly do not know good artivles, but for how they looked like, I would google this for images
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