History of Capitalism - GMGT 1010
GMGT 1010: Capitalism and Management in the 20th/21st Century
Quote
"You have to know the past to understand the present" - Carl Sagan
Key Question
What event do you believe had the biggest impact on business and capitalism between 1900 and now?
Roadmap of Capitalism Evolution
Timeline of Events and Movements:
Early 1900s
Roaring Twenties
Great Depression
World War II
Golden Age of Capitalism
The 1970s
Globalization
Neoliberalism
The Great Recession and its aftermath
Trump and other recent trends
Early 1900s: Technological Breakthroughs
Key Technological Innovations:
Electrical Power
Automobiles
Gasoline engine developed in 1852.
Automobile Industry
Explosion of Manufacturing:
1905: 121 establishments making automobiles.
1923: Increased to 2,471 manufacturing establishments.
Effects of Technology:
Urbanization: Movement from farms to cities.
Increased economic interdependence through specialization.
Shift in nature of work leading to repetitive tasks (e.g., assembly line production).
Mass Production
Key Aspects:
Assembly time for a motor dropped from 600 minutes to 226 minutes in one year.
Economies of Scale: Reduced costs and increased efficiency.
Rise of Big Business:
Increased competition and emergence of large corporations.
Threat of monopolies leading to the introduction of antitrust legislation.
The Classical Era (1910 – 1930)
Definition of Organizing: Ensuring tasks are assigned with a structure that facilitates organizational goals.
Schools of Thought:
Micro Focus: Designing specific jobs.
Macro Focus: How various jobs fit together.
Scientific Management (Taylorism)
Key Figure: Frederick W. Taylor
Methods: Time-and-motion studies.
Administrative Theories: Max Weber's Bureaucracy as a macro approach focused on management.
Features of Ideal Bureaucracy:
Division of labor
Rules and regulations
Hierarchy of authority
Technical qualifications
Impersonality
Noam Chomsky’s View on Division of Labor
Chomsky quotes Adam Smith:
"Division of labor will destroy human beings and turn them into creatures as stupid and ignorant as possible…the government must prevent it from proceeding to its limits."
Summary of the Early 1900s
Impact of Technological Breakthroughs:
Movement to urban centers for factory work; resulting changes in job nature.
Management Approaches:
Emphasis on efficiency through bureaucracy and scientific management.
Issues:
High unemployment, low wages, and lack of labor laws.
Winnipeg General Strike of 1919
Precipitating Factors:
High population returning from WWI.
Influx of European immigrants.
Low wages and high unemployment.
Inflation and rising living costs.
Event:
May 15, 1919: 30,000 workers walked off the job.
Included private and public sector employees.
Resulted in a violent confrontation known as Bloody Saturday.
Outcome:
Strike ended on June 26, 1919.
The Roaring Twenties
Economic Improvement:
Population growth, urban development, low unemployment, rising wages.
Herbert Hoover's quote reflecting optimism in November 1928:
"We in America today are nearer to the final triumph over poverty than ever before."
Stock Market Crash and Great Depression
Financial Collapse:
30 billion dollars of wealth “disappeared.”
GDP reduced by half from 1929 to 1933.
Unemployment rates soared to 25%.
Contributing Causes:
Speculation, weaknesses in agriculture and industry, and income inequality.
Stock Market Boom and Bust
Historical Data:
Showcased by annual New York Stock Exchange sales and corporate issues from 1920 to 1929.
New Deal and Rise of Public Sector
President Franklin D. Roosevelt's Initiatives (1933):
Government interventions introduced to stabilize the economy.
Glass-Steagall Banking Act: Separated commercial and investment banking.
Wagner Act, Social Security Act, Federal Housing Authority, National Recovery Act.
Economic Policies:
Rise of national banks and altered monetary policies.
The Human Era (1930 – 1950)
Focus of Management:
Leading through interpersonal relationships and connection to organizational goals.
The Hawthorne Effect:
Studied by Mayo & Roethlisberger.
Theories of Management:
Job stress (Lillian Gilbreth) and Theory X/Y (Douglas McGregor).
Summary of the Great Depression and New Deal
Transformation of Capitalism:
Shift from laissez-faire capitalism to greater government involvement in the economy.
World War II
Government Role in Economy:
Increase in governmental influence and intervention.
Fiscal Policies Introduced:
Employment Act of 1946 aimed to regulate the economy.
Focus on how to intervene rather than if to intervene, inspired by John Maynard Keynes.
Post-War Economic Expansion
Productivity Boom:
US and Canada experienced significant production capacity increases.
Technological efficiencies led to sustained demand and growth.
Golden Age of Capitalism
Booming Economy (Post-WWII):
Growth in business sectors, tourism, and consumer goods.
Labor Relations:
Cooperation and agreements between workers and management led to rising wages tracking productivity.
Government Spending:
Initiatives such as GI Bill, military spending, and infrastructure projects.
Wages and Productivity Data (1964–2008)
Illustration of Economic Trends:
Graphs showing relative productivity and real income from 1964 to 2008, highlighting economic disparities.
The Calculating Era (1950 – 1970)
Planning Importance:
Identifying organizational goals and developing strategies to achieve them.
Management Methods:
Involvement of management science and operations research.
The End of the Golden Age
Contributing Factors:
Economic challenges in the form of OPEC oil shocks, inflation, and increasing income inequality.
Income Disparities: Data from 1970 showing widening income gaps between workers and CEOs.
Understanding the 70s and OPEC Oil Embargo
Impact of Oil Crisis:
Resulted in significant economic turbulence and shifts.
The Values and Beliefs Era (1970 – 1990)
Management Focus:
Ensuring member actions conform to organizational values (social construction of reality).
Summary of the 1970s
Shifts in Business Power Dynamics:
Struggle of workers and social movements against corporate dominance.
Beginnings of Globalization
Precipitating Factors:
Collapse of the Bretton Woods system leading to flexible exchange rates.
Production and Finance Globalization:
Increased capital mobility, emergence of BRICS, rise of outsourcing.
Trends in International Trade (1972-2010)
Growth Patterns:
Discussion on trade volumes and FDI flows.
Neoliberalism in the 1980s
Definition:
A theory favoring free trade, privatization, and minimal government intervention.
Neoliberal Globalization
Effects on Global Fraternity and Environment:
Highlights on GDP growth, pollution, and the implications of globalization on working conditions and natural resources.
Left-Wing Backlash against Neoliberalism
Emerging Resistance:
Examples of backlash from various political factions against neoliberal policies.
Summary of Neoliberal Globalization
Economic Landscape Changes:
Despite economic growth, wage stagnation and increasing wealth gaps symbolize the crises underlying a successful global economy.
The Great Recession (2008-2009)
Causes of Economic Collapse:
Short-term collapse of the housing market, financial deregulation, significant downturn in trade flows.
Key Issues:
Unemployment rates peaked and government bailouts were executed at unprecedented levels.
Canada’s Resilience During the Crisis
Regulatory Measures:
Strong banking regulations kept Canadian institutions stable, including caps on leverage and higher capital requirements.
Right-Wing Backlash to Globalization and Neoliberalism
Major Political Changes:
Resurgence of nationalist policies and skepticism towards globalization.
The Gig Economy
Impact of New Technologies:
Changing job structures and implications on worker entrepreneurship, labor conditions, and consumer dynamics.
COVID-19 Pandemic
Discussion Points:
How the pandemic reshapes capitalism, government roles, profit motives, and consumer culture.
The Future of Capitalism
Evolving Systems:
Current trends indicate a critical juncture for capitalism in the coming decade.