Free Trade, Firms and Finance
Introduced| English | Meaning |
|---|---|
| laissez-faire capitalism/ˈleɪsez feə ˈkæpɪtəlɪzəm/ | An economic approach favouring private enterprise and market coordination with limited government intervention. |
| transnational/trænˈsnæʃənl/ | transnational |
| stock markets/stɒk ˈmɑːkɪts/ | stock markets |
| limited-liability corporations/ˈlɪmɪtɪd ˌlaɪəˈbɪlɪti ˌkɔːpəˈreɪʃnz/ | limited-liability corporations |
Mercantilism gives way
- Western European countries began abandoning mercantilism and adopting free trade policies, partly in response to the growing acceptance of Adam Smith's theories of laissez-faire capitalism 自由放任资本主义 and free markets.
- Partly is the CED's careful word: ideas mattered, and so did the interests of states that were now the cheapest producers.
- A country that can undersell everyone gains from open markets — the theory and the advantage arrived together.
The CED says free trade was adopted partly in response to Smith's theories, which implies...
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A country that can undersell everyone gains from open markets.
Firms outgrew their countries
- The global nature of trade and production contributed to the proliferation of large-scale transnational 跨国的 businesses that relied on new practices in banking and finance.
- The CED names HSBC — the Hong Kong and Shanghai Banking Corporation — and Unilever, based in England and the Netherlands and operating in British West Africa and the Belgian Congo.
- A transnational firm has operations in several states and is fully governed by none of them.
____ liability means an investor can lose the money they put in and nothing more.
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That single rule is what makes cross-ocean investment rational.
Two financial instruments
- The CED names stock markets 股票市场 and limited-liability corporations 有限责任公司.
- Limited liability means an investor can lose the money they put in and nothing more.
- That single legal rule is what makes it rational for a stranger to fund a mine on another continent — and it is the joint-stock company of unit 4, generalised.
System, ideology, or institution?
Sort each item into the objective's three categories.
Select all the transnational businesses the CED names.
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The Dutch East India Company belongs to unit 4's chartered companies.
"For some" is part of the CED's sentence, not a caveat you may drop. Industrial capitalism raised standards of living for some while increasing the availability, affordability and variety of consumer goods — a claim about goods, not about who got them.
Select all three things the CED says rose for consumer goods.
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It is a claim about goods, not about who got them.
What all of it produced
- The development of industrial capitalism led to increased standards of living for some, and to continued improvement in manufacturing methods that increased the availability, affordability and variety of consumer goods.
- For some is the CED's own qualifier and it is load-bearing — 5.9 will show who was left out.
- Three things rose together: availability, affordability, variety — a claim about goods, not about equality.
Industrial capitalism raised living standards for everyone.
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The CED's own qualifier is for some — 5.9 shows who was left out.
Systems, ideologies and institutions
- The objective names all three, and they map neatly onto this subtopic.
- System: industrial capitalism. Ideology: laissez-faire and free trade. Institution: the transnational firm, the stock market, the limited-liability corporation.
- An answer that gives one of each covers the objective exactly.
Limited liability means an investor in London can put money into a Congo plantation and, if it fails, lose that money and no more. Without the rule, personal ruin is possible and almost nobody invests. With it, capital crosses oceans routinely — one legal sentence, and a global economy becomes financeable.
Western European countries abandoned mercantilism for free trade, partly on Adam Smith's laissez-faire theories. Global trade produced large-scale transnational businesses (HSBC, Unilever) relying on new banking and finance — stock markets and limited-liability corporations. *Industrial capitalism raised living standards for some * and increased goods' availability, affordability and variety.
Write from limited liability
- A new company sold shares.
- If the company failed, a shareholder lost the money paid for the shares and not a whole personal fortune.
What financial rule made that possible?
Capped losses made it easier to fund large firms.
What did a failed limited-liability company cost a shareholder?
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Liability stopped at the investment.