Free Trade, Firms and Finance
Introduced| English |
|---|
| laissez-faire capitalism |
| transnational/trænˈsnæʃənl/ |
| stock markets/stɒk ˈmɑːkɪts/ |
| limited-liability corporations/ˈlɪmɪtɪd ˌlaɪəˈbɪlɪti ˌkɔːpəˈreɪʃnz/ |
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...
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.
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.
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.
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.
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.