what in general allows for the emergence of vigorous commerce?
Littleton
� Population growth
� Abundant supply
What are the specific material and linguistic requirements of the emergence of double entry bookkeeping?
Littleton
A Material (something which needs to be reworked)
Private property (power to change ownership)
Capital (wealth productively employed)
Commerce (interchange of goods, traders who bring desirable goods)
Credit (present use of future goods, delayed
Explain why accounting emerged, when it did, in northern Italy.
Littleton
� The cities were ready when their services were needed for transport and supplies for the Crusades.
� More importantly, when the Crusaders returned, they wanted things from the luxurious East and set about developing goods to trade.
What is double entry bookkeeping?
Pacioli
� Debit & credit into different accounts
According to Pacioli, what are the requirements of business?
� Cash
� Mathematical skills
� Systematic way to arrange/represent transactions
What are the four main elements of a good record keeping system for business?
Pacioli
� Inventory of assets
What you have
Most liquid listed first
� Record of Transactions
Chronological record of all transactions
� Journal
Chronological records of inventory over time
Record of credit and debit for each item
� Ledger
Alphabetical an
What animal should the merchant emulate and why?
Pacioli
� A rooster, which is the most alert animal, who keeps his night vigils and never rests
According to Saikaku's character Fuji-ichi, what traits should a business person have, if he or she wishes to do well financially?
� Frugality, attention to details and little things, never pay more than you have to
o What was the point of the story about the young men who visited Fuji-ichi?
� Don't waste money in entertaining, keep track of little details
What is "casting up shop" and why is it important?
Defoe
� Balancing accounts of stock, and profit and loss. It tells whether one is moving backwards or forward in the world. Those who do not do it look like they are afraid of closely examining their affairs.
� Keep track of money coming in and money owed
According to Defoe how should an error in the books be dealt with?
� Track down the error that was made and fix it
What are three reasons to keep perfect acquaintance with one's books?
Defoe
� So customers don't take advantage of you
� Plead case with creditors
� In case of death
Marx: what can money do?
� Give you the power to do anything
What forms has money taken?
� Giant stones
� Salt
Random other stuff
Where was first money used?
Lydia
Whose name do we invoke for someone who is rich?
Coresus
How is paper money made, why is it like alchemy?
Marco Polo
� Strip bark, pound pulp, print money
� Turns something worthless into value
Why are foreign merchants willing to trade with Chinese paper money?
Marco Polo
� Can trade for other things while still in China
o What are crimes associated with money in China?
Marco Polo
� Counterfeiting
� Punishment: death
Why does Polo think Khan has greatest treasure of all rulers?
� He has a way to enforce the value of money and keep it inside the country & keep value constant
What were some of the main products that Polo saw being produced and traded in China?
� Silk
Tissues, mixed with gold
Scarves
� Cotton
Fish
� Spices
Pepper
Ginger
Something like saffron
� Porcelain
Tax on the production and sale of which product in particular brought much revenue to the emperor?
Polo
Salt
What countries does Polo mention as international trading partners of China?
� India, Alexandria (Egypt)
What are the three components of profits, according to Mill?
� Abstinence (from using money)/Interest
Delayed consumption
� Risk/insurance
Varies by social stability and legal authority
� Management (salary)
Varies with knowledge, skill, effort
How does Mill define profit?
surplus of expenses of production compared to disposal of what is produced
How can these three components be apportioned to different people?
Mill
� Capital may be borrowed (bank)
� "sleeping partners" may get a share of profits
� Capital supplied by one person while managed by another
� One person can finance and run
What are the three components to the cost of labor?
Mill
� Labor is the source of value
� Wages (real reward of the laborer)
� Efficiency
� Cost of reproducing labor
Sustenance for workers (food)
Why does Mill think that there is a natural or necessary minimum to the rate of profits and why does this minimum vary from time to time and place to place?
� People only do things because they know they can profit
� It depends on desire of accumulation, which varies (with risk) in differing societies and times (China, medieval times)
� Some societies value consumption over savings more than others
What assumptions lie behind Mill's claim that the expectations of profit from various alternative ventures are generally equal?
� Same except for
risk
agreeableness of employments,
natural or artificial monopolies,
managerial skill
Mill uses the word "equilibrium;" what does he mean?
� Everything balances out; like a pendulum
� Free floating capital is unconstrained in where it goes, equalizes
� Pendulum motion
Why might reaching equilibrium sometimes be a rather slow process?
� Labor takes time and re-education
� It takes time to change the movement of the pendulum
What are the conditions under which Jews were allowed to lend money at interest?
Maimonedes
� When lending to heathens and alien residents
If interest was wrongly charged, what could be done about it?
Maimonedes
� Recoverable in court, except if the lender has died
Could a gift legally substitute for money paid as interest?
Maimonedes
� Gifts are like money paid as interest, prohibited
What possibilities do all partners to a business have to accept under Jewish economic laws?
Maimonedes
� Share in gains and losses, unless doing trade for orphans
Under what circumstances, if any, does Aquinas think it is acceptable to receive or pay interest on borrowed money?
� If they are going to sin anyway, but never really acceptable
Can gifts or other benefits substitute for money paid as interest when interest itself is not legitimate?
No (Aquinas)
What important other earlier works does Aquinas draw upon in developing and justifying his views?
� The Bible (New & Old Testament), Aristotle's Ethic
o According to Bacon, do riches tend to facilitate or to hinder virtue?
� Hinder
What are the ways to become wealthy, according to Bacon?
� Parsimony (frugality)
Can lead to lack of generosity
� Agriculture & husbandry
But it's slow
� Trades/vocations
Especially invention and monopoly
� But always looking for bargains is debasing
� Personal service
But creates sycophants
� Inheritance
But m
Rate of interest
Bacon: 5
Franklin: 6
Which way of making money is least admirable?
Bacon
� Usury
Making something out of nothing
Breaks Sabbath
What are the seven ways in which lending money at interest hurts a society?
Bacon
� Money would be otherwise invested more productively
� Imposes costs and distractions so effort is redirected
� Tax collections lowered due to lowered economic activity
� Wealth concentrated with bankers
� Land prices decline because money taken ou
What are the three ways in which lending at interest is useful for a society?
Bacon
� Helps set up new businesses
� Keeps bad markets from making people sell everything at a loss
� It makes people willing to lend money, facilitates economy
How much should a lender expect to lose in bad debts?
Franklin
5%
What are Franklin's ways to wealth?
� Self-reliance
� Industry
� Frugality
� Grace
For what purpose is it a good idea to borrow?
Starting a business
Finance
o Management of money in terms of time & risk
o Time value of money
� Now worth more than later
o Cash flows, where to invest & raise capital
o What is money?
� Stores value, provides means of exchange
Who are the bulls and bears?
De La Vega
� Bulls
"lovers"
Start operations by purhcase
Desire rise in price of shares
� Bears
Strive to "exhaust the mine"
Always begin operations with sales
What emotions are expressed by the bulls?
� Fear
� Trepidation
� Nervousness
What emotions are expressed by the bulls?
� Enthusiasm
� Fearlessness
Are either bulls or bears realistic in their assessments of market opportunities and risks?
No, bulls are overly optimistic and bears pessimistic
How does Keynes suggest that the convention of thinking that the current value of an investment is correct is related to the expectation of relatively slow change in the value of that investment?
� It lies in assuming that the existing state of affairs will continue indefinitely.
Why does relatively slow change depend, in turn, on the maintenance of that convention?
Keynes
� People don't buy and sell constantly, so investment values remain relatively constant
What is an efficient market?
� One in which the price of everything contains in it all of the knowledge about it.
What led to the increase in prices of Dutch tulips in the 17th century?
Mackay
� They were sought after by the wealthy, and became increasingly popular among the masses
� They were kept for the admiration they brought
� People became attached to them because they were hard to keep alive
Who shared the enthusiasm for tulips within Dutch society?
Mackay
� Everyone, rich and poor
What led to the eventual decline in tulip prices?
Mackay
� Rich people began to sell the tulips for cash, and it was realized that someone would lose money in the end. This led to a sell-off
Were the government's responses effective in dealing with this decline?
Mackay
No
Who, if anyone, got to keep the money from the sale of tulips at high prices?
Mackay
� Those who had sold before prices fell
What is Darwin's concept of survival of the fittest?
� Best adapted to environment will survive and pass their traits on to offspring
Difference between natural and artificial selection
� Darwin vs. Lobster & squid (Dreiser)
How might survival of the fittest apply to business?
� The business that has the most desirable differences from other businesses will survive and thrive
What is the role of "extremely slight modifications" in biology and in business?
� In both, they make or break the life of the thing or the success of the business
What constitutes the environment for contemporary business?
� Competition, supply & demand
Why is Frank Cowperwood so surprised by how society is organized?
Dreiser
� Things live on each other
How is life in the tank that contains the squid and the lobster organized?
Dreiser
Things lived on each other. Lobsters lived on squids
Is the organization of the tank natural?
Dreiser
� No, it is contrived
In what way did seeing this scene played out help clarify the order of things for Frank?
Dreiser
� He sees that everything lives on something else. There is a chain, at the top of which are rich men.
� Wants to be like the lobster, not the squid
What does Cicero think a wise person would do with the power of the Ring of Gyges?
� He would not do wrong, for good men seek what is right.
What does Cicero think of the relationship between what is morally right and what is expedient?
� We should resist the specious appearance of expediency, including cruelty
How does Cicero characterize competition?
� One should try to win, but not harm others so that they will win.
What is the difference for Cicero between friendship and conspiracy?
� We do everything we can under good conscience for a friend, but if we do something that is wrong for someone, it's a conspiracy.
What does Cicero think is the right course of action for the ship captain who arrives at Rhodes?
� Staying morally right by telling the Rhodians that more grain is on the way
What does Cicero say concealment means?
Trying for your own profit to keep others from finding out something that you know
What is the main issue in each of the four Articles about cheating?
Aquinas
� Selling things for more than they are worth
� Faults in things sold
� Stating defects of things sold
� Making a profit
Does Aquinas think that human law and divine law are the same?
� Human law:
Prohibits by punishment that which is destructive of social relations
Rewards nothing
� Divine law:
Prohibits that which is sinful
Why does Aquinas think that the main principle in pricing an object is to sell it for no more or less than it is truly worth?
� You should buy it for the price you would pay for it
What must someone who unknowingly sells a defective product do?
Aquinas
� Compensate the buyer
o When can a defect be simply ignored by the seller?
Aquinas
When it is an obvious defect
Under what circumstances must a person help another?
Aquinas
� When someone is subject to him (children, employees)
� When he is the only one who can assist them
What four reasons clearly justify profits for Aquinas?
� Upkeep of household
� Assistance of the needy
� Public advantage
� Compensation for labor
What additional five reasons for profit does Aquinas also endorse?
� Improvement of the product
� Transportation of product
� Passage of time
� Risk of transportation
� Risk of contracting another person to move the product
What does Bernays mean when he says that business' relationship to the public includes selling itself to the public?
� Selling the whole company, not just the product
Why does Bernays suggest that mass production requires that business ensure demand by reaching out to the public?
� A factory that can produce lots of a product needs consumers to buy the product.
To whom are public relations efforts directed?
Bernays
� The public as a whole
What is propaganda?
Bernays
� Something that sways public opinion
What does Veblen mean by the "leisure class?
� Owns stuff
� Doesn't have to work hard
What is the first private property, according to Veblen?
� Women
Why do people want to acquire goods, according to Veblen?
� Status enhancement
� Emulate others
� Display
What does Veblen indicate as the more conventional view?
� Conventionally, acquisition is for consumption
What are some examples of vicarious consumption?
� Dressed up servants
� Children spending money
Where do desires originate, for Galbraith?
� From production
� Advertising & salesmanship
What does Galbraith mean by "the dependence effect?
� The way wants depend on the process by which they are satisfied (production)
How does the existence of the dependence effect undermine the usual understanding of production?
Galbraith
� Production has traditionally been thought of as a means of satisfying consumer demands