Theories of the Employer: Risk, Control, and Innovation
Item 2: The Employer
Historical Review
In the mid-nineteenth century (when economists were starting to follow and analyze the separable functions of capitalist and entrepreneur) the employer was conceptualized as:
- A man whose ultimate goal is to make money.
- The one who organizes and directs the combined factors of production for products sold in the market.
- The confident and adventurous individual who assumes the “risk” securing a rent to the “undecided” or “shy”.
- An “innovator”.
- A man of action, practical,
The Evolution of the Employer: From Capitalist to Technocrat
The Evolution of the Employer
18th Century: The Capitalist
Adam Smith (1723-1790) described the employer as a capitalist owning the means of production during the Industrial Revolution.
19th Century: The Businessman
Richard Cantillon (1680-1734) viewed the entrepreneur as a businessman who buys means of production and resells at uncertain prices, assuming business risks. Jean-Baptiste Say (1767-1832) believed production value should cover all production costs and ensure profit.
Late 19th Century: The
Read MoreEconomic Activities, Production & Sectors: A Comprehensive Guide
Economic Activities and Production
Definition of Economic Activities
Economic activities are all the processes used to obtain the goods and services that people need.
Production
Production encompasses all the goods and services created as a result of an economic activity.
Distribution
Distribution is the process of moving goods and services from the place of production to the consumer.
Consumption
Consumption includes all the goods and services that people buy to satisfy their wants and needs.
Payment Methods
Read MoreFringe Benefit Tax (FBT) Guide: Calculations, Examples & Compliance in New Zealand
Fringe Benefit Tax (FBT) Guide
Calculating FBT in New Zealand
Understanding FBT Quarters
First Quarter (Q1): January – March (90 or 91 days)
Second Quarter (Q2): April – June (91 days)
Third Quarter (Q3): July – September (92 days)
Fourth Quarter (Q4): October – December (92 days)
FB Value of Free or Discounted Goods/Services
Formula: Market Value (or Cost) – Amount Paid by the Employee
Example: If a product’s price is lower than the retail price or below the manufacturing cost, it’s considered a benefit.
Industrial Evolution and Restructuring in the Late 20th Century
Industrial Problems
1. Business Challenges and New Orientation
The onset of monetary and energy problems had specific dates (see below). However, industrial difficulties became apparent only gradually. With hindsight, these disruptions were already evident in Western economies since the late 1970s. Problems within companies played a crucial role in triggering the late 20th-century economic crisis, representing the difficulties of the post-World War II economic model. Manufacturing output experienced
Read MoreThe Great Depression: Causes, Impacts, and Recovery
The Great Depression: An Overview
The Crisis of 1929
The 1929 crisis, often considered the starting point of the Great Depression, was initially perceived as a short-term financial crisis stemming from overvalued securities. This led to widespread issues in financial institutions, impacting the productive economy in the U.S. and other capitalist nations. Some believe that corrective measures like lowering the price of money and expanding the monetary supply could have mitigated the crisis.
However,
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