Big Business Rise & Globalization Origins: A Deep Dive

Posted on Mar 25, 2025 in History

The Rise of Big Business and Globalization

The Great Entrepreneurs

  • The humble origins of Carnegie (U.S. Steel Corporation) and Rockefeller (Standard Oil Company).
  • The average entrepreneur came from families dedicated to business.
  • The growing number of millionaires and robber barons.
  • Engineers acquired prominence as skilled workers; the leadership of great business men did not rest on inventive or engineering skills but on designing industrial and financial strategies, establishing alliances, etc.
  • Monopolies and oligopolies: the struggles for the control of the railroads in USA.
  • Is competence a self-destructive process?

The Change in Market Structure

  • From the small enterprise to the big business.
  • The emergence of national and global markets.

Two Decisive Factors

  • Mass production, increased output, and low prices.
  • Transport improvements.

The Rise of Big Business

  • Change in Competition.
  • The initial impact of the trend to big business entailed an increasing in competence.
  • But the competence became more expensive because the fixed charges and the barriers of entry grew.
  • So, the price wars were common in order to obtain markets which maintained the level of production (these wars benefited the consumers, but threatened bankruptcy for enterprises).

Limitation of Competition

  • The failure of the voluntary cooperation: trade associations, agreements, pools, and informal treaties.

The Rise of Big Business (cont.)

Trusts, Mergers, and Growth

Trusts
  • Shareholders of different companies gave (voluntarily or under coercion) its shares (and therefore the control of the company) to the board of directors of the trust, in exchange for certificates that assured them the same share of benefits earned before.
  • Trusts were forbidden.
Mergers
  • A corporation buys stock in another corporation and therefore they convert into a new bigger corporation.
  • Two big waves of mergers in USA (1890s and 1920s).
The Importance of Corporation to Economic Growth
  • It exists independently of its owners.
  • It limits the liability of its owners to the value of stock they had bought and protect them against limitless loss.
The Holding Company
The process of internal growth: Ford, General Motors

The Rise of Big Business (cont.)

Threat of Monopoly Capitalism

  • In the late 19th century, some American corporations are more powerful than the states in which they were.

Rise of Anti-Trust Legislation

  • The failed attempts by various states to crack down on trusts.
  • Federal legislation against monopolies.
  • The Sherman Antitrust Act and other subsequent laws.
  • The dissolution of the Standard Oil Trust.
  • Its weakness against the spontaneous internal growth of some big companies.

Imperialism and Explanations of Economic Backwardness

Imperialism

  • The extension of the power and dominion of one nation over others by military coercion or by political and economic compulsion.

Causes and Interpretations of Imperialism

  • Importance of economic factors (Leninist approach).
  • Imperialism as the natural consequence of capitalist logic.
  • Capitalism requires international expansion and trade wars in the long run.
  • Capitalist exploitation is the cause of economic backwardness in poor countries.

Causes and Interpretations of Imperialism (cont.)

  • Importance of ideological factors (liberal-conservative approach).
  • Colonial empires did not yield economic benefits.
  • The main factor was the international prestige and ideologies like nationalism, social darwinism and biological racism.
  • Social Darwinism: mistaken derivations of Darwin’s theory which justified European expansion.

Social Darwinism

  • The natural selection is manifested through the cultural, economic and technical prevalence.
  • Social inequality and economic differences between societies are the result of natural processes.
  • Biological racism: cultural differences, character and behaviour are determined by biological traits.
  • Backwardness is explained by the inability of poor countries to adopt economic institutions and the Western mentality.