Glamor Economics

Chapter 54

Chapter 8 Making the Pie of Wealth Bigger and Bigger——Manufacturer Behavior

Section 1 The Most Effective Mode of Economic Activities—Company Enterprises
In the late 18th century, due to the appearance of the steam engine, the industrial revolution occurred. At this time, the production activities were represented by machine production, and the factory system of mass production also came into being.During this period, the wave of technological innovation swept all the handicraft workshops. With the expansion of the scale of the enterprise, the cost of its products continued to decline. The large enterprises gradually drove out their small competitors from the market, thus Reduce unemployed craftsmen to hired workers.In the modern sense, corporate enterprises also emerged.

In the middle of the 19th century, due to the expansion of the market and the advancement of technology, driven by profits, the company embarked on a process of large-scale expansion.In industries requiring huge investment in fixed assets, such as oil, steel, and automobiles, some giant enterprises gradually emerged.Because these giant enterprises often need hundreds of millions of dollars, billions of dollars or even tens of billions of dollars of capital, almost no one can have such a huge amount of money, and even if someone has this huge amount of money, they may not be willing to take such a large risk .A corporate enterprise with limited liability and an efficient management system provides a platform for absorbing large amounts of private capital and diversifying investors' risk.

We know that the company is the inevitable product of the continuous development of the market economy.What are the main types of companies in my country?Article 2 of my country's "Company Law" stipulates: "The company referred to in this law refers to limited liability companies and joint stock limited companies established in China in accordance with this law." That is to say, my country's "Company Law" only stipulates two types of companies: : Limited Liability Company and Limited Liability Company.Regarding the understanding of this legal provision in our country, there is a point of view that: my country's "Company Law" does not recognize other company forms such as unlimited liability companies and limited liability companies; it cannot create other company forms.

In a market economy, why do firms dominate?Simply because it is the most efficient way to conduct economic activity.A company is a legal person that can engage in economic activities.The requirements of a market economy determine that market players must have clearly defined property rights and must be independent and equal.The unique nature of the legal person system makes the legal person play a major role in the market economy.As a form of legal person, the characteristics of the company fully meet the requirements of the market economy, which inevitably makes the company the main body of the market economy; occupies an important position.Compared with other market entities, the company's advantages are as follows:
1.The limited liability of the company's shareholders determines that the shareholders who invest in the company can not only meet the needs of investors to seek benefits, but also limit the risks they bear within a reasonable range, increasing their enthusiasm for investment.

2.Companies, especially joint-stock companies, can publicly issue stocks and bonds to raise funds widely in the society to facilitate the establishment of large-scale enterprises.

3.The company implements the principle of complete separation of ownership and management rights, which improves the company's management level.

4.The company's unique organizational structure maximizes the company's capital and business operations, and better realizes the goals of investors.

5.The form of the company is completely out of personal color, it is a permanent combination of capital, and the personal safety of shareholders does not affect the normal operation of the company.Therefore, the company exists for a long time and has high stability.

The company is a legal person enterprise, and the investor shall bear limited liability limited to the amount of capital contribution. It is an important form in modern enterprise organization. It effectively realizes the separation of ownership and management rights of the investor, and has the advantages of extensive fund raising and limited investment risk. , scientific organizational system and other characteristics, it is typical and representative in the organizational form of modern enterprises.

With the establishment and improvement of my country's socialist market economic system and the acceleration of the process of world economic integration, companies have become the main body of my country's business organization.

[links to related words]

Proprietary enterprises, also known as sole proprietorships, are enterprises funded and operated by individuals.The investor is the owner of the enterprise, who holds all the business management power of the enterprise, exclusively enjoys all the profits of the enterprise, bears all the risks alone, and bears unlimited liability for the debts of the enterprise.A sole proprietorship is not a legal person, and it conducts business with foreign companies solely based on the personal credit of the business owner.Proprietary enterprises are often called "mom-and-pop shops", which is what we often call individual businesses.

A partnership enterprise is an enterprise established jointly by two or more investors.This kind of enterprise generally stipulates the investor's income distribution method and loss liability through the contract.The property of a partnership enterprise is the joint property of the partners and shall be managed and used by the partners in a unified manner.Investors in a partnership enterprise are jointly and severally liable for the debts of the enterprise, and creditors have the right to exercise their creditor's rights against one or more or all of the partners simultaneously or successively, and require them to repay all the debts.

Entrusted operation refers to the behavior that the trustee accepts the entrustment of the principal and conducts the operation and management of the entrusted object according to the pre-specified contract.The connotation of entrusted management is the entrusted agency of the enterprise, which mainly takes the property rights and management rights of the enterprise as the object, and the entrusted party manages the enterprise, with the purpose of continuously developing and expanding the enterprise and improving the profitability of the enterprise.

The most basic condition for entrusted management to be possible is that the owner, the trustee, cannot or does not need to manage the business in person, so as to transfer the management right to the operator, the trustee.For example, in a state-owned or collectively-owned enterprise, the owners are all a group. In order to achieve the purpose of operation, they must transfer their right to operate the enterprise, that is, to the operator.

(End of this chapter)