Bab 1.

Assumptions About Human Behavior: A Historical Perspective

Feudalism and capitalism

All economic systems are characterized by basic social relations between those who
exercise authority and those who obey it and between those who own the means of
production and those who do not. An examination of the historical development of
these social relations will give us an idea of the underlying assumptions about
human behavior that have characterized business, economics, and accounting.
We will begin by contrasting capitalism with the feudal order that it replaced. This is
extremely relevant because the change from feudalism to capitalism has been the
major change in modern times. All other revolutions pale by comparison. Then, we
will contrast the assumptions about human behavior that characterized the early
stages of capitalism with those of the advanced stages that characterized the
United States and over Western countries in the 1980s.
The Feudal system
By the end of the fifteenth century, a political, social, and economic order was
coming to a close in Europe. Known as feudalism, this socioeconomic order was
defined by a series of social relations based on status derived from lineage and age.
In medieval Europe, a man was a serf or a lord, a merchant into which he was born,
rather than on merit.
Land and labor were not objects of commerce, both were communized in medieval
Europe. Ownership of land passed from a lord to his heir, and trading in real estate
was rare. Serts were part of the estate; they had the right to live on the land and to
work it.
Guilds were unions of artisans. The guild system the center of industrial
production was also steeped in tradition. A man became a carpenter or a
glassblower because that is the work his father did.
Masters elected their own guild government and set their own work rules. They set
wage rates, output standards, and working conditions. They regulated social
conduct and expected guild members to dress in an appropriate manner and to be
involved in civic affairs. In short, guilds were concerned with both the economic and
noneconomic dimensions of life.
The guilds of the Middle Ages wanted to preserve an orderly way of life, so they
regulated behavior at work and in the community. To maintain the status quo, guilds
shunned innovation and technological change. They worked to prevent the
formation of monopolies by sharing techniques and technology. The avoided
competition by limiting entry into the guild and regulating advancement from

apprentice to journeyman t master. The guilds set the terms of sale and expected
their members to adhere to those term. Advertising was prohibited. Guild members,
who owned the means of production, were expected to take pride in their work.
The idea was to maintain ones position in life., rather than to enhance it. There was
not a clear-cut distinction between ones social and economic life. People did not
make a living the work was an end in itself.
The rise of industrial society
The steam engine, invented by James Watt in 1776, could mark the beginning of the
Industrial Revolution and the decline of the guilds. It allowed for the beginning of
the factory system, as opposed to cottage industries where people worked at home.
The steam engine freed people as a source of energy. That is, it enable an energy
source to be established anywhere because it used inanimate energy and could be
moved. Before the steam engine, water, wind, and animals were used as power
sources.
The factory used large numbers of workers who operated machines driven by
inanimate power. Each worker had his or her specific role to play in the
manufacturing process. This was much different than work done by guild members,
who completed an entire job with their own tolls in their own workshop.
The factory relied on the availability of wage laborers free labor class unknown in
medieval Europe. The availability of this labor pool developed over time as the
result of other economic events. One of the more important events was the
enclosure movement in England.
The demand for wool led to the development of sheep farming, which resulted in
the land being enclosed or fenced off for the grazing needs of the animals. These
enclosures drove large numbers of serfs, who previously worked the land, off the
estates into the cities. This movement created an impoverished working class with
nothing to sell but their labor. The great migration to the cities also caused the
standards in guilds indeed, the entire guild system to break down because there
was too much labor competing with guilds.
Thus, the enclosure movement transformed the serfs who remained on the land
into peasants and the serfs who left the land into a free, mobile, property less labor
class that robbed the guilds of their former power. Moreover, the enclosure
movement change the perception of land use with the advent of an industrial
society, land became acceptable as an object of commerce. Up until the time of the
French Revolution in1789, landed estate (land, buildings, equipment, and serfs) was
a source of social privilege. The process by which landed estate change from
common land to private land took a long time. It represented a new idea: that land,
as property, could be owned. In medieval Europe, land was held but never owned.

Another major change was the development of a new middle class. Merchants now
stood between procedures and consumers. The rise of this entrepreneurial class was
also necessary for the development of capitalism. (hal 45)