6. Rise of the Joint Stock Corporation

Capitalism: Success, Crisis and Reform (PLSC 270)

Professor Rae explains how the growing scale and complexity of railroads in the US were foundational to the development of modern capitalism. Operating the railroad system required professional managers and new management techniques, and the scale of railroad financing gave rise to the formation of the joint stock corporation. Professor Rae then discusses how different forms of company ownership differ along liability, liquidity, financial scalability, accountability, and role of ownership dimensions. Joint stock corporations are shown to be extremely efficient ways to raise large amounts of money, even if they suffer principal-agent problems.

00:00 - Chapter 1. Introduction
06:13 - Chapter 2. The Double Challenge Faced by Railroads
20:16 - Chapter 3. The Joint Stock Corporation & Its Main Alternatives

Complete course materials are available at the Open Yale Courses website: http://open.yale.edu/courses

This course was recorded in Fall 2009.