This chapter described the way business systems have evolved from earliest times to feudalism, mercantilism, and then to capitalism. It also described how people organized themselves into business systems to take control of productive resources and use them to create capital and wealth. How business organization forms have changed over time was also discussed. This short account of the evolution of business has enriched our discussion of business in Chapter 1. It charts the way business as commerce, occupation, and organization evolved to allow land, labor, capital, and enterprise to be used most productively and profitably. The chapter made the following main points:

1. The hierarchy of authority is a ranking of people according to their relative rights and responsibilities to control and utilize resources.
2. Property rights are the claims by people to own, use, or sell the rights to valuable resources. In earliest times, the claim to property rights was a matter of brute force. Today laws provide people with the legitimate claim to own and use resources.
3. Feudalism is the system in which one class of people, aristocrats, control the property rights to all valuable resources, including people.
4. Much of the bargaining and negotiating that goes on in society, like that between landowners and tenants under feudalism, for example, results in land, labor, and capital being put to its best use.
5. The need to overcome problems associated with the double coincidence of wants led to the development of money. Money acts as a standard of value, a store of value, and is a source of capital in its own right. The use of money creates many new kinds of profitable business opportunities. When it is loaned out and a profit is generated from it, "money starts to make money." Money then becomes a desirable productive resource in and of itself.
6. Mercantilism is the business system in which products are traded across markets and countries until they are put to their most highly valued use. Merchants and bankers are traders who notice a difference between the value and price of commodities—resources and products—in one market and its value and price in another. They recognize an opportunity to profit from the difference in prices by trading commodities between one market and the next.
7. Increased trade led to the development of finance and banking institutions. It also led to a general increase in specialization and the division of labor, thereby increasing the capital and wealth of society.
8. The Industrial Revolution provided new opportunities for capital to be put to work. It represented a major shift in production and trade brought about by advances in technology. This technology transformed the production process and increased the profitability of all kinds of business activities.
9. Capitalism is the economic or business system in which the private ownership of productive resources becomes the basis for the production, trade, and distribution of goods and services. Capitalists personally own and/or control the physical capital of industrial production—the machinery, factories, distribution networks, raw materials and inputs, research and development and technology.
10. Capitalism gave rise to increasing conflicts between capitalists and workers. This led to the formation of trade unions that lobby on behalf of their members to increase their wages and working conditions. Capitalism also gave rise to a more complicated class system: a social hierarchy based upon people's capital and wealth, heredity, kinship, fame, occupations, and connections.
11. As business commerce evolved so did the forms of business organizations used to increase the productivity and profitability of productive resources. The hierarchy of authority evolved early to reduce the transaction costs surrounding business activity. The joint-stock corporation evolved to make it easier for enterprising people to borrow capital to pursue new ventures, and for wealthy people to find new ways in which they could build their capital and increase their wealth.
12. Joint-stock companies evolved into limited liability companies to encourage people to risk their capital to promote enterprise. Today, the limited liability model is the standard way to organize a business.