It was the Industrial Revolution in the 19th century that was the start of modern business organizations. The principles of business have been the same over the years - the availability of land, labor, capital and management. Among the factors of the production, capital has become the most important as the other factors are dependent on it. The capital and the management lead to the concept of Capitalism. Capitalism is the process of earning a living with the use of capital. The era of the capitalism is prominent in the growth of business over the years. It has been present since medieval times. In earlier stages of human history, people were nomadic in nature and they relied on agriculture. However, even at that time, the society consisted of businessmen of various classes and there were signs of business activity. Industrial Revolution, of the nineteenth century, aided the growth of the private business bodies and this helped in the development of economy. In some cases like that in China and Russia, the capitalism was state controlled and the Government controlled the economic activities of the state.
Throughout the stages of the economic development, the governing bodies of the society have maintained some sort of control over the growth of business. In early days, kings and the chiefs had the governing power. The economic activities and business needed their permission. Then came democracy, here the onus fell on governments of the respective countries to control the business activities. In some cases, governmental control has aided the development of the business, while on the other hand it has blocked the natural path of development. As the governmental system strengthened, judicial system developed to further defend the interest of businesses and their stake holders. This helped in the formation of rules and regulations, which were to be followed by the business organizations. The setting up of the rules and regulations paved the way for a more disciplined approach to the setting up of the business. However, there have been complaints that too many rules and regulations govern business organizations, which is detrimental to the natural growth of the business organizations. Indirectly, this also affects the rate of growth at which the economies grow. Thus, it can be said that the current level of government regulation of business is detrimental to our economy. (Graf, 2003: 1-8)
The concept of Regulation
The regulation of the business activities has been a problem from the beginning of time. These were the times when the leaders of the tribe or the kings controlled the people and business activity of their dominion. The next stage was of colonialism, the kings of the countries regulated the activities of the business. In the case of USA, the regulation of the business activities started with the advent of colonialism. The Europeans descended the USA and set up colonies in the region. The Government of the respective countries controlled the colonies. The business activities followed the trajectory of that in Europe where guilds were formed to control the business activities. These were formed to protect the people from exploitation of the authority. There were two different types of guilds in the medieval age - merchant guild and the craft guild. The merchant guild was