Lessons for Capitalism from the East India Company
In the wake of growing concerns from the rise of the ‘Big corporate’, two weeks ago, an American corporate lobby comprised of CEOs of some of the largest corporates pledged to look beyond just shareholder interests and instead become inclusive in terms of taking care of customers, employees, vendors and the society at large. Perhaps, an appropriate time for William Dalrymple, the Scottish historian settled in India to come up with his new book ‘The Anarchy’ which tracks the evolution of the East India Company into a giant and ruthless corporation. In this leading piece in the FT, Dalrymple gives a sense of how big and influential really was the world’s first ‘big corporate’ and puts that in the context of today’s monopolistic behemoths such as Google, Amazon, Facebook, etc. The East India Company’s influence was far and wide including triggering the American War of Independence on the back of the Boston Tea Party where the company’s tea trade from China to the west got on the wrong side of the patriots. Dalrymple clarifies that more than colonialism the British rule of the Indian sub-continent was a result of unbridled profit motives of the EIC, a company effectively set up by a bunch of traders to look beyond the European continent as Britain got sidelined by the Protestant-Catholic rift with mainland Europe (a Brexit of sorts, says John Gapper). Indeed the company got so powerful in the context of the nation state itself that it ended up morphing into a colonial rule. Dalrymple notes that at some stage the private security force of the company was twice the size of the British army. Dalrymple concludes that whilst today’s ‘Big Corporates’ may not need armies of their own, their influence on governments and hence legislations will in some ways resemble the EIC.
“We still talk about the British conquering India, but that phrase disguises a more sinister reality. For it was not the British government that began seizing chunks of India in the mid-18th century, but a dangerously unregulated private company headquartered in one small office, five windows wide, in London, and managed in India by a violent, ruthless and mentally unstable corporate predator — Robert Clive. India’s transition to colonialism, in other words, took place under a for-profit corporation, which existed entirely for the purpose of enriching its investors.
…By the beginning of the 19th century, the East India Company had become, as one of its directors admitted, “an empire within an empire”, with the power to make war or peace anywhere in the east. The EIC had created a vast and sophisticated administration and civil service in India, and built much of London’s Docklands. Its annual spending in Britain — around £8.5m — equalled about a quarter of total British government annual expenditure. No wonder the Company now referred to itself as “the grandest society of merchants in the Universe”. Its private armies were larger than those of almost all nation-states and its power encircled the globe; indeed, its shares were a kind of global reserve currency. As the parliamentarian Edmund Burke wrote: “The Constitution of the Company began in commerce and ended in Empire.”…
….When people voice fears today about the power of corporations and the way global companies can find ways around the laws and the legislatures of individual nation-states, it is no accident that they sound like 18th-century commentators such as Horace Walpole, who decried the way that EIC wealth had corrupted parliament: “What is England now?” he asked, but “a sink of Indian wealth, filled by nabobs [with] . . . a Senate sold and despised.”…”