Lessons for capitalism from the East India Company

William Dalrymple has helped people who don’t have the time to wade through 576 pages (or perhaps already have backlog of doorstep sized items of reading matter on the bedside table already) by writing an extended article on the subject of his new book about the East India Company in the FT.  However, it is a compelling article and means that I may add “The Anarchy: the Relentless Rise of the East India Company” to my list for Santa this Christmas.

This is a company of superlatives, starting out as a joint stock company operating under charter arising from a petition by entrepreneurs and investors to Elizabeth I, growing to become an empire with 60 million subjects, its own army of 200,000 men , accounting for half of the trade of the leading trading nation.  It’s global impact was enormous, from the fears about its reach – as well as its role in the tea trade – that contributed to the revolution in the Thirteen Colonies, to the part it played in the Opium Wars.  Microsoft, Amazon, Google, Apple and before them the oil majors – they were clearly nothing to this behemoth.

Dalrymple brings out in the his article the complex relationship of the Company to British state, from its original charter, through the continuing lobbying into government, the corruption in the relationships between the Company and the establishment (for example, in 1693 shelling out £1,200 a year to prominent MPs, described by Dalrymple as the first corporate lobbying scandal), and the final demise of the Company in the wake of the Indian Rebellion.

Dalrymple’s article has the effect of drawing attention to is the inadequacy of conventional theory, both “Microeconomics 101” and the Theory of the Firm, to describe one of the greatest commercial entities the world has ever known.  Some of things at work are the complex interfaces with the British state and its politicians, and also its deployment of its own naval operations (envisaged in its original charter) and an army to deliver a return to its joint stock holders, as well creating an entity became transformed into the biggest single component of Britain’s empire.

As I write this, I think he has done the job with his teaser article to promote the book.  Perhaps I should ignore the size of the unread pile by my bed and add “The Anarchy” to the letter to the bloke with the reindeer and sleigh.