"For those who naively or disingenuously attribute the rise of the West to mere innovations in technology and the Protestant work ethic, Nick Robin’s book is a sober reminder of the violence, corruption and speculation that went into the process."

Every once in a while comes a book that is so perfect in its political timing one is tempted to dub its advent as the result of either a grand conspiracy of some kind or the unique brilliance and foresight of its author.

Well-researched and engagingly written Nick Robins’ ‘The Corporation that Changed the World’, about the history of the British East India Company, is a work in this league of the latter sort.

As protests erupt around India against the corporate takeover of rich agricultural land, the retail trade and other critical sectors of the economy the book unveils the story of this mother of all modern corporations, the men and motivations behind it and the role it played in shaping the world as we know it now.

The modern corporation, in our times, is seen by its enthusiasts as the epitome of all that is good and wonderful about neo-liberal capitalism. In various ways it is praised as the engine of global growth, the harbinger of all round prosperity, the model of the future ‘shareholder’ society and the preserver of right to property and indeed democracy itself.

To its opponents corporations are exploitative, dictatorial bodies, unaccountable to both citizens and governments and a mechanism for maximizing the profits of investors at the expense of all other forms of life on Earth.

What is strange about this debate is not just the simplistic, black and white terms in which the corporation is seen but also the tacit assumption that this ‘benign’ or ‘evil’ entity has always been and will always be around.

So for example in many contemporary discussions of the modern multinational there is little reference to the political and economic factors that went into shaping its current form and rise to positions of domination. Nor for that matter do many ponder about the future of the corporation and how new forms of organizing business and usurping surplus value are being forged right before our eyes in the fire and fury of the globalization process.

Robins’ book puts corporations in historical perspective and by doing that gives us ample clues both to the dangers of their unfettered appetite for power and domination as well the ways in which they can be controlled and tamed by both nation states and people’s movements.

The East India Company (EIC), founded in 1600 was one of a number of companies granted a royal charter by the British monarchy to take advantage of the opportunities opened up by the age of European expansion and exploration.

In England, at that time, the first generation of chartered companies brought together a band of merchants who would then buy and sell goods under a common umbrella. These regulated companies operated more akin to a guild, setting standards for a chosen field of endeavour and collecting fees for shared services, such as docks and warehouses.

Where the EIC differed was in its fusion of the institutional structure of the public corporation with the financial mechanism of joint stock ownership.

As Robins explains, the joint stock mechanism enabled a separation of investors and managers, thus broadening the pool of capital that could be tapped to include both London City merchants as well as passive investors from elsewhere in the moneyed elite. Second, risks were shared widely. This limited liability endowed the EIC with a special dynamism, substantially reducing the risks for investors compared with the usual partnership model of ownership.

Third, trading was conducted by the joint stock company on its own account, rather than by the members themselves. This gave the EIC a separate identity and its own legal personality- one that could conduct business strategies that went beyond the interests the interests of individual merchants. In all these senses the EIC was certainly the forerunner of the corporations that dominate the global economy currently.

However an important structural difference from the modern multinational was the EIC’s status as a state-chartered enterprise. Today, establishing a company is considered as a basic right in ‘democratic’ market economies. In the Company’s time, however, this was a special privilege granted by the Crown and later by Parliament.

Allied with the EIC’s state-backed nature of its charter were a number of semi-sovereign privileges. These included the right to mint coin in its overseas subsidiaries, to exercise justice in its settlements and, crucially, the right to wage war.

From the beginning armed force was essential for the EIC’s ability to gain and sustain access to Asian markets. It was the EIC’s demonstration of naval superiority over the Portuguese off Surat in 1612 that paved the way for its first trade concessions from the Mughal Emperor Jehangir. The Company appreciated the value of conducting ‘commerce with sword in your hands’, in the words of the Company’s Governor of Bombay Gerald Aungier, in 1677.

In that sense nothing much has really changed as far as corporations are concerned these days too. As Thomas Friedman, the New York Times columnist, explained infamously a few years ago, the ‘hidden hand of the market will never work without the hidden fist. McDonalds cannot flourish without McDonnell Douglas, the designer of F-15s.”

As Robins says in his book “The continuing reluctance to examine the full scope of the East India Company’s impact is part of a more general amnesia about the historical role of business. It remains an oddity that although companies are among the most powerful institutions of the modern age, our histories still focus on the actions of states and individuals, on politics and culture, rather than on corporations, their executives and their impacts. If we are to fully understand our corporate present, then we must understand our corporate past – and this means grappling with the legacy of John Company.”

By the time of its demise in 1874 the EIC had changed the course of economic history, reversing the centuries old flow of wealth from West to East. The figures of this reversal of fortunes between East and West are stark indeed.

In 1600 India had a nearly 23% share of world GDP, China 29% and Britain a mere 1.8 %. By 1870 the shares of these three countries were 13%, 17% and 9% respectively. Given the huge differences in population sizes even then this was a phenomenal pauperization of a bulk of humanity, all achieved first under the rubric of ‘free trade’ and later justified as part of the ‘march of civilization’.

For those who naively or disingenuously attribute the rise of the West to mere innovations in technology and the Protestant work ethic, Nick Robin’s book is a sober reminder of the violence, corruption and speculation that went into the process. This is not mentioning the tremendous human suffering in Asia, Africa and Latin America that resulted from the tyranny and exploitation of colonialism – for which the EIC (along with its Dutch, French, Spanish and Portuguese counterparts) paved the way and provided an economic model.

For instance, in the famine of 1770 Warren Hastings, the first governor general of India, estimated that 10 million Bengalis had starved to death, equating to around a third of the population. Much of this, as Robins points out, was a result of the EIC’s policy of extracting taxes from the peasants even in a time of drought to ‘maintain revenues’, the lack of state investment in agricultural infrastructure, speculation by EIC officials in prices of basic commodities like rice (through hoarding, often forcing farmers to sell at gun point) and the sheer inhumanity of the EIC administration headed by Hastings himself.

If all these factors that went into the making of the Bengal famine under the EIC administration sound eerily contemporary that is simply because the same processes of putting profits over people have been resurrected over the past two decades of liberalization, privatisation and globalization by successive Indian regimes. The twin phenomenon of starvation deaths and farmers suicides that have emerged on the Indian landscape in recent times are a mere foretaste of what is to come if the current policies continue.

The experience of Bengal, which became the capital of the EIC and later British Empire, in particular is in fact critical to understand the similarity between the processes underway then and in our own times now.

In the first half of the eighteenth century, the Indian subcontinent was the workshop of the world, accounting for almost a quarter of global manufacturing output in 1750, compared with just 1.9 percent for Britain. Within the Mughal Empire, Bengal was the richest province, described by Aurangazeb as ‘the Paradise of Nations’.

At first the EIC was one out of many foreign companies with a foothold in the trade in textiles, salt and opium from Bengal, which was regulated by the Mughal administration and still dominated by Asian merchants. The EIC was no ordinary company though and harbored strong ambitions of monopolizing the entire trade and had a private army to back this up with to boot.

The history of how the EIC under the military leadership of the ruthless Robert Clive and with help from traitors like Mir Jafar, Amir Chand and Jagat Seth took power over Bengal from the Mughal ruler Siraj-ud-Daula is well known to every Indian school student.

It is a timely tale to remember today as West Bengal emerges as the site of massive struggles, in Singur and Nandigram, against attempts by the Left Front ruled government to shamelessly woo domestic and foreign corporations at the expense of livelihoods of ordinary folk.

Though the West Bengal Chief Minister Buddhadeb Bhattacharya is no Siraj-ul-Daula hopefully he won’t prove to be a Mir Jafar either.

The Corporation That Changed The World: How the East India Company Shaped the Modern Multinational, Nick Robins, Orient Longman, pp.218.

Satya Sagar is a journalist, writer and video maker from India living in New Delhi. He can be reached at sagarnama@yahoo.com