[Marxism] British East India Company

[Louis Proyect <lnp3@xxxxxxxxx>]

New Statesman, December 13 2004

The world's first multinational

NS Essay 1- Corporate greed, the ruination of traditional ways of life, 
share-price bubbles, western imperialism: all these modern complaints were 
made against the British East India Company in the 18th century. Nick 
Robins draws the lessons In The Discovery of India, the final and perhaps 
most profound part of his "prison trilogy", written in 1944 from Ahmednagar 
Fort, Jawaharlal Nehru described the effect of the East India Company on 
the country he would shortly rule. "The corruption, venality, nepotism, 
violence and greed of money of these early generations of British rule in 
India," he wrote, "is something which passes comprehension." It was, he 
added, "significant that one of the Hindustani words which has become part 
of the English language is 'loot'".

For most of the succeeding 60 years, the East India Company sank from view. 
No plaque marked the site where its headquarters had stood in the City of 
London for more than two centuries. It was regarded as something that could 
be consigned to the history books, its deeds to be squabbled over by 
academics and imperial romantics. But the onset of globalisation has 
revived interest in a company that could be seen as a pioneering force for 
world trade. Exhibitions at the British Library and the V&A, plus a string 
of popular histories, have sought to revive the reputation of the 
"Honourable East India Company". Its founders are now hailed as 
swashbuckling adventurers, its operations praised for pioneering the birth 
of modern consumerism and its glamorous executives profiled as 
multicultural "white moguls".

Yet the East India Company, romantic as it may seem, has more profound and 
disturbing lessons to teach us. Abuse of market power; corporate greed; 
judicial impunity; the "irrational exuberance" of the financial markets; 
and the destruction of traditional economies (in what could not, at one 
time, be called the poor or developing world): none of these is new. The 
most common complaints against late 20th- and early 21st-century capitalism 
were all foreshadowed in the story of the East India Company more than two 
centuries ago.

In The Wealth of Nations (1776), Adam Smith used the East India Company as 
a case study to show how monopoly capitalism undermines both liberty and 
justice, and how the management of shareholder-controlled corporations 
invariably ends in "negligence, profusion and malversation". Yet nothing of 
Smith's scepticism of corporations, his criticism of their pursuit of 
monopoly and of their faulty system of governance, enters the speeches of 
today's free-market advocates.

Smith's vision of free trade entailed firm controls on corporate power. 
And, as did his own times, subsequent history shows how right he was. If it 
is to contribute to economic progress, the corporation's market power has 
to be limited to allow real choice, and to prevent suppliers being squeezed 
and consumers gouged. Its political power also needs to be constrained, if 
it is not to rig the rules of regulation so that it enjoys unjustified 
public subsidy or protection. Internal and external checks and balances 
must curb the tendency of executives to become corporate emperors. And 
clear and enforceable systems of justice are necessary to hold the 
corporation to account for any damage to society and the environment. These 
are tough conditions, and have rarely been met, either in the age of the 
East India Company or in today's era of globalisation.

Today, we can see the East India Company as the first "imperial 
corporation", the very design of which drove it to market domination, 
speculative excess and the evasion of justice. Like the modern 
multinational, it was eager to avoid the mere interplay of supply and 
demand. It jealously guarded its chartered monopoly of imports from Asia. 
But it also wanted to control the sources of supply by breaking the power 
of local rulers in India and eliminating competition so that it could force 
down its purchase prices.

By controlling both ends of the chain, the company could buy cheap and sell 
dear. This meant organising coups against local rulers and placing puppets 
on the throne. By the middle of the 18th century, the company was 
deliberately breaching the terms of its commercial concessions in Bengal by 
trading in prohibited domestic goods and selling its duty-free passes to 
local merchants. Combining economic muscle with extensive bribery and the 
deployment of its small but effective private army, the company engineered 
a series of "revolutions" that gave it territorial as well as economic control.

After Robert Clive's victory at the Battle of Palashi in 1757, the company 
literally looted Bengal's treasury. It loaded the country's gold and silver 
on to a fleet of more than a hundred boats and sent it downriver to 
Calcutta. In one stroke, Clive netted a cool £2.5m (more than £200m today) 
for the company, and £234,000 (£20m) for himself. Historical convention 
views Palashi as the first step in the creation of the British empire in 
India. It is perhaps better understood as the company's most successful 
business deal.

full: http://www.newstatesman.com/nscoverstory.htm

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