Adam Smith (1723-1790) is widely regarded as the father of modern economics and capitalism. His work, Wealth of Nations, is his magnum opus and one of the most influential works on economics ever published. Edmund Burke (1729-1797) is considered by many to be the father of modern conservatism.
Karl Marx (1818-1883), of course is the father of communism. He is the author of The Communist Manifesto (1848) & Das Kapital. The latter is a critical analysis of capitalism and is considered to be the inspiration behind socialist economical thought.
But what do they have to do with India? The answer is Mercantile Capitalism. You mention this word to people in India, the first company they think of is Union Carbide. This was the company responsible for the 1984 toxic release at its Bhopal facility which killed 22,000 and resulted in around 100,000 people still suffering chronic and debilitating illnesses. Neither Union Carbide nor its successor Dow Chemical have suffered any monetary or criminal sanctions for this “crime against humanity”, in the words of Nick Robins.
If you mention the term Mercantile Capitalism to people in America, the first company they are like to think of is Enron. This is true even after 10 years and after the much greater financial crisis. In fact, this past Thursday, Bill O’Reilly of Fox used the term “Enron II” when discussing the current scandal around Solyandra, the show case alternative energy company that filed for bankruptcy after a visit by President Obama and a loan of $500 million from the Obama Administration.
Very few Americans know that the word Enron is even more reviled in certain areas of India than it is in America. Enron’s contract with Maharashtra State is regarded as the most massive fraud in India’s history, according to Nick Robins. He also quotes what Justice Daud, a Judge of the
Mumbai High Court, argued – “It’s the second coming of the East India Company”.
That brings to the connection to India of the three famous thinkers. It is through their criticism of the notorious East India Company, referred to in our title as “EIC” for short. This article is a review of the book by Nick Robins titled “The Corporation That Changed The World” about the East India Company. The subtitle of this book is “How the East India Company Shaped the Modern Multinational“.
This article is not about how the East India Company plundered India. We covered that topic in our article on August 14, 2011 titled The Plunder of Bengal – A Lesson for “Independent” India.
This article is about the Author’s look back at the East India Company (“EIC”) as a multinational company, an Imperious and Mercantile Corporation that acted as a Sovereign. The look back is more about the practices of EIC as a corporation and about the behavior of EIC’s managers and shareholders. Nick Robins, the author & a historian by training, runs socially responsible investment funds in London.
For the record, we asked to speak with him through his agents but our approaches were ignored by Mr. Robins. The behavior of this author does not bias us in any way about the book. It does shed some light on the intellectual arrogance and disdain occasionally displayed by this author in this book towards other points of view.
We review this book because we consider it to be both interesting and important. Any one interested in how corporations can run rampant in their pursuit of excessive profits should read this book. The author cites both Union Carbide and Enron in his book, Enron for corruption and Union Carbide for human devastation.
What about the three famous men in our title? According to the author, “Adam Smith, Edmund Burke and Karl Marx were all united in their critique – for quite different reasons – of this domineering, overbearing corporation….
- “For Smith, the corporation was one of the great enemies of the open market,” while
- “for Burke, it posed a revolutionary threat to the established order in Britain and India”.
- “And for Marx, writing 70 years later as the Company was on its last legs, it was the standard bearer of Britain’s ‘moneycracy’, a more terrible creation than ‘any of the divine monsters startling us in the Temple of Salsette‘ near Mumbai.“
As the author himself writes in his introduction,
- “Chapter 6 (Regulating the Company) of the book reviews Adam Smith’s ferocious critique of the corporation and places it in the context of the wider movement of the public protest, parliamentary activism and outright rebellion that sought to end the Company’s abuses in the 1770s”. Yet, justice was still not done, and Chapter 7 (Justice Will be Done) examines how Edmund Burke tried to place responsibility at the heart of the Company’s charter.”
Chapter 1 – The Hidden Wound, and Chapter 4 – The Bengal Revolution, might of great interest to readers who want to know how EIC plundered India and the scale of the riches that flowed to England.
Chapter 2, titled This Imperious Company, is an analysis of EIC’s metabolism. It examines its systems of governance and finance as well as the inherent tensions that led to its downfall. Chapter 9, titled Unfinished Business, discusses the lessons that can be drawn for today’s encounter with global corporations.
We include below some interesting quotes from the book;
for its first 150 years…, there was almost nothing that England could
export that the East wanted to buy. Then first in Bengal….and then in
China through the opium trade, the Company broke this longstanding
pattern of trade and wealth. By the time of its demise, Europe’s economy
was double the size of those of China and India, a complete reversal of
the situation in 1600” – Chapter 1, page 7
characteristics make the Company immediately recognisable as a close
relative of the modern multinational….A more structural difference was
the Company’s status as a state-chartered enterprise….As a part of
its charter, the Company gained a whole series of special rights, most
valuable of which was the monopoly awarded to this London-based
corporation of all trade between England and the lands beyond the Cape
of Good Hope.” – Chapter 2, page 27 – (Does this remind readers of the
criticism leveled against today’s Chinese state-owned multinationals?)
- “Perhaps what infuriated the Company’s contemporaries most…was its impunity, its ability to shrug off the consequences of its actions. For an insidious corollary to the Company’s speculative drive for market dominion was its willingness to engage in immense crimes, safe in the knowledge that domestic and international remedies were not in place…..Compared with the immense political capital that has been expended in recent decades to liberalise international trade, precious little has been done to ensure that common human rights are respected and enforced.” – Chapter 2, page 37 – (this section leads the author to discuss Union Carbide and the Bhopal disaster).
- “The sheer barbarity of the Company’s conduct during the 1770 famine lies in its refusal to temper its demands for taxes with a sense of responsibility for the people of Bengal”. – Chapter 5, page 93 – (this might remind Indian readers of the famed movie “Lagaan” by Amir Khan).
- “The Wealth of Nations had been written during the period when the Company’s aggression overseas and speculation at home had dominated British public life, and it is no surprise that it features extensively in his pages…..Smith recognised that commercial success often comes not just from meeting consumer demand, but also from building up market power to generate excess profits…The result of this anti-competitive behaviour was to raise profits above the natural level, amounting to ‘an absurd tax upon the rest of their fellow citizens’. Cartels are thus an ever-present danger in a market economy,…” – Chapter 6, pages 100-101
- “Instead of merchants and traders, a succession of soldiers and aristocrats ruled the Company’s possessions, accentuating the burgeoning militarisation of its operations in India….Between 1763 and1805, the Company’s army had grown almost ten-fold from 18,000 to 154,500, far beyond the needs of self-defense. This created a powerful dynamic in favour of further aggression. Indeed, …, military adventurism was the only avenue left open for aspiring individuals to make fortune in India.” – Chapter 8, page 143 – (Similar to the RDA Corporation from the 2009 film Avatar?)
- “Drawing on his analysis of class society, Marx positioned the Company as tool of Britain’s elite interests in India: ‘the aristocracy wanted to conquer it, the moneyocracy to plunder it and the milliocracy to undersell it‘…Marx was certainly sickened by the way in which the Company had first plundered India, and then dismantled its economy, destroying the textile industry in the process. There was no doubt in his mind that ‘the misery inflicted by the British in Hindostan is of an essentially different and infinitely more intensive kind than all of Hindostan had to suffer before.'” – Chapter 8 – page 161
- “The more substantive issue is what difference these flows made to the rise of Britain and the decline of India and, subsequently, China. ‘We may date the commencement of the decline’ wrote Alexander Dow in 1772, ‘from the day on which Bengal fell under the dominion of the foreigners.’ – Chapter 9 – page 178
- “For Brooks Adams, writing at the end of the nineteenth century, the coincidence of the influx of Bengal plunder with the deployment of new industrial technologies was compelling. Without the resources provided by the Indian drain, Adams argued that the spinning jenny, Crompton’s mule and Watts’s steam engine would have lain dormant. ‘Possibly since the world began,’ Adams concluded, ‘no investment has ever yielded the profit reaped from the Indian plunder.’ – Chapter 9, page 178
- In sector after sector….the remorseless search for profits is leading companies to close down competition through mergers and acquisitions. The global media industry is a case in point. In the early 1980s, the US market was dominated by 50 firms; by the end of the millennium, this had fallen to fewer than 10. Speaking on World Press Freedom Day 2002, Czech President Vaclav Havel declared that ‘fifty years from now, the globalisation process may be the biggest threat to freedom of expression‘. – Chapter 9, page 185.
This is a serious and interesting book.
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