| Submit your comments on this article |
| India-Pakistan |
| The Rise of the East India Company Is Not a Cautionary Tale about Corporate Power |
| 2019-11-02 |
| [National Review] How did a joint stock company founded in Elizabethan England come to replace the glorious Mughal Empire of India, ruling that great land for a hundred years? William Dalrymple’s splendid history, The Anarchy, tells that story‐and purports to warn us about the perils of corporate power. The American edition sports the provocative subtitle, "The East India Company, Corporate Violence, and the Pillage of an Empire" (compared with the neutral British subtitle, "The Relentless Rise of the East India Company"). Yet the story Dalrymple really tells is of how government power corrupts commercial enterprise. The East India Company’s charter began with an original sin‐Elizabeth I granted the company a perpetual monopoly on trade with the East Indies. With its monopoly giving it enhanced access to credit and vast wealth from Indian trade, it’s no surprise that the company grew to control an eighth of all Britain’s imports by the 1750s. Yet it was still primarily a trading company, with some military capacity to defend its factories. That changed thanks to a well-known problem in institutional economics ‐ opportunism by a company agent, in this case Clive of India. The "anarchy" in the book’s title refers to the disintegration of Mughal India following the death of Emperor Aurangzeb in 1707. Religious intolerance, devastating Persian and Afghan invasions, a series of weak and unstable rulers, and powerful viziers and regional potentates left the emperor imprisoned and his heir, Shah Alam, exiled from Delhi. One particularly unstable potentate, Siraj ud-Daulah, Nawab of Bengal, alienated his bankers, the Jagat Seths, and demanded foreign merchants dismantle their walls, which were erected mostly to defend against other European companies. Facing threats from the French, the company governor of Calcutta refused. Siraj plundered the settlement. A company force led by Clive recaptured Calcutta, backed by crown forces that feared yielding advantage to the French. The Jagat Seths then bribed the company men to attack Siraj. Clive, with an eye for personal gain, was happy to do so. In what Dalrymple calls a crucial point, the company directors had no part in this. They "consistently abhorred ambitious plans of conquest," he notes. Clive’s defeat of Siraj at Plassey and the subsequent chain of events that led to Shah Alam giving tax-raising powers to the company in 1765 may be history’s most egregious example of the principal-agent problem. |
| Posted by:Besoeker |