For a corporation that has been defunct for more than a century, Britain's East India Company is undergoing something of a comeback. The onset of globalisation has prompted a resurgence of interest in what the Victorian historian Thomas Babington Macaulay once described as "the greatest corporation in the world".
Founded in 1600 by a marginal island state in northwest Europe to gain seaborne access to Asia's luxury trade, the London-based company evolved to become the dominant commercial power in the east. The turning point came in 1757, when one of its more unscrupulous executives, Robert Clive, deployed the company's private army, a healthy dose of bribes and ingenious fraud to defeat the nawab (prince) of Bengal at the battle of Plassey.
In the looting that followed, Clive netted £2.5 million for the company, and £234,000 for himself - equivalent today to a £232 million windfall for his employers and a cool £22 million success fee for himself. Historical convention views Plassey as the first step in the creation of the British empire in India. But it is perhaps better understood as the company's most successful business deal.
Back in London, the company's share price rose sharply when news hit the markets, and would spike even higher the following decade, when it took control of Bengal's diwani (tax system) - a bit like Wal-Mart running the Internal Revenue Service in today's United States. With this acquisition began the systematic drain of wealth that would continue under corporate control until 1858, and thereafter under the British Raj until 1947. More immediately, the company's takeover of Bengal contributed to a devastating famine in 1770 that killed between a third and a half of the population, leaving a "jungle inhabited only by wild beasts".
Once consigned to the history books, the East India Company is now re-emerging as an unquiet ghost at the feast of globalisation. In Britain, high-profile exhibitions along with a string of popular histories have revived the "honourable company's" reputation. Its founders are hailed as swashbuckling adventurers crossing the globe in search of spices and its executives are profiled as multicultural "white mughals".
In the business community, the attraction of the company lies in its commercial supremacy, a model for today's global economy. The chairman and chief executive of Standard Chartered, for example, argued in 2002 that the bank would aim to "build on the courageous, creative and truly international legacy of the East India Company". Rod Eddington, one-time chief executive of British Airways, took similar encouragement from the company's record, seeing it as a case study in how corporations succeed "by dint of hard work, shrewdness and charm".
A dot.com entrepreneur even relaunched the East India Company as a web-based "virtual factory" offering "a range of branded products. According to the site, using the Company's name gives credibility to virtually any product or service", combining "the great strengths of British brands - tradition, old-fashioned luxury, impeccable class - with the general appeal of exotic countries, seafaring, travel and adventure".The global kudos that is still associated with the company in financial circles was confirmed in summer 2006 when the East India Company Acquisition Corp. was brought to the New York stock exchange with the aim of raising $36 million for investments in modern India.
Nick Robins is head of socially responsible investment research at a company in the City of London. Among his books is The Corporation that Changed the World: How the East India Company Shaped the Modern Multinational (Pluto Books/Orient Longman, 2006)
Also by Nick Robins in openDemocracy:
"Loot: in search of the East India Company"
(22 January 2003)
"The East offering its riches to Britannia"
(22 January 2003)
"The $20,000,000,000,000 question" (3 June 2005)
Degrees of responsibility
This rejuvenated prestige attached to the East India Company would have perplexed many of its contemporaries. From the beginning, it was controversial in Britain for the monopoly control it had over all trade with Asia. Its closeness with the court often spilled over into naked corruption. But it was with the Bengal revolution that followed in the wake of Plassey that the company became the focus of powerful critique from those who feared that its newfound wealth would be used to subvert Britain's hard-won liberties.
For one writer in the Gentleman's Magazine of April 1767, the issue at stake was "whether the freedom or the slavery of this island shall result", defiantly concluding his piece by declaring, "down with that rump of unconstitutional power, the East India Company!" In the decades that followed some of the age's leading minds sought first to expose the company's malpractice in India and then bring remedies.
The company became the subject of ferocious critique in Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations, where he argued that over-mighty corporations were just as much the enemy of the open market as the over-mighty state. Not only did people pay for "all the extraordinary profits which the company may have made", argued Smith, but they also suffered from "all the extraordinary waste which the fraud and abuse, inseparable from the management of the affairs of so great a company, must necessarily have occasioned".
The philosopher-politician Edmund Burke took up the baton in the 1780s, introducing legislation in 1783 to make the company accountable to parliament, arguing that its corporate charter carried with it intrinsic duties: "this nation never did give a power without imposing a proportionable degree of responsibility". When this measure failed as a result of an unholy alliance of court and City, Burke launched an almost hopeless struggle to impeach the company's most senior executive in India, the former governor-general Warren Hastings.
For seven long years, the trial continued, ending as expected, with Hastings being acquitted of "high crimes and misdemeanours" by a grateful House of Lords. In spite of Smith's profound analysis and Burke's passionate rhetoric, imperial interests won out against principle, consigning India to an empire of scorn and extraction.
To get the founder of liberal economics and the father of modern conservatism each struggling to tame the company says something for the bipartisan threat that this corporation posed to Enlightenment Britain. And they were joined by many others - poets, playwrights and pamphleteers - who expected future generations to take a similarly hard look at the company's performance as a corporation.
"Historians of other nations (if not our own)", wrote the poet Richard Clarke in 1773, "will do justice to the oppressed of India and will hand down the Memory of the Oppressors to the latest Posterity". In the introduction to his long satire entitled The Nabob, or Asiatic Plunders, Clarke urged on his fellow countrymen "to perpetuate an honest indignation against these enemies of mankind".
Now it's our turn
From the ruins of the company's fort at the pepper port of Tellicherrry on the west coast to the grandeur of Chennai's Fort St George on the east, the company's physical presence in India continues to impress. The mark is greatest in Kolkata, a "company town" of immense proportions. This physical presence is matched by a powerful legacy presence in India's public memory, stretching back to the nationalist struggle for independence.
For India's first prime minister Jawaharlal Nehru, the company lay at the root of the oppression that he had fought against. "The corruption, venality, nepotism, violence and greed of money of these early generations of British rule in India", Nehru thundered in The Discovery of India, "is something which passes comprehension". Looking back at the company's conquest of India, Nehru noted "it is significant that one of the Hindustani words which has become part of the English language is loot".
Today, after a decade of economic liberalisation in India, this critical analysis continues to lie close to the surface. For many Indians - particularly in Bengal - the company's story has two profound morals: first that multinational companies want not just trade, but power; second, that division and betrayal among Indians enables foreign rule.
For the business commentator Gurcharan Das, "every child knows the perfidious story of how Bengal was lost at Plassey". He drew the clear conclusion: "is it surprising that we are suspicious of merchants and foreign companies?"
For some, this focus on the "creeping acquisition of effective control and wealth" by foreign interests amounts to a full-blown "East India Company Syndrome". In a wide-ranging review of the lessons learned from economic reform, Arvind Virmani has identified a generational divide between those brought up before independence and those born afterwards: "The most important cultural memory of the former was about being ruled by the British government for a century and (most galling) by the British East India Company for a century before that". This translated into a fear of foreign capitalists and, in its most extreme form, this syndrome "encompassed a lack of confidence in one's abilities relative to white foreigners".
A reaction against this "syndrome" is now in motion, with observers arguing that it is time for India to "get over" the East India Company. A new sense of national assertiveness also informs real decisions about India's future economic path, whether the issue is tightening patent rules for pharmaceuticals or opening up the retail sector to foreign companies.
The chief executive of Ranbaxy, Malvinder Mohan Singh, caught the mood in a recent Financial Times article: "five hundred years ago, a company was formed in London that directly led to British rule in India", adding that "there appears to be some concern that there is evidence of a reverse trend". This theme of reversal has also influenced India's popular media, most strikingly in the TV advertisement for Rajnigandha pan masala. Set in London, the advert shows an Indian tycoon stopping his car in front of the East India Company's headquarters and telling his secretary that he wants to buy the firm: "they ruled us for 200 years, and now it's our turn".
Reckoning with John Company
The East India Company deserves to be looked at as it was - a profit-making company that generated great wealth, but one that also contributed to immense suffering. Just as corporations today should be judged by the impacts of their core business rather than their often peripheral donations to cultural events, so the East India Company has to be assessed on the basis of its underlying activities rather than the occasional philanthropy of its executives.
The continuing reluctance in Britain 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".
Far from being a dusty relic, the company exemplifies the constant battle within corporations between the logic of exchange and the desire for domination. Two centuries on, it demonstrates that the quest for corporate accountability is a perpetual exercise in directing the energies of merchants and entrepreneurs so that their private passions do not undermine the public interest.
For Britain, much can be gained by confronting this legacy. From Adam Smith, we can draw the imperative of keeping corporate size in check - an imperative in today's economy, where globalisation is fostering ever-increasing commercial concentration. And from Edmund Burke, we can take the essential importance of placing corporate conduct within a framework of justice, establishing legal mechanisms to hold corporations to account, and fill the void that allows scandals such as Bhopal to continue largely unaddressed.More broadly, as Britain still struggles to construct a truly post-imperial identity, a more conscious process of reflection could bring immense cultural rewards. Writing in the 1920s, Edward John Thompson looked at the barbarities inflicted by the British in the "Indian Mutiny" (aka the "first war of independence"), and called for an act of atonement (prayaschitta) to enable relations between the two countries to flourish. As we approach the triple anniversaries of Plassey, the "mutiny", and independence itself - all to be marked in 2007 - there is need once more for some "honest indignation" in the face of the East India Company's contribution to Europe and Asia's shared histories.
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