This is a rather excellent essay, and you should go and read it. With all the normal I-am-not-an-economist caveats, Venkatesh Rao’s reading of post-Enlightenment history in terms of the rise and fall of the concept of the corporation is powerful stuff, and – unlike a lot of economics material I’ve read recently – it actually manages to look beyond tomorrow afternoon, albeit with a certain amount of shrugging (I’d much rather have someone admit they’re not sure how something’s going to pan out than dress up a guess as a given). It clocks in at over 7k words (!) so you’ll wanna set aside some time to read the whole thing; I suspect that even those among you who’ll disagree with some of Rao’s mappings will still find plenty of stuff to think about.
But hey, this is Futurismic, and we’re all about the hand-picked excerpts, so here’s a teaser that makes it clear that not only are today’s rapacious and out of control corporations nothing new, but that they’re also pussycats compared to their historical forebears:
The [East India Company] was the original too-big-to-fail corporation. The EIC was the beneficiary of the original Big Bailout. Before there was TARP, there was the Tea Act of 1773 and the Pitt India Act of 1783. The former was a failed attempt to rein in the EIC, which cost Britain the American Colonies. The latter created the British Raj as Britain doubled down in the east to recover from its losses in the west. An invisible thread connects the histories of India and America at this point. Lord Cornwallis, the loser at the Siege of Yorktown in 1781 during the revolutionary war, became the second Governor General of India in 1786.
But these events were set in motion over 30 years earlier, in the 1750s. There was no need for backroom subterfuge. It was all out in the open because the corporation was such a new beast, nobody really understood the dangers it represented. The EIC maintained an army. Its merchant ships often carried vastly more firepower than the naval ships of lesser nations. Its officers were not only not prevented from making money on the side, private trade was actually a perk of employment (it was exactly this perk that allowed William Jardine to start a rival business that took over the China trade in the EIC’s old age). And finally — the cherry on the sundae — there was nothing preventing its officers like Clive from simultaneously holding political appointments that legitimized conflicts of interest. If you thought it was bad enough that Dick Cheney used to work for Halliburton before he took office, imagine if he’d worked there while in office, with legitimate authority to use his government power to favor his corporate employer and make as much money on the side as he wanted, and call in the Army and Navy to enforce his will. That picture gives you an idea of the position Robert Clive found himself in, in 1757.
He made out like a bandit. A full 150 years before American corporate barons earned the appellation “robber.”
Rao’s thesis here is that the corporation – in terms of its power and influence – is actually entering its twilight years as we hit the limits of certain forms of economic growth; as such, I guess we have to view the recent banking crises as one last desperate – and rather savage – grasp for power and influence over a changing world. I certainly hope he’s right… though his concept of “Coasean growth” probably won’t be as appealing a replacement for the status quo for others as it is for me.