Outsourcing Empire: How Company-States Made the Modern World

by Andrew Phillips, J.C. Sharman

How chartered company-states spearheaded European expansion and helped create the world's first genuinely global order
From Spanish conquistadors to British colonialists, the prevailing story of European empire-building has focused on the rival ambitions of competing states. But as Outsourcing Empire shows, from the seventeenth to the twentieth centuries, company-states--not sovereign states--drove European expansion, building the world's first genuinely international system. Company-states were hybrid ventures: pioneering multinational trading firms run for profit, with founding charters that granted them sovereign powers of war, peace, and rule. Those like the English and Dutch East India Companies carved out corporate empires in Asia, while other company-states pushed forward European expansion through North America, Africa, and the South Pacific. In this comparative exploration, Andrew Phillips and J. C. Sharman explain the rise and fall of company-states, why some succeeded while others failed, and their role as vanguards of capitalism and imperialism.



In dealing with alien civilizations to the East and West, Europeans relied primarily on company-states to mediate geographic and cultural distances in trade and diplomacy. Emerging as improvised solutions to bridge the gap between European rulers' expansive geopolitical ambitions and their scarce means, company-states succeeded best where they could balance the twin imperatives of power and profit. Yet as European states strengthened from the late eighteenth century onward, and a sense of separate public and private spheres grew, the company-states lost their usefulness and legitimacy.

Bringing a fresh understanding to the ways cross-cultural relations were handled across the oceans, Outsourcing Empire examines the significance of company-states as key progenitors of the globalized world.

Genres: History, Economics, Politics, Business, Nonfiction, Asia, 18th Century

272 pages, Hardcover

First published June 2, 2020

Reviews

[Kosta · Rating 4 out of 5]

Thorough if repetitive argument for centering the rise of the hybrid company-state model in the history of the modern world.
Lays out the mediaeval precedent for pre-modern notions of sovereignty that led to the rise of first late mediaeval trading companies, then later trading companies from England and Holland cashing in on Spanish and Portuguese conquests into America and Asia. Then looks at later company states like the Hudson bay company, the Russian American company, the British South Africa company and others. Charts what they had in common and how they differed.
One of the most striking things to me was the vulnerability and lack of power these institutions had initially when dealing with African and Asian polities, militarily and diplomatically during their rise.
Good stuff

[Sami Eerola · Rating 5 out of 5]

Excellent book on the history of company states. Very well written for a academic book. I enjoying reading every chapter.

Great book that answers most of the questions that i had about the company states. For example are they integral part of the history of capitalism or predates it? Are there parallels in today´s world?

[Martin Henson · Rating 4 out of 5]

A very readable and well argued case for a view of European history that recognises the crucial role of the company states.

My only disappointment is that, I think, there is insufficient attention paid to the economic/financial story. Two key features of (at least some of) the company states are their ability to wield force and issue currency. From reading books like David Graeber's Debt: The First 5,000 Years this cocktail is very powerful - taxing in a currency that the payer needs to earn (and is issued by the authority) and with guns to enforce this, is an effective way of dividing and ruling, and getting cooperation to generate economic activity. Clearly the company states were often directly extractive of material wealth (e.g. Clive's transfer of Nawab of Bengal's treasury (£250 million in today's money) in 1757 - see Shashi Tharoor's Inglorious Empire: What the British Did to India, pp. 3-4) but it is not quite clear what is meant and actually gained by e.g. raising taxes and duties (p. 174). With the exception of a couple of well known examples, most company states were - from an economic perspective - a disaster: profits (if they existed) would have come from actual mobilisation of resources and generation of stuff - the money itself being a lubricant to this. What I would like to know much more about is the way in which those company states that had the right to "mint money" used that right, and how this interacted with the currency of their home country. Clearly, this is complicated, because during the period in question (say 1450 to 1900) the way money worked, even in states, was not simple - and this was a period in which money was basically specie (not meaning a distinction between coins and notes, but between coin and the kind of fiat credit money we have had since 1971).

[Charles Bookman · Rating 3 out of 5]

Sometimes called “Colonialism on the cheap” company states like The Dutch East India Company, the Royal Africa Company, and Russian America Company flourished in the 17th and 18th centuries and were revived by Germany and the Belgium in the late 19th century. They brought tea and china to Europe, distributed cheap textiles and more efficient armaments around the globe, and played a large role in human trafficking between Africa, Europe and the Americas. This book provides a history of company states and in so doing sheds interesting light on concepts of sovereignty and mercantilism. More of an essay than a book. Of special value to those to those interested in the nature of sovereignty and the history of colonialism and imperialism. Read more at bookmanreader.blogspot.com .

[B · Rating 3 out of 5]

A solid insight into the unique features of the European “company-states,” and the role they have played in forging overseas empires (especially in the 17th & 18th centuries) and laying the foundations of financial capitalism until they became obsolete.

The authors do a great job in examining how company-states came into being (mostly as a legacy of medieval structures where it was customary for states to delegate “state” powers), and their “hybrid” nature: on the one hand, acting like modern corporations seeking to maximize profit, on the other, (surprisingly) acting with powers that we normally associate with modern states (the ability to have armies, wage wars, sign treaties, collect taxes etc.) This they generally did through trade, but more so through heavy use of diplomacy - now playing the supplicant to a local overlord, now playing the mediator between two local powers, thereby holding a tenuous balance in order to run their businesses.

The authors point out that the making of the “company-state” was due to coincidental circumstances where both the state and the “company-state” benefited from a fruitful partnership: the former passing on the cost of expeditionary ventures and management of outposts while collecting revenue and the latter enjoying quasi-sovereign powers while keeping a monopoly on a particular trade in commodity (at least in theory).

The authors conduct inter-temporal and inter-regional analysis among the companies to explain why some fared better than others. Chief among these factors were geographical location, being relatively independent from state control, keeping under the radar, and being adaptable. Their survival, however, no matter how nimble they happened to be, was ultimately struck down with states assuming their monopoly in international politics in the 19th century, and the concomitant change in public opinion.

Another strong point of the book is how the authors addressed the lack of validity of some of the commonly held beliefs on the topic: for example, that the company-states were true success stories, or that the Europeans’ conquest was based primarily on technological prowess of their armies.

The book’s main drawback, however, lies with its textbooks approach, i.e., recapitulating arguments at the end of every chapter, along with repetitions strewn across the book. Instead, the conclusion at the end of the book would have sufficed.

[David Sogge · Rating 4 out of 5]

This book recounts the career and retirement of a major warhorse and workhorse in the service of European capitalism in non-European places. Forerunners of empire and of colonialism, chartered companies were private agencies operating on behalf of, or in collusion with public authorities. This book describes the rise and decline of five major examples, with remarks on a number of lesser cases. The authors put classic comparative methods of analysis to good use. By signposting what they intend to say, then recapping their arguments chapter by chapter, and in the conclusion, the authors create an accessible, compact and convincing account for both university and general readers. The prose is clear and the editing tight – which comes at the cost, perhaps, of human interest and savoury anecdotes. They are sparse. Among the few I found was one about a latecomer state-promoted enterprise, in New Guinea, where uncurious German overseers dutifully erected massive fences against monkeys, only to discover that there were no monkeys on that island.

A creature of early globalized capitalism, the company-state is now extinct. Yet its history seems pretty relevant for understanding trends in today’s capitalism. With enthusiastic help from domestic and international politicians, central bankers and other public sector authorities, under terms of ‘public-private partnerships’, ‘blending’, 'de-risking', 'multi-stakeholderism' and, indeed ‘outsourcing’ (as in the book's sub-title), multinationals and corporations in the finance, insurance and real estate sectors are today marching forward in seven league boots. So it disappointed me that the authors decline to pursue, and indeed seem to dismiss, the proposition that basic, if camouflaged, mixing of public/private norms, framings and reflexes that company-states cultivated and celebrated centuries ago live on today, and robustly -- in laws, agencies and other core institutions with global reach. But perhaps that would require another book altogether.

[burak · Rating 4 out of 5]

this was a book which was much better than i expected it to be. as other reviewers mention, it is written according to academic prose, which might make it repetitive. nevertheless, in just over 200 pages, it sketches the corpus of the company-state, its major properties as a theoretical entity. next, the book continues with 2 chapters describing two waves of the company-state, first with the eponymous company states such as the voc & wic and then, for example, nineteenth century endeavours by belgium, the russian-american company and cecil rhodes projects in the southern parts of africa. an interesting argument being made, albeit implicitly, is how the company-state itself is self defeating and will give rise to its own demise. the final chapter, which is also the conclusion, makes some closing remarks and fiddles with the thought of the company-state in our age, mentioning china's projects, both the belt road project as china's scramble of africa. more ambitious and futuristic projects such as chartered cities or floating cities (thiel, praxis, &c.) are shortly noted. a wonderful read, my only remark, as someone who is allergic to academic prose, is that it might be dull in certain parts, but the slimness of the book compensates for it. this review is much longer than i thought.

[Nathan Randall · Rating 4 out of 5]

A concise book that talks about the unique institutional form of these "Company-States". Includes a broad overview of the 1600-1900 period that these were active and a good survey of the different companies and geographies. Includes some interesting Economic History, Politics, IR and the organizational analysis.

Below are some fun sentences to give you a feel for the book:

"In its lifetime, the Company [VOC] shipped over a million Europeans to the East on 4,800 ships"

"Yet even ephemeral company-states like the Scottish Darien Company, the Danish East India Company, or the various French company-states utilized the most capital-and technology-intensive weapon systems of their day, deploying groups of multidecked cannon-armed sailing ships. In contrast, even with the the most powerful contemporary military companies, there is no equivalent: there are no private aircraft carriers, attack submarines, armored divisions, or fighter squadrons. The difference between then and now is legal, but also very practical"

[Carolyn · Rating 4 out of 5]

Hard to imagine how early companies and their transporting spices, tea, plus assundies items to sell and make a profit over and above the expense of shipbuilding, operating, and taking advantage of needs and wants of customers all over the world. The actual history is far longer than imagined and the reasons one needed to protect this activity bringing on the possibility of war. The early control of power by way of consumer purchase and or sale.

One can identify the source of world wide expansion.

[Winston B-S · Rating 3 out of 5]

An interesting book but the writers repeat themselves and their ideas quite frequently. It would've been better to present their thesis once or twice instead of repeating it at the top of every chapter. In addition, I wish there was more information here. This book should've been ~100 more pages than it currently is

[W M · Rating 5 out of 5]

A very well written and research overview of the stock venture company concept and colonial system of worldwide economic exchange.