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For Profit: A History of Corporations
A history of how corporate innovation has shaped society, from ancient Rome to Silicon Valley
From legacy manufacturers to emerging tech giants, corporations wield significant power over our lives, our economy, and our politics. Some celebrate them as engines of progress and prosperity. Others argue that they recklessly pursue profit at the expense of us all.
In For Profit , law professor William Magnuson reveals that both visions contain an element of truth. The story of the corporation is a human story, about a diverse group of merchants, bankers, and investors that have over time come to shape the landscape of our modern economy. Its central characters include both the brave, powerful, and ingenious and the conniving, fraudulent, and vicious. At times, these characters have been one and the same.
Yet as Magnuson shows, while corporations haven’t always behaved admirably, their purpose is a noble one. From their beginnings in the Roman Republic, corporations have been designed to promote the common good. By recapturing this spirit of civic virtue, For Profit argues, corporations can help craft a society in which all of us—not just shareholders—benefit from the profits of enterprise.
From legacy manufacturers to emerging tech giants, corporations wield significant power over our lives, our economy, and our politics. Some celebrate them as engines of progress and prosperity. Others argue that they recklessly pursue profit at the expense of us all.
In For Profit , law professor William Magnuson reveals that both visions contain an element of truth. The story of the corporation is a human story, about a diverse group of merchants, bankers, and investors that have over time come to shape the landscape of our modern economy. Its central characters include both the brave, powerful, and ingenious and the conniving, fraudulent, and vicious. At times, these characters have been one and the same.
Yet as Magnuson shows, while corporations haven’t always behaved admirably, their purpose is a noble one. From their beginnings in the Roman Republic, corporations have been designed to promote the common good. By recapturing this spirit of civic virtue, For Profit argues, corporations can help craft a society in which all of us—not just shareholders—benefit from the profits of enterprise.
357 pages, Hardcover
Published November 8, 2022
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3130 people want to read
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Displaying 1 - 30 of 87 reviews
November 23, 2022
Hugely disappointing.
I was expecting a unique account of the ways in which corporate structure has evolved in tandem with changing sociocultural, economic, political, legal, etc. conditions, but instead the book’s subtitle, A History of Corporations, should be taken at face value: the bulk of it is literally a history of some corporations. It’s structured with eight discrete, discursive chapters that each survey one type of corporate variant (monopoly, mass producer, multinational, etc.) by chronicling a specific historical exemplar of that variant (Union Pacific Railroad, Ford, Exxon, etc.). The result is that you feel you’ve gleaned much more about the histories of a select few companies than about the history of corporate entities. There’s a concluding chapter on start-ups, for instance, that has astonishingly little to say about the nature of start-ups, but instead is largely a history of Facebook, a story that’s already been told ad nauseam.
The Economist reckons that this book is magnificent, but I regret to report that I beg to differ.
I was expecting a unique account of the ways in which corporate structure has evolved in tandem with changing sociocultural, economic, political, legal, etc. conditions, but instead the book’s subtitle, A History of Corporations, should be taken at face value: the bulk of it is literally a history of some corporations. It’s structured with eight discrete, discursive chapters that each survey one type of corporate variant (monopoly, mass producer, multinational, etc.) by chronicling a specific historical exemplar of that variant (Union Pacific Railroad, Ford, Exxon, etc.). The result is that you feel you’ve gleaned much more about the histories of a select few companies than about the history of corporate entities. There’s a concluding chapter on start-ups, for instance, that has astonishingly little to say about the nature of start-ups, but instead is largely a history of Facebook, a story that’s already been told ad nauseam.
The Economist reckons that this book is magnificent, but I regret to report that I beg to differ.
February 10, 2024
Well documented, well written, relevant and informative. Highly recommended.
January 13, 2023
The author is a law professor and formerly worked for a NYC law firm which dealt with high power corporate mergers so I had high hopes of getting a fascinating history of how corporations have involved, with lots of details and legal minutia.
This is not that book.
Instead, this book picks a small-ish number of specific historical instances, typically where one corporation or another behaved scandalously, and give a basic recounting with no more than a popular understanding. Sure, people may behave badly, illegally, and immorally but the fact that corporations sometimes do, also, appears to be taken by the author as damning of corporations. I'm not sure why admittedly horrible behavior by corporations is any different than horrible behavior by individuals.
Anyway: I had already read deeper writings about all of the instances covered in this book, except for the Roman corporation instance. Sadly, opportunities to discuss the theory of the firm from a modern perspective is completely neglected, presumably because the author doesn't have a particularly deep understanding of it. Don't expect to hear Coase or others in the field mentioned.
Basically: if you're interested enough in corporate history and the history of corporations to consider this book then it probably won't offer anything for you.
This is not that book.
Instead, this book picks a small-ish number of specific historical instances, typically where one corporation or another behaved scandalously, and give a basic recounting with no more than a popular understanding. Sure, people may behave badly, illegally, and immorally but the fact that corporations sometimes do, also, appears to be taken by the author as damning of corporations. I'm not sure why admittedly horrible behavior by corporations is any different than horrible behavior by individuals.
Anyway: I had already read deeper writings about all of the instances covered in this book, except for the Roman corporation instance. Sadly, opportunities to discuss the theory of the firm from a modern perspective is completely neglected, presumably because the author doesn't have a particularly deep understanding of it. Don't expect to hear Coase or others in the field mentioned.
Basically: if you're interested enough in corporate history and the history of corporations to consider this book then it probably won't offer anything for you.
December 10, 2022
historically interesting but overly optimistic in its analysis in the role of corporate role. the concluding truisms were cheesy at best, naive at worst.
August 14, 2023
I have a minor problem with this book. It could have been restricted to the contents in the introduction and the conclusion. The author could have refined the content in those sections and expanded it. It would have been a shorter book, it would have been a book purely about how corporations need to inject a little bit of social responsibility into their operating structure, and it would have been a better book. Rather, four-fifths of the book was dedicated to telling the story of corporations through 8 companies. On its own, there was really nothing wrong with this system except that no attempt was made (with the exception of the first 3) to make these companies a larger story of the era.
But my main problem with the book is that the author doesn’t seem to understand that the point he tried to make by giving us a profile of these 8 corporations was actually counter to his intentions.
The author tries to convey the idea that corporations were never meant to be purely for profit. And to back this up, he gives us corporations like the Medici banking family, the joint stock companies of the 17th and 18th centuries and the Societas of the Roman republic / empire. Which makes me wonder why it never occurred to the author that the common good for which these corporations were founded was merely ostensible and a front through which powerful and well-connected individuals hand-picked by the ruling elite could be used to profit from the people. In what universe, for example, was the Medici Banking family incorporated for the common good? He even wrote that “The Medici Bank in Florence was denounced for engaging in usury, and the Dominican friar Savonarola led bonfires of the vanities to campaign against their vices.” Again, he writes, Beyond the church, kings, rulers, and nobles formed another important component of the Medici Bank’s clientele. These groups were in more or less constant need of money during the Renaissance to fund their wars, build their castles, and buy their luxury goods, and the Medici Bank proved a reliable source of it. Is this an example of a body that is founded to provide for the common good?
Another example, he points out that “Roman publicans became renowned for their greed and corruption, leading to their eternal association with sinners in the Bible. ” But he later goes ahead to say that ” But Romans living in the Roman Republic viewed publicans quite differently. The publicans were a respected and even revered class within Roman society for much of the existence of the commonwealth. Their very name suggests their close connection to the state: publica means “public,” and res publica, “public thing” or “republic.” The publicani themselves were government contractors—that is, private citizens who negotiated with the government to perform public duties. Since there was no large government bureaucracy to do so, the republic depended heavily on publicans to keep the state running.’
Here then is my question? Are we supposed to derive the template of corporations as instruments of common good by looking to times when corporations were instruments of either imperial power or states with over-extended spheres of power? The Romans who lived in Rome might have viewed the publicans differently. But that is probably because they were not feeling their rod. Just as British people might have viewed the joint stock companies differently from the way the actual people in India, for example. By that standard, only defense contractors can be said to be operating under the author’s sense of common good.
In the end, the author suggests ways to make corporations better and more responsible. No problem with me there. All it shows is that the author should have written a different book, a book about corporate social responsibility rather than one purporting to show a non-existent time when corporations existed to serve the common good. Corporations have never served the common good. The earliest ones have profited from state projects (and still do if you include federal contractors, especially defense contractors), but that is not the same as saying they existed to promote the common good. I would rather have giant corporations like Apple and Facebook rather than the joint stock companies of the 17th century or the Societas of the Roman republic.
But my main problem with the book is that the author doesn’t seem to understand that the point he tried to make by giving us a profile of these 8 corporations was actually counter to his intentions.
The author tries to convey the idea that corporations were never meant to be purely for profit. And to back this up, he gives us corporations like the Medici banking family, the joint stock companies of the 17th and 18th centuries and the Societas of the Roman republic / empire. Which makes me wonder why it never occurred to the author that the common good for which these corporations were founded was merely ostensible and a front through which powerful and well-connected individuals hand-picked by the ruling elite could be used to profit from the people. In what universe, for example, was the Medici Banking family incorporated for the common good? He even wrote that “The Medici Bank in Florence was denounced for engaging in usury, and the Dominican friar Savonarola led bonfires of the vanities to campaign against their vices.” Again, he writes, Beyond the church, kings, rulers, and nobles formed another important component of the Medici Bank’s clientele. These groups were in more or less constant need of money during the Renaissance to fund their wars, build their castles, and buy their luxury goods, and the Medici Bank proved a reliable source of it. Is this an example of a body that is founded to provide for the common good?
Another example, he points out that “Roman publicans became renowned for their greed and corruption, leading to their eternal association with sinners in the Bible. ” But he later goes ahead to say that ” But Romans living in the Roman Republic viewed publicans quite differently. The publicans were a respected and even revered class within Roman society for much of the existence of the commonwealth. Their very name suggests their close connection to the state: publica means “public,” and res publica, “public thing” or “republic.” The publicani themselves were government contractors—that is, private citizens who negotiated with the government to perform public duties. Since there was no large government bureaucracy to do so, the republic depended heavily on publicans to keep the state running.’
Here then is my question? Are we supposed to derive the template of corporations as instruments of common good by looking to times when corporations were instruments of either imperial power or states with over-extended spheres of power? The Romans who lived in Rome might have viewed the publicans differently. But that is probably because they were not feeling their rod. Just as British people might have viewed the joint stock companies differently from the way the actual people in India, for example. By that standard, only defense contractors can be said to be operating under the author’s sense of common good.
In the end, the author suggests ways to make corporations better and more responsible. No problem with me there. All it shows is that the author should have written a different book, a book about corporate social responsibility rather than one purporting to show a non-existent time when corporations existed to serve the common good. Corporations have never served the common good. The earliest ones have profited from state projects (and still do if you include federal contractors, especially defense contractors), but that is not the same as saying they existed to promote the common good. I would rather have giant corporations like Apple and Facebook rather than the joint stock companies of the 17th century or the Societas of the Roman republic.
December 15, 2024
I enjoyed this book because I was unfamiliar with some of these stories and I appreciated having these corporations that spanned centuries and geography all together. I mean where else can you read about KKR and Rome’s ancient tax collectors together?
But as a book I was disappointed. The author attempts to draw common threads between these stories but I think he left some overarching themes and patterns untouched. Ultimately he chose examples of each type of corporation that went to excess rather than surveying more sustainable and “good” versions of these. For startups he chose Facebook? Not representative of startups at all, IMO.
More importantly the types of corporations Magnuson covers are not really in the same categories. One chapter is “The Raider” that covers LBOs. There’s almost nothing intrinsically positive in that corporation type. And to put it on the same playing field as a startup or even assembly line is disjointed. Much of the Startup chapter covered VC so why wasn’t that covered?
And by simply choosing a subset of corporation types and then covering the most extreme versions of each, he renders his conclusion chapter pretty worthless. He recommends ways to improve corporations that all involve the corporation’s willing participation. Saying things like “don’t undermine the republic,” or “treat your workers right” are pretty hollow recommendations in a book where every company covered has willfully (and at times is quoted), done the opposite. In short, the greedy corporations would laugh at such a weak conclusion. I mean KKR exists literally only to profit. They couldn’t care less about their impact.
And that’s my own personal negative conclusion drawn here. Whereas reforms have curtailed corporate greed in the past through things like the Sherman Act, the chapter on KKR and Facebook indicated there are almost zero repercussions or reforms happening any longer. But again this is relevant to the EXTREME cases he covers. If he’d covered the less greedy companies we could actually see these principles at work. Instead they ring hollow and fairly common sense against a backdrop of the worst excesses capitalism has to offer.
But as a book I was disappointed. The author attempts to draw common threads between these stories but I think he left some overarching themes and patterns untouched. Ultimately he chose examples of each type of corporation that went to excess rather than surveying more sustainable and “good” versions of these. For startups he chose Facebook? Not representative of startups at all, IMO.
More importantly the types of corporations Magnuson covers are not really in the same categories. One chapter is “The Raider” that covers LBOs. There’s almost nothing intrinsically positive in that corporation type. And to put it on the same playing field as a startup or even assembly line is disjointed. Much of the Startup chapter covered VC so why wasn’t that covered?
And by simply choosing a subset of corporation types and then covering the most extreme versions of each, he renders his conclusion chapter pretty worthless. He recommends ways to improve corporations that all involve the corporation’s willing participation. Saying things like “don’t undermine the republic,” or “treat your workers right” are pretty hollow recommendations in a book where every company covered has willfully (and at times is quoted), done the opposite. In short, the greedy corporations would laugh at such a weak conclusion. I mean KKR exists literally only to profit. They couldn’t care less about their impact.
And that’s my own personal negative conclusion drawn here. Whereas reforms have curtailed corporate greed in the past through things like the Sherman Act, the chapter on KKR and Facebook indicated there are almost zero repercussions or reforms happening any longer. But again this is relevant to the EXTREME cases he covers. If he’d covered the less greedy companies we could actually see these principles at work. Instead they ring hollow and fairly common sense against a backdrop of the worst excesses capitalism has to offer.
August 28, 2025
(4.4 stars) This book tells the history of corporations through a different example in every chapter. First up is the invention of the limited liability corporation in Rome, called the societates publicanorum, which was used to collect taxes. Then we go to the Medici Bank in Renaissance Italy, the East India Company, the Union Pacific Railroad Company in the Civil war era USA, the Ford Motor Company, the oil multinational company Exxon, the private equity firm KKR and finally Facebook. In every chapter Magnuson tells a wonderfully detailed and well-paced story of the company and the impact it had on the surrounding society. He does a really great job of balancing the accomplishments and projects these corporations achieved with their negative consequences. I learned a ton, especially about the East India company, which was truly a psychotic enterprise, fighting a war in India and helping to cause the Boston Tea Party. I was originally worried this book would be capitalist propaganda judging by its reviews, but it absolutely is not. The author constantly cites Adam Smith’s own worries about the invisible hand and its pitfalls. He ends the book with the conclusion that the purpose of corporations is to help the society that they are based in. He gives a chapter on rules that corporations can follow to do this. Overall, except for some lagging passages and a little bit of a dry topic, this book was incredibly good. It was a sober, careful analysis of the pros and cons of corporations. I highly recommend this book to everybody.
November 2, 2025
3.5 ⭐️
Як на мене автор захопився розповіддю про історії конкретних компаній і про життя людей, які будували ці компанії. Цього було значно більше ніж розповідей про самі корпорацій. Через це книжка для мене виявилася перегруженою і важкою для сприйняття через велику кількість зайвих фактів.
Попри це значна частина історій мені була не відома, тому їх було цікаво читати (хто ж знав, що в римській державі податки збирала не держава, а приватні особи?)
Як на мене автор захопився розповіддю про історії конкретних компаній і про життя людей, які будували ці компанії. Цього було значно більше ніж розповідей про самі корпорацій. Через це книжка для мене виявилася перегруженою і важкою для сприйняття через велику кількість зайвих фактів.
Попри це значна частина історій мені була не відома, тому їх було цікаво читати (хто ж знав, що в римській державі податки збирала не держава, а приватні особи?)
January 15, 2025
A thoughtful introduction to the history of corporations starting with Ancient Rome and showcasing the major milestones of corporate evolution throughout history. He asks readers to contemplate the purpose of corporations and shows how they can be powerful vessels for cooperative accomplishment but also tend towards abuse and exploitation if left unchecked.
May 1, 2023
Splendid book. Full of important historical facts brought together in the conclusion. I read the last 3rd of the book casually on a Sunday morning/afternoon, that’s how hooked I was! An excellent book and a very important one for our current times focusing on what’s the purpose of a corporation through a historical lens.
July 7, 2024
yaas private equity companies!
Read
December 3, 2024For a course about business history
August 27, 2025
reading history books willingly go me! this was a very easy read and made learning abt the economy actually interesting???? succinct, well organized, interesting theory that corporations aren’t inherently bad and they need to go back to serving the common good. covers a wide range of history and brings to present day, would recommend
April 8, 2023
This book celebrates the virtues of corporations both through its characteristics (limited liability, joint stock, and being a single legal entity) and through its potential to utilize the power of capitalism in the most efficient way to bring progress and transform societies.
It offers a quick survey of development of corporation from its relatively rudimentary form in Roman times as societas pubilcanorum to our present-day form as start-up outlining their raison d’être as well as the innovations they have brought to capitalism through case studies of banking, the concept of joint stock, monopoly power, assembly line/mass production, multinational reach, and corporate takeovers. I was able to relate to most of these chapters since I had read books on these themes (“Medici Money” on banking in Florence where I learnt about the ingenious idea of “bill of exchange” and “discretionary deposit” to circumvent the religious rules on usury; “Outsourcing Empire” on East India company / joint stock where I learnt about in-company fighting and the ensuing attempts to establish checks and balances to align management and owners’ interests; “Americana” and “Goliath” on monopolies and anti-trust movement etc.)
The book is reasonably well-structured in presenting the successes and shortcomings (mainly in the form of corruption and fraud) of the institution, and it provides interesting tidbits of information –even if some of it is tangentially relevant at best (yet certainly interesting in themselves) to the topic such as various battles of the 2nd Punic war and the Fabian strategy that won it for Rome, or about Elihu Yale, an official at East India company whose donations contributed to the foundation of the Yale University, or on how “cowcatchers” came to be added in front of locomotives etc.
Among the heap of knowledge from this book that I was happy to add to my knowledge-bank are: how some of the East India company officials spread rumours to manipulate the company’s stock prices, how under Child’s leadership the company sidelined the British government to pursue its own interests, and how the company played a role in alienating Americans, hastening the revolution; how Rome, ruled by a small bureaucracy, relied heavily on companies that acted as quasi-governmental agencies both in catering to public works and collecting of taxes on behalf of the republic and how they became “systemically important” and abusive in their practices; how the healthy competition between Union and Central Pacific companies helped pave the way for the American transcontinental railway system (but also were given many concessions including land grants and rights to minerals found in them), the Credit Mobilier scandal, the subsequent rise of robber barons and the anti-trust movement, and most interestingly the watering down of the anti-monopoly laws over the years; Ford as a controversial figure, both as a benevolent employer providing the best wage for his employees, but also as an overly paternalistic one monitoring them through the infamous “Sociological Department,” his innovative techniques of assembly lines “to take the work to the men instead of the men to the work,” and most importantly how Fordism led to consumption and advertising spree for the rest of the 20th century; the growth of multinational firms led by Exxon’s efforts to find alternative oil resources to reduce dependence on the middle east; how private equity firms used strategies like leveraged-buyouts where they load their targeted companies with debt, and structured their earnings through various fees (primarily through management and carried-interest), and used junk-bonds in financing their acquisitions; and the blatant “move fast and break things” strategy pioneered by Zuckerberg’s Facebook and adopted by other start-ups.
Professor Magnuson’s book remains, however, a mediocre work as the book suffers from repetitive passages, and some factual inaccuracies (the author claims Florence was the most powerful city-state in Italy – it was probably the richest for a short while but was a military midget compared to most of its neighbours). The quality of the book takes an unfortunate nosedive at the last section where the author in his absolute naïveté grounded on the belief that the corporation has “obligations to society”, offers “suggestions” full of incurable optimism that are seemingly aimed at the C-suite leaders in order to preserve the “spirit of capitalism.” This “spirit” according to the author, was at its inception firmly anchored in morality to promote the public good and Professor Magnus nostalgically (and probably vainly) years for a return to its original purpose.
It offers a quick survey of development of corporation from its relatively rudimentary form in Roman times as societas pubilcanorum to our present-day form as start-up outlining their raison d’être as well as the innovations they have brought to capitalism through case studies of banking, the concept of joint stock, monopoly power, assembly line/mass production, multinational reach, and corporate takeovers. I was able to relate to most of these chapters since I had read books on these themes (“Medici Money” on banking in Florence where I learnt about the ingenious idea of “bill of exchange” and “discretionary deposit” to circumvent the religious rules on usury; “Outsourcing Empire” on East India company / joint stock where I learnt about in-company fighting and the ensuing attempts to establish checks and balances to align management and owners’ interests; “Americana” and “Goliath” on monopolies and anti-trust movement etc.)
The book is reasonably well-structured in presenting the successes and shortcomings (mainly in the form of corruption and fraud) of the institution, and it provides interesting tidbits of information –even if some of it is tangentially relevant at best (yet certainly interesting in themselves) to the topic such as various battles of the 2nd Punic war and the Fabian strategy that won it for Rome, or about Elihu Yale, an official at East India company whose donations contributed to the foundation of the Yale University, or on how “cowcatchers” came to be added in front of locomotives etc.
Among the heap of knowledge from this book that I was happy to add to my knowledge-bank are: how some of the East India company officials spread rumours to manipulate the company’s stock prices, how under Child’s leadership the company sidelined the British government to pursue its own interests, and how the company played a role in alienating Americans, hastening the revolution; how Rome, ruled by a small bureaucracy, relied heavily on companies that acted as quasi-governmental agencies both in catering to public works and collecting of taxes on behalf of the republic and how they became “systemically important” and abusive in their practices; how the healthy competition between Union and Central Pacific companies helped pave the way for the American transcontinental railway system (but also were given many concessions including land grants and rights to minerals found in them), the Credit Mobilier scandal, the subsequent rise of robber barons and the anti-trust movement, and most interestingly the watering down of the anti-monopoly laws over the years; Ford as a controversial figure, both as a benevolent employer providing the best wage for his employees, but also as an overly paternalistic one monitoring them through the infamous “Sociological Department,” his innovative techniques of assembly lines “to take the work to the men instead of the men to the work,” and most importantly how Fordism led to consumption and advertising spree for the rest of the 20th century; the growth of multinational firms led by Exxon’s efforts to find alternative oil resources to reduce dependence on the middle east; how private equity firms used strategies like leveraged-buyouts where they load their targeted companies with debt, and structured their earnings through various fees (primarily through management and carried-interest), and used junk-bonds in financing their acquisitions; and the blatant “move fast and break things” strategy pioneered by Zuckerberg’s Facebook and adopted by other start-ups.
Professor Magnuson’s book remains, however, a mediocre work as the book suffers from repetitive passages, and some factual inaccuracies (the author claims Florence was the most powerful city-state in Italy – it was probably the richest for a short while but was a military midget compared to most of its neighbours). The quality of the book takes an unfortunate nosedive at the last section where the author in his absolute naïveté grounded on the belief that the corporation has “obligations to society”, offers “suggestions” full of incurable optimism that are seemingly aimed at the C-suite leaders in order to preserve the “spirit of capitalism.” This “spirit” according to the author, was at its inception firmly anchored in morality to promote the public good and Professor Magnus nostalgically (and probably vainly) years for a return to its original purpose.
January 3, 2023
Throughout my reading of this book, I thought of Peter Drucker's enlightening and forward-looking analyses of management practices and the business of corporations and wondered if Professor Magnuson had been at all influenced by Drucker's extensive body of work. For Profit has a different aim - an examination of the whys and wherefores of the "corporation," the benefits - social and economic, and the damage wrought when the purpose is undermined by the greedy and unscrupulous.
Magnuson narrates in riveting detail eight periods as the corporation evolved in form and practice to the present.
1 Rome - societas pulicanorum - wealthy citizens who united to form a separate legal entity to provide government services. The structure was the modern separation of management running the business and shareholders providing the capital.
2 Florence - the rise and fall of the Medici bank - the brilliance of the accounting system, the financial skill of the Medici, and network of branches beginning in 1397 - to its collapse through grasping and poor judgement in 1494.
3 London - formed by a group of merchants, the East India Company received a charter from Queen Elizabeth I to trade between England and the East Indies in 1600. The purpose was to advance the "greatness of England". Financing was achieved through forming a joint stock company and turning sales of stock to the newly formed the stock exchange. It worked well until manipulators found ways to cheat the markets. Ultimate destruction ensued from the company putting its interests ahead of all else to take over the rule of Bengal.
4 The United States - after the Civil War the building of railroads across the continent, achieved through mass financing, high octane competition, and sheer grit resulting in the rapid economic growth in the West. Jay Gould and monopolistic practices and government disregard followed with great harm to the shareholders, employees, farmers, and economy.
5 Detroit and the Assembly Line - a manufacturing revolution in production, management, marketing, and consumerism. But what of the workers? And what of the consequences to having a car in every driveway?
6 The Multinational as illustrated by Standard Oil's offspring - Exxon. Fascinating account of the critical role Exxon played in obtaining oil for the allies during World War II. But this has also been the company that has denied climate change, lied about emissions, and done its utmost to increase (not decrease) use of fossil fuels. The author's observation - "The history of Exxon is, in a way, the history of the twentieth century." (p 213)
7 The Raider - oh - so that is how KKR came into being and the leveraged buyout worked, the part private equity played (and plays) in taking over companies supposedly to make them more efficient. One of the stories concerns RJR Nabisco. Clearly, I wasn't paying attention in the 1980s.
8 The Start-Up - today. Here the mantra, in the words of Mark Zuckerberg, is, “Move fast and break things.” We read of Facebook - good in connecting people, bad in recognizing and curtailing the abuse of those connections. Facebook has accepted some responsibility. This book was written before Elon Musk took on Twitter to what may be devastating social consequences.
The Conclusion solidified my view that business schools would do well to add this book - or at least this chapter - to its reading list for a balanced view of the corporation, past and present: that the purpose has been "to promote the common good" (initially - usually) with some magnificent examples; but there can be and is often a turn to "vice and greed." (p. 298)
Magnusen closes with "a few guiding principles for fixing corporations ... a useful road map, based on real-world examples." - addressed to "corporate executives, government policy makers, and citizens" (p. 303) - to which I add all business school students.
Magnuson narrates in riveting detail eight periods as the corporation evolved in form and practice to the present.
1 Rome - societas pulicanorum - wealthy citizens who united to form a separate legal entity to provide government services. The structure was the modern separation of management running the business and shareholders providing the capital.
2 Florence - the rise and fall of the Medici bank - the brilliance of the accounting system, the financial skill of the Medici, and network of branches beginning in 1397 - to its collapse through grasping and poor judgement in 1494.
3 London - formed by a group of merchants, the East India Company received a charter from Queen Elizabeth I to trade between England and the East Indies in 1600. The purpose was to advance the "greatness of England". Financing was achieved through forming a joint stock company and turning sales of stock to the newly formed the stock exchange. It worked well until manipulators found ways to cheat the markets. Ultimate destruction ensued from the company putting its interests ahead of all else to take over the rule of Bengal.
4 The United States - after the Civil War the building of railroads across the continent, achieved through mass financing, high octane competition, and sheer grit resulting in the rapid economic growth in the West. Jay Gould and monopolistic practices and government disregard followed with great harm to the shareholders, employees, farmers, and economy.
5 Detroit and the Assembly Line - a manufacturing revolution in production, management, marketing, and consumerism. But what of the workers? And what of the consequences to having a car in every driveway?
6 The Multinational as illustrated by Standard Oil's offspring - Exxon. Fascinating account of the critical role Exxon played in obtaining oil for the allies during World War II. But this has also been the company that has denied climate change, lied about emissions, and done its utmost to increase (not decrease) use of fossil fuels. The author's observation - "The history of Exxon is, in a way, the history of the twentieth century." (p 213)
7 The Raider - oh - so that is how KKR came into being and the leveraged buyout worked, the part private equity played (and plays) in taking over companies supposedly to make them more efficient. One of the stories concerns RJR Nabisco. Clearly, I wasn't paying attention in the 1980s.
8 The Start-Up - today. Here the mantra, in the words of Mark Zuckerberg, is, “Move fast and break things.” We read of Facebook - good in connecting people, bad in recognizing and curtailing the abuse of those connections. Facebook has accepted some responsibility. This book was written before Elon Musk took on Twitter to what may be devastating social consequences.
The Conclusion solidified my view that business schools would do well to add this book - or at least this chapter - to its reading list for a balanced view of the corporation, past and present: that the purpose has been "to promote the common good" (initially - usually) with some magnificent examples; but there can be and is often a turn to "vice and greed." (p. 298)
Magnusen closes with "a few guiding principles for fixing corporations ... a useful road map, based on real-world examples." - addressed to "corporate executives, government policy makers, and citizens" (p. 303) - to which I add all business school students.
April 30, 2025
It is a little-known fact that one of the major factors behind the rise of the Roman empire was the role played by its corporations. During the era of the Republic, the state had little resembling the bureaucracy that would normally have been required to govern such a large realm. Yet, roads had to be built, cities had to be supplied with water, armies had to be equipped and fed. Meeting these needs was a role filled by private corporations, known as societates, which pioneered some of the innovations that we still think of as being characteristic of the corporation: multiple shareholders, limited liability, a perpetual lifespan beyond that of the owners, and so on. These Roman legal and organizational inventions live on today in the modern corporation.
For Profit is a work of big history by law professor William Magnuson. It spans the millennia from the Roman Republic to the current era of tech giants such as Meta, Apple, Amazon and Google. But this is no theoretical treatise about the theory of the firm. Instead, each chapter of the book focuses on a particular era with a representative company, with the exception of the chapter on Rome.
The Renaissance era is represented by the multinational Bank of the Medici family, which invented international banking. Each of their branches in assorted European countries was its own legal entity, but was controlled by the Medici family while being run by local management which also had a significant equity stake in their own branch. This structure diversified the company, allowed it to carry out cross-border international transactions, and shielded the company as a whole from being taken down by disaster befalling any one of its constituent parts. For well over a century, the Medici bank was Europe's dominant bank, as the family grew so wealthy and powerful that it supplied four popes, two queens of France, and effectively ruled Florence, where it was based. Hordes of tourists still visit the city to see the buildings the Medicis built and the art collections they assembled -- 500 years later.
The European colonial era is represented by the East India Company, which pioneered the idea of a joint stock company with shares traded on the London stock exchange. The company, with vast access to capital, moved on from being a company of merchants with far-flung trading posts to eventually becoming a colonial power in its own right. It created its own army, conquering and ruling much of the Indian subcontinent until the British government took it over following the India Mutiny of 1857.
The 19th century railroad era's star actor was Union Pacific, run by robber barons, and which built most of the transcontinental railroad across the US during the 1860s and '70s, with ample funding and land grants from the federal government. It eventually became a byword for rapacious acquisitions as it hoovered up its competitors by means fair and foul, and then took advantage of its monopoly to set ruinously high prices at the expense of farmers and small businesses.
The story continues with Ford, which pioneered mass production via the assembly line, and innovated in assorted other ways such as introducing the 40-hour work week and high wages for its workers. The multinational corporation model was brought to a high level of refinement by Exxon, which grew out of Standard Oil created by John D Rockefeller in the late 19th century. Like Union Pacific, Rockefeller well understood the art of driving competitors out of business by whatever means necessary, but eventually grew so large it caused the US federal government to pass anti-trust legislation and break up the company.
Facebook rounds out the picture by representing Silicon Valley, with its constellation of startups and the venture capital firms that funded them, eventually leading to the handful of dominant tech behemoths that dominate the economy today: Microsoft, Tesla, Apple, Google, Meta, Amazon and Nvidia.
If you want a highly readable survey of the great corporations that have dominated the world's economy, particularly that of the US, this book condenses many tomes of economic history into one. Very much recommended.
For Profit is a work of big history by law professor William Magnuson. It spans the millennia from the Roman Republic to the current era of tech giants such as Meta, Apple, Amazon and Google. But this is no theoretical treatise about the theory of the firm. Instead, each chapter of the book focuses on a particular era with a representative company, with the exception of the chapter on Rome.
The Renaissance era is represented by the multinational Bank of the Medici family, which invented international banking. Each of their branches in assorted European countries was its own legal entity, but was controlled by the Medici family while being run by local management which also had a significant equity stake in their own branch. This structure diversified the company, allowed it to carry out cross-border international transactions, and shielded the company as a whole from being taken down by disaster befalling any one of its constituent parts. For well over a century, the Medici bank was Europe's dominant bank, as the family grew so wealthy and powerful that it supplied four popes, two queens of France, and effectively ruled Florence, where it was based. Hordes of tourists still visit the city to see the buildings the Medicis built and the art collections they assembled -- 500 years later.
The European colonial era is represented by the East India Company, which pioneered the idea of a joint stock company with shares traded on the London stock exchange. The company, with vast access to capital, moved on from being a company of merchants with far-flung trading posts to eventually becoming a colonial power in its own right. It created its own army, conquering and ruling much of the Indian subcontinent until the British government took it over following the India Mutiny of 1857.
The 19th century railroad era's star actor was Union Pacific, run by robber barons, and which built most of the transcontinental railroad across the US during the 1860s and '70s, with ample funding and land grants from the federal government. It eventually became a byword for rapacious acquisitions as it hoovered up its competitors by means fair and foul, and then took advantage of its monopoly to set ruinously high prices at the expense of farmers and small businesses.
The story continues with Ford, which pioneered mass production via the assembly line, and innovated in assorted other ways such as introducing the 40-hour work week and high wages for its workers. The multinational corporation model was brought to a high level of refinement by Exxon, which grew out of Standard Oil created by John D Rockefeller in the late 19th century. Like Union Pacific, Rockefeller well understood the art of driving competitors out of business by whatever means necessary, but eventually grew so large it caused the US federal government to pass anti-trust legislation and break up the company.
Facebook rounds out the picture by representing Silicon Valley, with its constellation of startups and the venture capital firms that funded them, eventually leading to the handful of dominant tech behemoths that dominate the economy today: Microsoft, Tesla, Apple, Google, Meta, Amazon and Nvidia.
If you want a highly readable survey of the great corporations that have dominated the world's economy, particularly that of the US, this book condenses many tomes of economic history into one. Very much recommended.
March 28, 2023
I enjoyed the history portion of the book, with it's wide-ranging coverage of the corporation from ancient Rome to American railroad companies to Facebook. But the last chapter, in terms of how to address the future of corporations seemed thin and based on an assumptions that we already know aren longer tenable.
August 27, 2023
"For Profit: A History of Corporations" by William Magnuson is an eloquently written and captivating exploration into the evolution of the corporate entity, showcasing its multifaceted manifestations throughout the ages. The crux of the author's narrative revolves around the intriguing notion that corporations were originally conceived to serve the greater good of society. However, as the pages of history unfurl, it becomes evident that the mere existence of corporations, albeit founded with noble intentions, did not invariably translate to virtuous outcomes.
Magnuson deftly navigates through historical epochs, unveiling a tapestry of instances where corporations embarked on their journeys with philanthropic missions, only to veer astray from their initial purpose. The annals of time bear witness to a litany of corporations that embarked on benevolent endeavors but ultimately deviated into the realms of exploitation and abuse. Among these is the saga of Roman societates, which commenced with noble aspirations of public welfare, yet progressively transmuted into instruments of oppression, subjugating foreigners and manipulating the Senate for their gain.
The narrative gains further texture with the chronicle of the East India Company, an emblem of global trade expansion and exploration. While hailed for its initial contributions to world commerce, the company's unchecked dominance led to the egregious maltreatment of local governments abroad, culminating in episodes of famine and warfare that underscored the paradox of its existence.
The Union Pacific Company, a conduit for connecting a nation, emerges as yet another exemplar of the dichotomy inherent in the corporate saga. As the continental United States celebrated its unity through the company's efforts, the shadow of monopolistic power loomed, casting a pall over the triumph of connectivity.
In summation, "For Profit: A History of Corporations" presents a compelling narrative that scrutinizes the underbelly of corporate history, challenging the conventional perception of their altruistic essence. William Magnuson's artful prose invites readers on an intellectual journey through time, navigating the intricate interplay between corporate intent and societal impact. In its totality, this book stands as a commendable endeavor, fostering a nuanced comprehension of the corporate institution's complex relationship with the public welfare, while also providing a cautionary tale of its potential for divergence from noble aspirations.
Magnuson deftly navigates through historical epochs, unveiling a tapestry of instances where corporations embarked on their journeys with philanthropic missions, only to veer astray from their initial purpose. The annals of time bear witness to a litany of corporations that embarked on benevolent endeavors but ultimately deviated into the realms of exploitation and abuse. Among these is the saga of Roman societates, which commenced with noble aspirations of public welfare, yet progressively transmuted into instruments of oppression, subjugating foreigners and manipulating the Senate for their gain.
The narrative gains further texture with the chronicle of the East India Company, an emblem of global trade expansion and exploration. While hailed for its initial contributions to world commerce, the company's unchecked dominance led to the egregious maltreatment of local governments abroad, culminating in episodes of famine and warfare that underscored the paradox of its existence.
The Union Pacific Company, a conduit for connecting a nation, emerges as yet another exemplar of the dichotomy inherent in the corporate saga. As the continental United States celebrated its unity through the company's efforts, the shadow of monopolistic power loomed, casting a pall over the triumph of connectivity.
In summation, "For Profit: A History of Corporations" presents a compelling narrative that scrutinizes the underbelly of corporate history, challenging the conventional perception of their altruistic essence. William Magnuson's artful prose invites readers on an intellectual journey through time, navigating the intricate interplay between corporate intent and societal impact. In its totality, this book stands as a commendable endeavor, fostering a nuanced comprehension of the corporate institution's complex relationship with the public welfare, while also providing a cautionary tale of its potential for divergence from noble aspirations.
July 3, 2023
This book explores the influence and impact of corporations throughout history. Magnuson is both a law professor and a former mergers and acquisitions professional. He writes about business history and how corporations affect world events.
Early corporate entities in Rome provided essential goods and services to the Roman Republic. These corporations showed the ability to manage important tasks for the state. The fall of the republic and the rise of monarchies caused corporations to decline and less efficient bureaucratic systems to take over.
The book looks at how corporate structures and practices changed over time. Magnuson examines the Medici family's role in creating a banking empire in Renaissance Florence. Medici's innovative financial practices, such as currency exchange and secure deposit services, still resonate today. The Medici family competed ruthlessly and clashed violently with rivals, overshadowing their arts patronage.
The book also explores the British East India Company, which wielded both military force and economic influence in establishing a British presence in India. Aggressive tactics by the company, such as preferential product treatment, led to the American Revolution.
In the 19th century, corporations became less overtly violent but remained highly exploitative. The Union Pacific Railroad connected the nation but was corrupt and imposed unfair prices. This era was marked by wealthy industrialists, known as Robber Barons, yet their ruthless business practices generated a public backlash.
The author addresses the issue of public perception, illustrating how prominent figures like John D. Rockefeller, despite engaging in cutthroat competition and manipulation, also contributed to societal progress. Rockefeller's domination of the oil industry resulted in an extensive fuel network and transportation system that persists today. Similarly, Henry Ford's revolutionary production methods and introduction of affordable automobiles profoundly impacted industrial production and mass consumerism. Ford is an example of a corporate leader who worked to achieve both profits and societal goals. When he opened his assembly line, he paid his workers $5 a day, double the standard rate at the time, for an eight-hour day rather than the industry's 9- or 10-hour day standard. When asked why he would do this, he said: "We believe in making twenty thousand men prosperous and content rather than follow the plan of making a few slave drivers in our establishment multimillionaires." Later, Ford became anti-union and pro-Nazi, but the assembly line remained a huge benefit to human welfare.
Multinational corporations such as Exxon Mobil, which evolved out of the breakup of Rockefeller's Standard Oil, have increasingly lost their national identity. Dependence on global supply chains may mean resources from one set of countries, production in another, and sales in another. Yet, during crisis periods, multinationals helped support their "home" governments, like Exxon and other US-based oil majors did during the Arab oil embargo of the 1970s.
The book highlights the transformation of corporations in the modern era. The rise of unions and bureaucratic inefficiencies led to the emergence of private equity firms like Kohlberg Kravis Roberts & Co. (KKR). Initially focused on assisting family-owned businesses, these firms evolved into more aggressive entities, leveraging debt, layoffs, and asset sales to increase company value. The impact of private equity on businesses has been mixed, with both positive and negative social and financial consequences.
Magnuson concludes by examining contemporary high-tech corporations, using Meta (formerly Facebook) as an example. While influential, these companies face criticism for privacy concerns and addictive platforms. The book recognizes the rising animosity towards corporations but encourages a greater understanding of their societal role.
One issue that isn't clear is why corporations, since the 1970s, particularly those based in the USA, have increasingly ignored their traditional obligation to promote the common good as well as profits. The book shows that extreme corporate focus on profits in the USA is a recent development, contributing to income inequality and greater reliance on under-funded government programs to support societal goals.
Why has this happened at this point in time in the USA and other places? The book doesn't say; instead, it emphasizes the need for corporations to be socially and economically responsible by keeping some rules in mind: 1. Don't overthrow the republic-- corporations should serve the greater good, and not destroy democracy; 2. Think long term-- learn from the Medici bank and don't sacrifice the long term for short-term advantage; 3. Share with shareholders--give them essential information, treat them fairly; 4. Compete, but fairly-- provide better products and lower prices, but not to put competitors out of business; 5. Treat your workers right; 6. Don't destroy the planet-- This rule is a particular concern because of the existential risk of climate change, which can only be addressed through the combined efforts of government and corporate leadership; 7. Don't take all the pie for yourself; 8. Don't move too fast or break too many things.
The book has many valuable insights into corporations' historical significance and complex nature. It highlights their role as wealth generators, innovation drivers, and societal change catalysts, and also their spectacular failures over time in protecting the interests of society. Increasing corporate benefits to our society and planet while reducing the costs is a crucial challenge for the USA and the planet.
Early corporate entities in Rome provided essential goods and services to the Roman Republic. These corporations showed the ability to manage important tasks for the state. The fall of the republic and the rise of monarchies caused corporations to decline and less efficient bureaucratic systems to take over.
The book looks at how corporate structures and practices changed over time. Magnuson examines the Medici family's role in creating a banking empire in Renaissance Florence. Medici's innovative financial practices, such as currency exchange and secure deposit services, still resonate today. The Medici family competed ruthlessly and clashed violently with rivals, overshadowing their arts patronage.
The book also explores the British East India Company, which wielded both military force and economic influence in establishing a British presence in India. Aggressive tactics by the company, such as preferential product treatment, led to the American Revolution.
In the 19th century, corporations became less overtly violent but remained highly exploitative. The Union Pacific Railroad connected the nation but was corrupt and imposed unfair prices. This era was marked by wealthy industrialists, known as Robber Barons, yet their ruthless business practices generated a public backlash.
The author addresses the issue of public perception, illustrating how prominent figures like John D. Rockefeller, despite engaging in cutthroat competition and manipulation, also contributed to societal progress. Rockefeller's domination of the oil industry resulted in an extensive fuel network and transportation system that persists today. Similarly, Henry Ford's revolutionary production methods and introduction of affordable automobiles profoundly impacted industrial production and mass consumerism. Ford is an example of a corporate leader who worked to achieve both profits and societal goals. When he opened his assembly line, he paid his workers $5 a day, double the standard rate at the time, for an eight-hour day rather than the industry's 9- or 10-hour day standard. When asked why he would do this, he said: "We believe in making twenty thousand men prosperous and content rather than follow the plan of making a few slave drivers in our establishment multimillionaires." Later, Ford became anti-union and pro-Nazi, but the assembly line remained a huge benefit to human welfare.
Multinational corporations such as Exxon Mobil, which evolved out of the breakup of Rockefeller's Standard Oil, have increasingly lost their national identity. Dependence on global supply chains may mean resources from one set of countries, production in another, and sales in another. Yet, during crisis periods, multinationals helped support their "home" governments, like Exxon and other US-based oil majors did during the Arab oil embargo of the 1970s.
The book highlights the transformation of corporations in the modern era. The rise of unions and bureaucratic inefficiencies led to the emergence of private equity firms like Kohlberg Kravis Roberts & Co. (KKR). Initially focused on assisting family-owned businesses, these firms evolved into more aggressive entities, leveraging debt, layoffs, and asset sales to increase company value. The impact of private equity on businesses has been mixed, with both positive and negative social and financial consequences.
Magnuson concludes by examining contemporary high-tech corporations, using Meta (formerly Facebook) as an example. While influential, these companies face criticism for privacy concerns and addictive platforms. The book recognizes the rising animosity towards corporations but encourages a greater understanding of their societal role.
One issue that isn't clear is why corporations, since the 1970s, particularly those based in the USA, have increasingly ignored their traditional obligation to promote the common good as well as profits. The book shows that extreme corporate focus on profits in the USA is a recent development, contributing to income inequality and greater reliance on under-funded government programs to support societal goals.
Why has this happened at this point in time in the USA and other places? The book doesn't say; instead, it emphasizes the need for corporations to be socially and economically responsible by keeping some rules in mind: 1. Don't overthrow the republic-- corporations should serve the greater good, and not destroy democracy; 2. Think long term-- learn from the Medici bank and don't sacrifice the long term for short-term advantage; 3. Share with shareholders--give them essential information, treat them fairly; 4. Compete, but fairly-- provide better products and lower prices, but not to put competitors out of business; 5. Treat your workers right; 6. Don't destroy the planet-- This rule is a particular concern because of the existential risk of climate change, which can only be addressed through the combined efforts of government and corporate leadership; 7. Don't take all the pie for yourself; 8. Don't move too fast or break too many things.
The book has many valuable insights into corporations' historical significance and complex nature. It highlights their role as wealth generators, innovation drivers, and societal change catalysts, and also their spectacular failures over time in protecting the interests of society. Increasing corporate benefits to our society and planet while reducing the costs is a crucial challenge for the USA and the planet.
March 13, 2023
I was hoping for a comparative history with more technical details on corporate structure. This book contains instead a series of short stories about Roman societas publicanorum, Medici bank (fantastic chapter), East India Company, US railway, Ford, private equity (great) and startups (interesting). The author could have spared us his ethical suggestions in the last chapter.
February 19, 2023
This admirably even-handed book tells the story of the Western world's most powerful corporations: Roman corporations, the Medici bank, the East India Company, Union Pacific Railroad Company, Ford Motors, Standard Oil, KKR (Kolhlberg, Kravis, Roberts), and Facebook. Apart from this story-telling, it tries to draw more general conclusions about the trajectory of the corporation itself. How did the form of the corporation change over time and, most fascinatingly, has it reached its “final form”?
We learn that a corporation is a special kind of business or firm, one created through special license from the state. Unlike private individuals:
1. A corporation consists of “a group of individuals incorporated by law into a single body” that can “act, and be acted upon, as one”. (4) It is, in other words, a person.
2. Corporations can issue shares to public investors. (5)
3. They possess limited liability, so stockholders can “rest assured that their purses are safe from the grasp of creditors” (5)
This set of rights is extraordinarily powerful – it can ensure stability for businesses and help to direct capital to productive uses, even socially productive uses. Magnuson suggests it is crucial for understanding the success of Ancient Rome. Corporations allowed Rome to extract taxes from its populace and accomplish other large public projects (including, apparently, feeding the sacred geese on the Capitoline Hill). For example, the right to tax a certain province might be auctioned off to a corporation for a fixed sum up front. Though contemporary corporations are generally not created for these public purposes, they nevertheless sometimes act in a way that reflects their origins as public charters, like when the big oil companies got together during the Oil Embargo to make sure that the US remained supplied with oil.
Further innovations to the structure of corporations followed. The Medici Bank innovated by splitting itself into principal office and branch offices, each with their own limited liability. If an angry monarch in Belgium sought to take all of the assets from a bank’s Bruges branch, they could only sue the branch and not the principal. Multinationals extended this principle, so much so that some corporations are no longer truly bound to any single sovereign jurisdiction and indeed are more powerful than them. As the CEO of Exxon famously testified, “I’m not a U.S. company and I don’t make decisions based on what’s good for the U.S.” Finally, the “Gordon Gecko” years of the 1970s and 1980s gave rise to private-equity (rather than share-granting) companies that bought corporations and resold them for profit – sometimes improving them, but other times harvesting them. When it eventually went public, this meant there were corporations whose business was buying and selling corporations.
Yet corporations cause many problems. First, in virtually all of Magnuson’s case studies, corporations tend to become very powerful, and also to become involved in politics and intrigue. This, of course, is not unique to corporations. Second, because the managers and shareholders are not the same bodies, it can be difficult to align their interests. Sometimes this leads managers to pay themselves overly handsomely, or at least to gorge themselves on corporate jets and club memberships. Sometimes managers enact their own vision of the company’s good to the expense of profits, particularly when the manager is the founder. This came to a head in Dodge v Ford Motor Company, where Ford was accused of neglecting profit in favour of his own vision of what was good for society, and the court demanded that he defer to his shareholders (leading him to ultimately buy them out). There are other problems when the managers are themselves shareholders; this makes it possible for managers of the corporation to manipulate share prices, as with Josiah Child inventing rumours about his East India Company. Third, while monopolies can arise anywhere, they are sometimes written into the charter of a corporation created with special license from the state, like the example of the Union Pacific Railroad. Magnuson lengthily describes the harms caused by this monopoly.
In places, Magnuson’s focus drifts unnecessarily from the corporation itself to industry, particularly in the chapters about Ford and Facebook, which are interesting not because they involved innovative forms of corporation, but because they created novel products or techniques of production. I’m also left with a few more questions. What’s so special about corporations that can’t be replicated through ordinary contracts? How did the ability to form a corporation go from being a privilege to being a right? I particularly wish that the book was better structured around its most intriguing question: is there a “final form” of the corporation?
We learn that a corporation is a special kind of business or firm, one created through special license from the state. Unlike private individuals:
1. A corporation consists of “a group of individuals incorporated by law into a single body” that can “act, and be acted upon, as one”. (4) It is, in other words, a person.
2. Corporations can issue shares to public investors. (5)
3. They possess limited liability, so stockholders can “rest assured that their purses are safe from the grasp of creditors” (5)
This set of rights is extraordinarily powerful – it can ensure stability for businesses and help to direct capital to productive uses, even socially productive uses. Magnuson suggests it is crucial for understanding the success of Ancient Rome. Corporations allowed Rome to extract taxes from its populace and accomplish other large public projects (including, apparently, feeding the sacred geese on the Capitoline Hill). For example, the right to tax a certain province might be auctioned off to a corporation for a fixed sum up front. Though contemporary corporations are generally not created for these public purposes, they nevertheless sometimes act in a way that reflects their origins as public charters, like when the big oil companies got together during the Oil Embargo to make sure that the US remained supplied with oil.
Further innovations to the structure of corporations followed. The Medici Bank innovated by splitting itself into principal office and branch offices, each with their own limited liability. If an angry monarch in Belgium sought to take all of the assets from a bank’s Bruges branch, they could only sue the branch and not the principal. Multinationals extended this principle, so much so that some corporations are no longer truly bound to any single sovereign jurisdiction and indeed are more powerful than them. As the CEO of Exxon famously testified, “I’m not a U.S. company and I don’t make decisions based on what’s good for the U.S.” Finally, the “Gordon Gecko” years of the 1970s and 1980s gave rise to private-equity (rather than share-granting) companies that bought corporations and resold them for profit – sometimes improving them, but other times harvesting them. When it eventually went public, this meant there were corporations whose business was buying and selling corporations.
Yet corporations cause many problems. First, in virtually all of Magnuson’s case studies, corporations tend to become very powerful, and also to become involved in politics and intrigue. This, of course, is not unique to corporations. Second, because the managers and shareholders are not the same bodies, it can be difficult to align their interests. Sometimes this leads managers to pay themselves overly handsomely, or at least to gorge themselves on corporate jets and club memberships. Sometimes managers enact their own vision of the company’s good to the expense of profits, particularly when the manager is the founder. This came to a head in Dodge v Ford Motor Company, where Ford was accused of neglecting profit in favour of his own vision of what was good for society, and the court demanded that he defer to his shareholders (leading him to ultimately buy them out). There are other problems when the managers are themselves shareholders; this makes it possible for managers of the corporation to manipulate share prices, as with Josiah Child inventing rumours about his East India Company. Third, while monopolies can arise anywhere, they are sometimes written into the charter of a corporation created with special license from the state, like the example of the Union Pacific Railroad. Magnuson lengthily describes the harms caused by this monopoly.
In places, Magnuson’s focus drifts unnecessarily from the corporation itself to industry, particularly in the chapters about Ford and Facebook, which are interesting not because they involved innovative forms of corporation, but because they created novel products or techniques of production. I’m also left with a few more questions. What’s so special about corporations that can’t be replicated through ordinary contracts? How did the ability to form a corporation go from being a privilege to being a right? I particularly wish that the book was better structured around its most intriguing question: is there a “final form” of the corporation?
January 1, 2025
Note: Originally posted on my old blog in 2023
The basic premise if this book is that from its inception, the corporation was designed to promote the common good (p.9).
Wait, what?
I think that's why I dismissed the book the first time I came across it. Oh, not another one of those apolegtics for why crony capitalism is actually a good thing. Not that any CEO ever calls it that, but that's basically what it comes down to.
Magnuson's chapters are devoted to the different iterations of corporations we have seen throughout history, from its tax-collecting progenitor in Rome to the Medici Bank in Florence to the British East India Company to the US railroad monopolies to Henry Ford's assembly line to more modern examples such as the Multinational, Private Equity, and of course, the Start-up.
I enjoyed the first six chapters much more than the last two. Being more historical in nature, I learned relatively more from them. I found the last two chapters on Private Equity and the Start-up to be less critical than they needed to be, especially given the author's major premise of the book.
Now tell me, what is the Good that private equity is purportedly seeking? None, whatsoever! Unless you count charging exorbitant fees for basically bankrupting another company as good. Magnuson even acknowledges such by titling the chapter, "The Raider." Additionally, I found his depiction of the bookish co-founder Jerome Kohlberg of KKR, the first of the destructive private equity firms, to be a bit too deferential. Just because the dude liked to read and advocated for "friendly" takeovers as opposed to hostile takeovers doesn't absolve him of creating a type of entity that I would argue has done more harm than good for society.
I'm obviously still upset about the demise of Toys R Us. We have private equity to blame for that!
Magnuson acknowledges that corporations have lost their way. His solution however is for government regulation to ensure the invisible hand works the way it should. I take issue with his chapter on solutions for two reasons: 1) The government is in on the corruption. They have no incentive to change the current structures because they benefit from them. 2) It contradicts Smith's whole idea of an invisible hand in the first place, does it not? Economic theorists, please correct me if I am wrong. But the whole supply and demand idea does not leave a lot of room for governmental interference. Of course, we need to deal with reality, which is precisely why I think that governmental intervention without changing how government first works is not only not going to solve the problem, but only going to make it worse. Anyone remember 2008?
Overall, I found this book to be fascinating for the history and the questions it posed. I am often very critical of banks, monopolies and other such entities. But the history of those institutions does demonstrate that they did come with some benefits... once upon a time ago: establishing global trade routes (British East India Company), financing the great Renaissance artists (the Medici family), making the continental United States navigable (railroads). But as we got closer to the current age, I wasn't much convinced of the "good" private equity or start-ups were doing because on the whole, they're doing a lot more "bad." And the governmental attempts to "fix" the problem aren't really the fixes we need.
The basic premise if this book is that from its inception, the corporation was designed to promote the common good (p.9).
Wait, what?
I think that's why I dismissed the book the first time I came across it. Oh, not another one of those apolegtics for why crony capitalism is actually a good thing. Not that any CEO ever calls it that, but that's basically what it comes down to.
Magnuson's chapters are devoted to the different iterations of corporations we have seen throughout history, from its tax-collecting progenitor in Rome to the Medici Bank in Florence to the British East India Company to the US railroad monopolies to Henry Ford's assembly line to more modern examples such as the Multinational, Private Equity, and of course, the Start-up.
I enjoyed the first six chapters much more than the last two. Being more historical in nature, I learned relatively more from them. I found the last two chapters on Private Equity and the Start-up to be less critical than they needed to be, especially given the author's major premise of the book.
Now tell me, what is the Good that private equity is purportedly seeking? None, whatsoever! Unless you count charging exorbitant fees for basically bankrupting another company as good. Magnuson even acknowledges such by titling the chapter, "The Raider." Additionally, I found his depiction of the bookish co-founder Jerome Kohlberg of KKR, the first of the destructive private equity firms, to be a bit too deferential. Just because the dude liked to read and advocated for "friendly" takeovers as opposed to hostile takeovers doesn't absolve him of creating a type of entity that I would argue has done more harm than good for society.
I'm obviously still upset about the demise of Toys R Us. We have private equity to blame for that!
Magnuson acknowledges that corporations have lost their way. His solution however is for government regulation to ensure the invisible hand works the way it should. I take issue with his chapter on solutions for two reasons: 1) The government is in on the corruption. They have no incentive to change the current structures because they benefit from them. 2) It contradicts Smith's whole idea of an invisible hand in the first place, does it not? Economic theorists, please correct me if I am wrong. But the whole supply and demand idea does not leave a lot of room for governmental interference. Of course, we need to deal with reality, which is precisely why I think that governmental intervention without changing how government first works is not only not going to solve the problem, but only going to make it worse. Anyone remember 2008?
Overall, I found this book to be fascinating for the history and the questions it posed. I am often very critical of banks, monopolies and other such entities. But the history of those institutions does demonstrate that they did come with some benefits... once upon a time ago: establishing global trade routes (British East India Company), financing the great Renaissance artists (the Medici family), making the continental United States navigable (railroads). But as we got closer to the current age, I wasn't much convinced of the "good" private equity or start-ups were doing because on the whole, they're doing a lot more "bad." And the governmental attempts to "fix" the problem aren't really the fixes we need.
June 19, 2023
This is a fascinating historical look at how “did we get here” with respect to corporations. Magnuson does a great job of using historical settings to explain the evolution of lending and credit, stocks, bonds, corporate raiders, monopolies and Silicon Valley start-ups.
You will read about:
Rome where wealthy citizens formed separate entities to provide services for the government, funded by shareholders who provided the capital.
Florence during the Renaissance where the very clever Medici family developed a method of accounting (still used today) as well as a way around the Vatican’s prohibition on requiring ANY interest payment on a loan. Any interest payment on a loan, no matter how small was considered usury at the time according to church teachings.
London during the rise of the British Empire where the financing for British imperialism was obtained by the issuing of stock and the establishment of a London stock exchange
The construction and financing of the transcontinental railroad after the Civil War and the emergence of corporate monopolies.
How Ford Motor company’s assembly line changed business forever in terms of manufacturing, and treatment of labor.
How monopolies such as Standard Oil which were eventually broken up as a result of the passage of the Sherman Anti-Trust Act of 1890 and how their many offspring (Exxon for example) became multi-national corporations.
How private equity and corporate raiders (like KKR & Co) used leveraged buyouts to take over various businesses, turn them around and sell them at a profit.
How Silicon Valley start-ups like Facebook and Twitter have not only made money and prospered, they have changed the entire culture of the country.
If you enjoy reading about history and would like a better understanding of the evolution of business, you will really enjoy this one.
You will read about:
Rome where wealthy citizens formed separate entities to provide services for the government, funded by shareholders who provided the capital.
Florence during the Renaissance where the very clever Medici family developed a method of accounting (still used today) as well as a way around the Vatican’s prohibition on requiring ANY interest payment on a loan. Any interest payment on a loan, no matter how small was considered usury at the time according to church teachings.
London during the rise of the British Empire where the financing for British imperialism was obtained by the issuing of stock and the establishment of a London stock exchange
The construction and financing of the transcontinental railroad after the Civil War and the emergence of corporate monopolies.
How Ford Motor company’s assembly line changed business forever in terms of manufacturing, and treatment of labor.
How monopolies such as Standard Oil which were eventually broken up as a result of the passage of the Sherman Anti-Trust Act of 1890 and how their many offspring (Exxon for example) became multi-national corporations.
How private equity and corporate raiders (like KKR & Co) used leveraged buyouts to take over various businesses, turn them around and sell them at a profit.
How Silicon Valley start-ups like Facebook and Twitter have not only made money and prospered, they have changed the entire culture of the country.
If you enjoy reading about history and would like a better understanding of the evolution of business, you will really enjoy this one.
January 20, 2025
Interesting look at the evolution of "corporations" from Roman times to the modern capitalist behemoths we are now familiar with. Told with one example each from the following perspectives.
- Early public-private partnership: (funding for army, Rome, BC)
- Early banking (Medici, Florence 15th century)
- Early stock issue (East India Company, London 17th century)
- Early planned monopoly (Railroads, USA 19th century)
- Founding of assembly line (Ford, early 20th century)
- Corporate raiders, LBO & M/A (KKR, 1980s)
- Startup (Facebook, 2000s)
The author looks at both the positives (private enterprise funded innovation) and the negatives (unbridled greed, insider trading, systemic corruption etc.) over the centuries. The modern corporation has undergone continuous evolution and the book abounds with interesting anecdotes.
Given where we are in modern capitalistic societies today, the concluding chapter seemed overly optimistic to me hey, maybe I'm being too negative. The author gives the following injunctions for corporations to function for the common good.
- Don't overthrow the republic (Fait accompli today I think? Jan 20, 2025)
- Think long term (Major jumps of technology like Angry Birds? )
- Share with shareholders (Anyone check executive pay lately?)
- Compete but fairly (Seriously? Monopolies and oligarchies are the rage.)
- Treat your workers right (No comment needed)
- Don't destroy the planet (Drill, baby, drill?)
- Don't take the pie for yourself (ditto on executive pay?)
- Don't move too fast or break too many things (Too late?)
Overarching themes didn't quite register for me, but the book makes for fascinating reading nonetheless. A worthy start to 2025 non-fiction reading for me!
- Early public-private partnership: (funding for army, Rome, BC)
- Early banking (Medici, Florence 15th century)
- Early stock issue (East India Company, London 17th century)
- Early planned monopoly (Railroads, USA 19th century)
- Founding of assembly line (Ford, early 20th century)
- Corporate raiders, LBO & M/A (KKR, 1980s)
- Startup (Facebook, 2000s)
The author looks at both the positives (private enterprise funded innovation) and the negatives (unbridled greed, insider trading, systemic corruption etc.) over the centuries. The modern corporation has undergone continuous evolution and the book abounds with interesting anecdotes.
Given where we are in modern capitalistic societies today, the concluding chapter seemed overly optimistic to me hey, maybe I'm being too negative. The author gives the following injunctions for corporations to function for the common good.
- Don't overthrow the republic (Fait accompli today I think? Jan 20, 2025)
- Think long term (Major jumps of technology like Angry Birds? )
- Share with shareholders (Anyone check executive pay lately?)
- Compete but fairly (Seriously? Monopolies and oligarchies are the rage.)
- Treat your workers right (No comment needed)
- Don't destroy the planet (Drill, baby, drill?)
- Don't take the pie for yourself (ditto on executive pay?)
- Don't move too fast or break too many things (Too late?)
Overarching themes didn't quite register for me, but the book makes for fascinating reading nonetheless. A worthy start to 2025 non-fiction reading for me!
November 19, 2022
This is a history of the corporation (the corporate form of organization?) beginning with Roman times and culminating with Facebook. The author is an attorney and law professor and the book has a distinct legal perspective to it, although it is oriented to more general readers. It reads as if it could be a course supplement in a general undergraduate or grad course on corporate management. The book is organized by chapters and each chapter tells a general story in the historical progression of the corporate form, making use of a particular corporation as a focal point. So the book begins with Roman forms for lax farming and other government support function and then moves onto the Medici Bank and to the British East India Company. Afterwards, the examples come closer to more modern forms (Union Pacific Railroad; Ford Motor Company, Exxon). As we approach the present, primate capital firms and internet startups are the examples.
The chapters are well organized and the author has his points to make and his perspective to share. I have to process this further, but the story is a reasonable one of the usefulness of corporations, the more than occasional excesses, and the steps that government and society take to address corporate excesses and more the economy forward. This is a useful informative book with a measured and reasonable point of view. This is not original research but Professor Magnuson has done his homework and presents his materials well. This is a good book.
The chapters are well organized and the author has his points to make and his perspective to share. I have to process this further, but the story is a reasonable one of the usefulness of corporations, the more than occasional excesses, and the steps that government and society take to address corporate excesses and more the economy forward. This is a useful informative book with a measured and reasonable point of view. This is not original research but Professor Magnuson has done his homework and presents his materials well. This is a good book.
December 13, 2023
Avoid reading this book. I bought this based on the Economist’s pick of top books and have no idea how did this get there… Not sure if I ever read a worse book.
This is NOT a book about history of corporations. Magnusson picks 8 examples of large corporations for which he provides a shallow one-sided criticism of what his selected corporations did wrong. There are even full books on the examples companies, so if you are at least somewhat familiar with them, there is nothing new to learn.
Magnusson starts the book by assuming the reader hates corporations and believes they are evil and then repeats this over and over as if nobody can think otherwise. He presents opinions and untruths as facts (e.g. when trying to demonstrate how bad and evil shareholders are, Magnusson at one point states that shareholders do not take any risk and only collect huge dividends…). What the hell?
I will continue to wonder if Magnusson (he is a lawyer) does not understand basics of finance or if he just ignores it. Somehow, he takes for granted a simple truth that if a company exists and generates profit, it is already beneficial for a society.
So i read his superficial and poorly argued chapters and got to the conclusion section where he presents his “handy toolkit for government policy makers and executives for making wise decisions”. Now, this is not even good high school level essay writing.
Thinking of writing something positive, but there is nothing.
This is NOT a book about history of corporations. Magnusson picks 8 examples of large corporations for which he provides a shallow one-sided criticism of what his selected corporations did wrong. There are even full books on the examples companies, so if you are at least somewhat familiar with them, there is nothing new to learn.
Magnusson starts the book by assuming the reader hates corporations and believes they are evil and then repeats this over and over as if nobody can think otherwise. He presents opinions and untruths as facts (e.g. when trying to demonstrate how bad and evil shareholders are, Magnusson at one point states that shareholders do not take any risk and only collect huge dividends…). What the hell?
I will continue to wonder if Magnusson (he is a lawyer) does not understand basics of finance or if he just ignores it. Somehow, he takes for granted a simple truth that if a company exists and generates profit, it is already beneficial for a society.
So i read his superficial and poorly argued chapters and got to the conclusion section where he presents his “handy toolkit for government policy makers and executives for making wise decisions”. Now, this is not even good high school level essay writing.
Thinking of writing something positive, but there is nothing.
October 20, 2023
I really enjoyed reading this book. Corporations are legal fictions created by the state so that people can take risks and pursue enterprises for the common good. By granting limited liability, corporations capped the downside to investments and allowed for the pooling of funds. Limited liability also allowed for shareholders not to be liable for what the corporation did, or failed to do. The author argues that corporations were initially charted by the king, and to be charted the corporation required to prove that the enterprise was for the common good. Along the way, such essence has been lost and nowadays, corporations are incorporated by filing some paperwork, without the need to prove any common good, and working towards profit maximization (at all cost) has become the common ethos. Corporations are the cornerstone of capitalism, they embody the ability to pursue any goal, reach those goals as impossible as they might be, and in the meantime bring prosperity to all those involved in the venture. Corporations also embody the dark side of capitalism, poised with greed, corruption and materialism above else, including a threat to democracy. Looking at the evolution of corporations allows us to understand their origins and how best we can seek to improve corporate governance to ensure that corporations work for the common good.
January 3, 2024
This book is an engaging walk through seven or eight specific corporations, each (according to the author Magnuson) emblematic of an era in the history of corporations. Throughout, Magnuson pays special attention to the relationship between the corporation and the state, arguing that while the corporation ought to be, and often originally has been, a subordinate institution to the state, that corporations have means of amassing power which exceeds that of the state along certain dimensions.
Magnuson works hard to avoid over-simplification, and wants to recognize the dual truth -- that corporations enable innovation and efficiency, and also have many tendencies towards social degeneration. This book defends neither central planning nor free-market libertarianism. What the book does defend, however, is somewhat vague. The last chapter, in particular, lays out a number of ethical business precepts ("Compete Fairly", "Treat Your Workers Right", "Don't Destroy the Planet") which are reasonable but widely open to interpretation. And, Magnuson seems to think that these precepts ought to be enforced by law, failing to recognize the dangers of over-regulation.
Stylistically, Magnuson is a solid writer. However, there are weird bits where he repeats, verbatim or nearly so, something he said earlier. It's a minor issue but interrupted my reading flow a number of times.
Magnuson works hard to avoid over-simplification, and wants to recognize the dual truth -- that corporations enable innovation and efficiency, and also have many tendencies towards social degeneration. This book defends neither central planning nor free-market libertarianism. What the book does defend, however, is somewhat vague. The last chapter, in particular, lays out a number of ethical business precepts ("Compete Fairly", "Treat Your Workers Right", "Don't Destroy the Planet") which are reasonable but widely open to interpretation. And, Magnuson seems to think that these precepts ought to be enforced by law, failing to recognize the dangers of over-regulation.
Stylistically, Magnuson is a solid writer. However, there are weird bits where he repeats, verbatim or nearly so, something he said earlier. It's a minor issue but interrupted my reading flow a number of times.
April 9, 2023
"I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country... corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed." Abraham Lincoln
It's amazing the Lincoln saw the dangers of corporations long before the robber barons and excesses of the next 50 years led to the Great Depression. For all of history mankind has had a love/hate relationship with corporations. On the one hand, they can produce remarkable wealth and useful products beyond our imaginations. But on the other hand, they can corrupt entire systems and initiate a race to the bottom where only the bottom line matters. Where did corporations come from? And how can we reap their benefits while taming the immense powers they hold over workers, politicians, and ordinary citizens?
It's amazing the Lincoln saw the dangers of corporations long before the robber barons and excesses of the next 50 years led to the Great Depression. For all of history mankind has had a love/hate relationship with corporations. On the one hand, they can produce remarkable wealth and useful products beyond our imaginations. But on the other hand, they can corrupt entire systems and initiate a race to the bottom where only the bottom line matters. Where did corporations come from? And how can we reap their benefits while taming the immense powers they hold over workers, politicians, and ordinary citizens?
December 1, 2022
The book is worth reading for the case studies or stories selected. There is a lot to dislike from what is omitted (every knowledgeable reader will have a long list of examples that should have been included), a rather negative tone (except for the positive message in the last paragraph of the book), a lack of comparative analysis, rather cliched suggestions at the end, and a lot more.
The author does an excellent job narrating half a dozen historic examples. These well-written episodes provide a lot of good, relevant information that will help readers see the arc of how today's corporates came into being. Even while the author does not explicitly talk about what happened in communities that adapted to this route of doing collective work late, the examples are clear enough to help readers see the changes wrought themselves.
A quick, easy, and unique read for what is offered.
The author does an excellent job narrating half a dozen historic examples. These well-written episodes provide a lot of good, relevant information that will help readers see the arc of how today's corporates came into being. Even while the author does not explicitly talk about what happened in communities that adapted to this route of doing collective work late, the examples are clear enough to help readers see the changes wrought themselves.
A quick, easy, and unique read for what is offered.
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