I’ve been meaning to write about an fascinating and - in my view - important Guest Essay in the New York Times from over a month ago that got very little publicity and reaction. It’s titled, “What It Took to Dismantle the Most Powerful Company in the World”.
The writer, William Dalrymple, is an author who has written extensively about the East India Company, its power from the later 1700s into the mid 1800s and how it relates to corporate power today.
I’ve been beating the corporatism drum for years now. Here is a post I wrote earlier this year:
Charles Wilson, the President of General Motors who was nominated to be Secretary of Defense under President Eisenhower, said this at his confirmation hearing in 1953, “For years I thought what was good for our country was good for General Motors, and vice versa.”. Over the years, this was shortened down (and even entered into the Congressional Record) to “What’s good for General Motors is good for America”.
Context: In the 1950s, GM was an enormous corporation and employer. manufacturer, defense contractor and, yes, taxpayer. Wilson’s view was essentially that the relationship between GM and the U.S. was mutually beneficial. Essentially, Wilson was saying that a prosperous America meant a prosperous GM which meant more production and investment in the U.S. economy which meant more jobs and a better life for individual Americans; and conversely, a strong GM meant a stronger industrial and economic base which meant a stronger country.
However, over the years, as Wilson’s words were shortened, the saying, “What’s good for General Motors is good for America” came to be seen as more of a one-way street: whatever benefited large U.S. corporations (GM) by definition benefitted the U.S. as a whole. In effect, corporate interests and the national interest could be treated as essentially the same thing.
Back to the East India Corporation. Mr. Dalrymple writes that even back in 1788, some people understood that corporations were only out for themselves. He provides us with a stunning quote from Edward Thurlow, the Lord High Chancellor of Britain in 1788 and the person who presided over the proposed impeachment of the Governor General of the East India Company (bold emphasis mine):
Edward Thurlow, who presided over the trial, summed up the proceedings with a statement that is as true today as it was then: “Corporations,” he said, “have neither bodies to be punished nor souls to be condemned. They therefore do as they like.”
SIDE NOTE: Dalrymple also points out, incredibly, how putting corporations first has incredible unintended consequences, including, perhaps, serving as the catalyst for the American Revolution:
“In the summer of 1772, the greatest corporation on earth ran out of money. The East India Company had conquered Bengal, but the conquest had turned ruinous. A famine helped along by company negligence had killed perhaps a fifth of the province’s people, and the company’s share price had collapsed.
On June 8 a Scottish banker named Alexander Fordyce, having speculated heavily in East India Company stock, disappeared from his office, leaving debts of 550,000 pounds. His bank soon declared bankruptcy, followed by another the next week, initiating a financial crisis that spread across Britain into Europe. By the fall, company directors were asking for a bailout.
Parliament saved the East India Company because it could not afford otherwise. Like Lehman Brothers, the company really was too big to fail. Company stock was a pillar of British public credit and was held by around 40 percent of the members of the House of Commons. In 1773 the state advanced the East India Company £1.4 million, and then, casting about for some way to help it earn the money back, hit on the unsold tea sitting in its London warehouses. The Tea Act let the company ship it directly to America, undercutting the colonial merchants who had handled the trade.
This was legislation written to solve one corporation’s inventory problem. It cost Britain 13 colonies. That December, men in Boston threw tea into the harbor. One of the principal fears of the American patriots in the run-up to the American Revolution was that Parliament would unleash the East India Company in the Americas to loot there as it had done in India.
This “almost bankrupt company,” having been occupied in wreaking “the most unparalleled barbarities, extortions and monopolies” in Bengal, had now “cast their eyes on America, as a new theater, whereon to exercise their talents of rapine, oppression and cruelty,” wrote the American John Dickinson. Within three years, America declared independence.
This is how a corporation crosses the line from doing business with a state to becoming inseparable from it; how the state, once the corporation is large enough, finds itself legislating on the company’s behalf; and how the bill, when it arrives, is paid by the country rather than the shareholders. The government, under Prime Minister Frederick North, did not set out to lose America. It set out to keep a company solvent. The results were catastrophic for the British state and did much to diminish its power.”
Dalrymple then relates the rise of the East India Trading Company to our current world where AI and tech companies rule the roost (bold emphasis mine):
While its original focus was the spice trade and then the export of Indian textiles, it was authorized from the start by its charter to found and run colonies and wage war. From its maiden voyage in 1601, it used violence to conduct its business and enhance its profits. By 1788, it was not just Britain’s biggest corporation and largest employer; it was the company that had conquered what was then the richest country on earth: Mughal India, whose bejeweled loot helped power Britain into the Industrial Revolution.
Here, as in so much of imperial history, commerce, colonization and brute corporate power walked in lock step. As Tolstoy later wrote in a letter published by Gandhi, “A commercial company enslaved a nation comprising 200 million people.” All that made the East India Company the most powerful corporation in history — until now. For in the past decade, Big Tech has, too, begun to take on the attributes of sovereign states, and in many ways is now as powerful as the East India Company at its height.
Nvidia, a chip maker with some 42,000 employees, is valued at over $5 trillion, roughly the gross domestic product of Germany, the world’s third-largest economy, with a population of 84 million. Only the United States and China have gross domestic products larger than this one company’s market capitalization. Apple is valued above the annual output of Britain, Alphabet above that of France.
The way these companies control crucial global choke points echoes the political and economic power of the East India Company and its European siblings at the apex of their power. Just as the Dutch East India Company in the 1710s controlled about 72 percent of seaborne trade around Africa’s Cape of Good Hope and the British East India Company at its height in the 1820s controlled about three-quarters of the tonnage transported between Europe and Asia, so SpaceX’s share of everything humanity puts into orbit has risen from below 10 percent in 2014 to around three-quarters last year. It has over 10,000 satellites in orbit — almost two out of every three functioning spacecraft circling the planet.
As the history of the East India Company shows, there can come a point when a corporation stops being just a company and begins seizing for itself the powers and trappings typically associated with a nation-state. True, today’s tech giants don’t have standing armies, nor have they conquered territory. Nevertheless, like the East India Company, they are increasingly integrated with their country’s military and have swayed events on the battlefield, particularly in Ukraine.
Rhetorical question #1: Do we really want our space program and next gen satellite communications programs controlled by an avowed white supremacist with his own personal agenda?
Rhetorical question #2: Do we really want our constitutionally protected news media controlled by a cabal of billionaires whose personal interests clearly don’t fit into the “What’s good for General Motors is good for America” model?
Should our country be fortunate enough to have a different dynamic in the next congress (i.e., Democrats in charge instead of Republicans), that congress will have a lot on it’s plate, to say the least. We’ve discussed these issues before and Mister Mix linked to Norm Orenstein’s take in his post this morning.
I’d like to add an additional very specific goal for a new and - hopefully - different congress to make high priority: reducing inequality - and the concentration of political and economic power - by reducing the power of corporations to impact decisions that would normally be the purview of a representative government run by the people, for the people and of the people.
This means using Orenstein’s 6 tools - lawmaking, power of the purse, investigation and oversight, bully pulpit, advice and consent, and accountability (what Orenstein calls “impeachment”) - to rein in corporate power.
Specifically, this also means anti-trust actions, state-by-state lawmaking to limit corporate charters, increasing taxes on corporations, “piercing the corporate veil” to hold individuals - and not just corporate entities - responsible for criminal and negligent behavior, and getting rid of billionaires, and finding a way to get corporate money out of politics (again, via passing state laws that explicitly outlaw corporations’ ability to engage in political donations and activity).
Drilling down even further, other actions might entail significant tax surcharges for executive compensation over a certain threshold, once again making stock buybacks illegal, and getting rid of multiple classes of stock that allow someone like Mark Zuckerberg to own a minority of shares in Meta yet have ironclad, forever control over corporate strategy and shareholder votes by owning a different class of shares that give him supermajority voting power).
I ran for congress multiple times. I don’t envy the job the next congress has in front of them.
And please read Mr. Dalrymple’s column in full. It’s instructive how what happened in the late 1700s and early 1800s has direct application to our society today.
One of my all-time favorite songs:
