Dangers of Business Interest in Government

By 1720, approximately 15% of all imports into England came from India and the British East India Company was responsible for almost all of this trade.  Furthermore, the British East India Company grew so large and influential that by the 18th century it faced almost no competition for trade between England and India, that it was effectively a monopoly.  This situation gained the company not only influence in India, but also in the political and economic circles in England.  While the company often battled with the British Parliament for more control over its own affairs, it also enjoyed relative freedom to reign over India how it so wished.

Besides exerting its power over the subcontinent of India, the British East India Company also played a significant role in other regions of the Far East, including China.  For example, the company was heavily involved in the trade of opium to China during the late 1700s and early 1800s.  In fact, much of the opium sold to China was harvested from parts of British controlled India.  While the opium trade was illegal in China, the British East India Company created a work around by selling its opium to traffickers who then sold the opium in Chinese markets.  The opium trade became such a large issue for China, that it eventually resulted in two wars: First Opium War and Second Opium War.  These were major conflicts in world history and the history of British imperialism.

In the eighteenth century a career with the East India Company was a throw of the dice for unattached young British men. Arriving in India wan and scurvy after a year at sea, 30% of all new clerks and writers quickly succumbed to disease, madness, or one of the innumerable little wars that the company fought in order to embed itself on the subcontinent. Despite the handsome 8 percent annual dividend the company awarded its shareholders, these drawbacks tended to put off all but those whom circumstances had already disfavored: second sons, members of the down-at-heel Anglo-Irish gentry, dispossessed Scottish landowners who had backed the losing side in a rebellion against the crown.

In order to fill the ranks of “writers” and clerks that the East India Company required, it established the East India Company College at Hailey, Hertfordshire to train “writers” (administrators) for the East India Company. This school provided general and vocational education for young men of sixteen to eighteen years old, joined the company as “writers” in its overseas civil service. By 1800 the EIC had become the de facto government for millions of people in India and most of the EIC administrators had little to no training for the role. The college was intended to address these shortcomings. Of course, the shortcoming of this is that entering the EIC at 16 and traveling halfway around the world meant these young men only knew the EIC and the EIC was notoriously corrupt.

In his opening speech at the trial of Warren Hastings, the former EIC Governor General in Bengal in 1788, Edmund Burke argued that the English East India Company’s corporate structure and culture encouraged the Company to operate in India in ways that prompted charges of ‘bribery, corruption, or malversation.’ Burke went on to argue of ‘the corporate espirit de corps’ never was a spirit which corrected itself in any time or circumstance in the world.’ The East India Company was unaccountable to social, moral, and legal prescriptions; they were structurally predisposed to permit and protect dishonesty amongst their members and officials. Burke attributed the responsibility for Hastings’ alleged crimes to the corporate context in which he operated more than the man. The East India Company’s profit and ‘extraction’ ethos eroded and obscured individual responsibility in favor of what was good for the company’s bottom line which led to horrific abuses ranging from theft and bribery to murder and genocide.

Of course, Burke’s reprobation of Hastings was a little hypocritical.  Using the looted wealth of Mughal Bengal returning and retiring EIC employees (especially nabobs such as Robert Clive) used their wealth to simply buy both MPs and parliamentary seats. In turn, Parliament consistently voted to support the EIC with state power: the ships and soldiers as well as tax relief and ultimately in 1773, a corporate bail-out that caused Brittan to lose her American Colonies.  The EIC invented corporate lobbying, predatory commerce and government bail-outs of private corporations. 

Today it is still unclear how governments should cope with the power and perils of large multinational corporations.  Many of the tactics of the EIC are commonplace in the corporations of today (albeit with less overt corrupt intent).   How a nation, state, or city protect itself and its citizens from corporate aggression where companies simply threaten economic ruin upon anyone who opposes them, or worse seek to put former corporate officers into high office to “guide” legislation, adjudication, and administration. While contemporary corporation could get away with duplicating the sheer military might of the EIC, but many have attempted to match its success at bending state power to their own ends. The biggest modern corporations run sophisticated lobbying operations very much like those of the EIC.  While but no modern corporation have established sovereignty over another nation, corporations have frequently conspired to make weak governments fall. The most powerful corporations do not need their own armies: they rely on governments to protect their interests, guard them and bail them out.   As recent American adventures in Vietnam, Central America, and Iraq have shown, our world is far from post-imperial, and quite probably never will be.

But far more unsettling is the fact that many monied interest transform themselves itself into forms of global power through campaign contributions, commercial lobbying, and standing up puppet candidates for office (like D Trump). Four hundred and twenty years after its founding, the East India Company continues to instill its destructive version of Capitalism (not true Capitalism but protected Capitalism where profits are sacred but losses must be covered by government intervention and bail-out) upon the world. 

As Edward Burke remarked during the impeachment of EIC Governor Warren Hastings, “Corporations have neither bodies to be punished, nor souls to be condemned. They therefore do as they like.” Think about this next time a “former businessman” tells you Washington is corrupt.