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NY Times Op-Ed, Sept. 5, 2019
The Original Evil Corporation
By William Dalrymple
The rise and rise of giant oil and tech companies, with their campaign
contributions, commercial lobbying, predictive data harvesting and
surveillance capitalism, has lent a certain urgency to old questions:
How are we to cope with the power and perils of multinational
corporations and how can a nation-state protect itself and its citizens
from corporate excess?
As the international subprime bubble and bank collapses of 2007-09
demonstrated, just as corporations can enrich and positively shape the
destiny of nations, so they can also drag down their economies. The
Federal Reserve’s bank bailout has been estimated to be $7.77 trillion
dollars. The collapse of all three of Iceland’s major privately owned
commercial banks brought the country to the brink of bankruptcy.
Corporate influence, with its fatal blend of power, money and
unaccountability, is particularly potent and dangerous in frail states
where corporations are insufficiently regulated, and where the
purchasing power of a large company can outbid or overwhelm an
underfunded government.
The lobbying power of the largest corporations can even make and break
governments: The Anglo-Persia Oil Company was able to induce a coup that
toppled the government in Iran in 1953; United Fruit Company which owned
42 percent of Guatemala’s land, lobbied to bring about a C.I.A.-backed
coup a year later in 1954. The International Telephone and Telegraph
Corporation campaigned for the ouster of Chile’s Salvador Allende in the
1970s, while more recently Exxon Mobil has lobbied the United States to
protect its interests in Indonesia and Iraq.
The roots of this predatory corporate culture go back 400 years to the
foundation and the global rise of the East India Company. Many modern
corporations have attempted to match its success at bending state power
to their own ends, but the Company remains unmatched for its violence
and sheer military might.
The East India Company, which was established in London in 1599, was
authorized by its charter to wage war, and from its maiden voyage in
1602, it used corporate violence to enhance its trade. In the mid-18th
century, the Company began seizing by brute military force great chunks
of the most prosperous provinces of the Mughal Empire, which then
embraced most of India, Pakistan and Bangladesh and half of Afghanistan.
In 1765, in the Mughal fort of Allahabad, in northern India, the
defeated Mughal emperor Shah Alam was forced into what we would now call
an act of involuntary privatization. He had to replace his own revenue
officials in Eastern India with a set of English traders.
The collecting of Mughal taxes was henceforth subcontracted to a
powerful multinational corporation whose operations were protected by
its own private army. Within a few months, 250 company clerks backed by
a force of 20,000 locally recruited Indian soldiers had become the
effective rulers of the richest Mughal provinces. An international
corporation was, for the first time, transforming itself into an
aggressive colonial power.
Using the looted wealth of Mughal Bengal, the Company started ferrying
opium east to China, then fought the Opium Wars to seize an offshore
base at Hong Kong and safeguard its profitable monopoly in narcotics. To
the west, it shipped Chinese tea to Massachusetts.
Such was the reputation of the East India Company that in the cold
winter of 1772-3, a panic spread across the 13 Colonies that the Company
would be let loose on America. John Dickinson, the “Penman of the
Revolution,” feared that the soldiers of the Company, having plundered
India, were now “casting their eyes on America as a new theater whereon
to exercise their talents of rapine, oppression and cruelty.”
As a result of this panic, and the slapping of British taxes on tea,
some 90,000 pounds of Company tea, worth £9,659 (more than $1.2 million
today), was dumped in Boston Harbor. The Revolutionary War broke out
soon after.
The Company had become, as one of its directors said, “an empire within
an empire,” with the power to make war or peace anywhere in the East. It
had also by this stage created a vast and sophisticated administration
and Civil Service, built much of London docklands and come close to
generating a quarter of Britain’s trade. Its annual spending within
Britain alone equaled about a quarter of total British government annual
expenditure. Its armies were larger than those of almost all nation-
states and its power now encircled the globe.
The Company’s lawyers and lobbyists and some of its shareholders who
were members of the British Parliament subtly worked to influence
legislation in its favor. Indeed the Company may have invented corporate
lobbying. In 1693, less than a century after its foundation, the Company
was discovered to be using its own shares for buying parliamentarians.
The investigation into this, the world’s first corporate lobbying
scandal, resulted in the Company being found guilty of bribery and the
imprisonment of the Company’s governor.
Yet, like more recent mega corporations, the Company proved at once
hugely powerful and oddly vulnerable to economic uncertainty. The East
India bubble burst when famine broke out in Bengal in 1770. Conditions
there were worsened by the Company’s pillaging of what had once been the
wealthiest province in India, and in turn led to huge shortfalls in
expected revenues.
The Company was left with debts of £1.5 million and a bill of £1 million
in unpaid tax owed to the Crown. At the news of this, 30 banks collapsed
like dominoes across Europe. On July 15, 1772, the directors of the
Company applied to the Bank of England for a loan of £400,000. By
August, the directors were whispering to the government that they would
actually need an unprecedented sum of a further £1 million.
The official report the following year foresaw that the Company’s
financial problems could potentially drag the government “down into an
unfathomable abyss” and worried that “this cursed Company would, at
last, like a viper, be the destruction of the country which fostered it
at its bosom.”
But the Company really was too big to fail. The following year it was
saved by history’s first mega bailout, with the British government
extracting as its price the right to regulate and rein in the Company.
Although it has no exact equivalents, the Company was the ultimate
prototype for many of today’s corporations. The most powerful among them
these days do not need their own armies: They can rely on governments to
protect their interests and bail them out.
The history of the East India Company shows that Western imperialism and
corporate capitalism were born hand in hand, the dragons’ teeth that
spawned the modern world. As Baron Thurlow remarked in the late 1700s,
when the Company was being criticized for its misdeeds and its
governor-general, Warren Hastings, was on trial, “Corporations have
neither bodies to be punished, nor souls to be condemned. They therefore
do as they like.”
William Dalrymple is the author, most recently, of “The Anarchy: The
East India Company, Corporate Violence and the Pillage of an Empire.”
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