The East India Company: The World's Most Powerful Corporation (The Story of Indian Business) Read Free Page B

concession from the Mughal emperor. Legitimate corporations no longer maintain private armies, although security is an obsession with many. Nor do they aspire to become drug lords. The East India Company engaged in violence, drug-dealing and openly bribed Members of Parliament and high officials in exchange for licenses and favours. This is the dark side of the story.
    But its institutional contributions are equally impressive. The joint-stock ownership has survived the industrial and the post-industrial ages. So has the hierarchical system of management. The Company did an impressive job of rewarding and motivating employeesand creating an environment for careers open to the talented. Roy recounts inspiring stories of many talented young men—Oxenden, Aungier, Charnock and others—who rose from below and went on to perform extraordinary, often heroic, deeds thousands of miles away from home. It is not an accident that the Company managed to throw up talent generation after generation, and gain its loyalty. Although Adam Smith fretted about the moral hazard in separating investors from professional managers, the Company obviously achieved efficiency through the division of labour. Smith may have been distrustful of employees but the Company’s shareholders were not. This innovation survives, although boards of companies still wrestle with the issues of corporate governance that Smith raised about the accountability of employees in a faceless setup.
    Monopoly was clearly a birth defect, but it was constantly breached and it created a flawed corporate culture which led to conflict in the minds of its employees between private and corporate interest. The Company had permitted private trade in the belief that employees were not sufficiently compensated for the huge risks involved. It soon realized its mistake, however, and tried to stamp it out—but without success. Companies today reward employees for taking great risks, but they do so in a transparent way throughbonuses and stock options, which have the additional benefit of aligning the individual’s with the company’s goals. Some entrepreneurial communities, such as Marwaris and Jains, have a similar way of compensating employees—allowing them to trade privately. Often, however, it is a method of training youngsters who in a few years are expected to set out on their own.
    Every child in India grows up reading in school the perfidious story of how Clive and the Company stole Bengal at Plassey in 1757. So, it is hardly surprising that Indians remain suspicious of trade, merchants and foreign companies. ‘The return of the East India Company’ is still invoked in public discourse about trade liberalization, multinationals and market-based policies. More than sixty years after Independence, India has become the world’s second-fastest growing economy, the minds of the young are decolonized and liberated, and so it is time, perhaps, to get over the ‘East India Company syndrome’.
    The ‘East India Company syndrome’ has been behind a sentiment called swadeshi in India’s public life after Independence. It is variously nationalist, xenophobic, anti-foreign, and usually exhibits itself in a clamour for tariff protection and self reliance in economic policy. It was first practised with Mahatma Gandhi in the 1920s, who used it successfully as a political tool to mobilizeIndians against foreign rule. But after Independence, it was exploited by businessmen to get barriers erected against foreign goods and investment. The economic reforms of the 1990s were a clear turning point against this sentiment as tariff walls tumbled and India opened up to trade and investment despite rearguard action by the protectionist Bombay Club.
    Tirathankar Roy’s story of the East India Company has brought a fresh perspective to history, which for too long has been a dreary account of the reign of kings. He breathes life into history, as will the rest of the volumes in our series, in