Micro-Review: Phillips & Sharman on "Outsourcing Empire"
Book: Andrew Phillips & J.C. Sharman, "Outsourcing Empire: How Company-States Made the Modern World (Princeton University Press, 2020).
Written by two professors of international relations and/or strategy, this ambitious book helpfully situates the “company-state” (e.g., the Dutch East India Company, Hudson Bay Company, British East India Company, etc.) not so much within the field of historiography as those of institutional theory, international relations, and management science.
Phillips and Sharman analyze how unique assumptions of 16th and 17th century monarchies—such as it being natural for the Crown to delegate or alienate crucial components of sovereignty to a pseudo-feudal subordinate—intersected with the rising mercantile order. In this case, that pseudo-feudal subordinate was a joint-stock company, the antecedent to the modern corporation. Yet unlike modern corporations, these company-states had to balance the oft-competing responsibilities of sovereignty (administering a state, waging war) with those of profitability (balancing the books). In the end, Phillips and Sharman show how [1] changing assumptions deriving not only from the theoretical side, that is from proto-political science and economics (“political economy”), but also [2] evolving political considerations at home sent the company-states into a legitimation crisis. Compounded with [3] the impossibility of reconciling the competing priorities of managing a warlike empire and running a profitable peacetime business, European states increasingly took over an empire that (in the English and Dutch cases, in particular) the home state had obtained “on the cheap” by “outsourcing empire” to this company until private capital had built enough infrastructure to make a public takeover worthwhile.
The authors point out that the Dutch and English East India Companies were actually startling exceptions; most company-states, despite being set up as carbon copies of these Amsterdam and London models, could not get off the ground due to failure to manage problems 1-3 above. In the end, even the Dutch and East India companies became victims of this basic instability: the Dutch company, dedicated to war from the beginning, wasted its strength fighting the Portuguese in Brazil, while its English analogue, initially chased out of Indonesia by the Dutch and subservient to the Mughals in India, was eventually drawn by the fragmentation of the latter Indian empire and increasing competition from its French rival into the full-scale empire-building and warmongering that would give it a larger domain than the English state. When this vast responsibility provided opportunity for sins of commission (corruption and brutality leading to the so-called Mutiny) and omission (allowing and aggravating the Bengal famine), the home state demanded the “state” part of the company back again, and the company itself ended soon after. The exception to these, Phillips and Sharman note, was the only company-state still operative today: the now Toronto-and-New-York-based Hudson Bay Company. This, the authors show, survived by keeping a low profile, avoiding the “state” part of the company-state as much as possible and maintaining generally amicable relations with the First Nations until Russian and especially American expansion made the company’s preference for keeping Canada a vast game preserve seem an invitation for Tsarist or Yankee interlopers.
Finally, Sharman & Phillips examine how the renewed scramble for African and Asian empire during the late 19th and early 20th century led to the temporary, but ultimately abortive, arrival of the company-state model. However, these tended to be used either as dodges for disreputable sovereigns (the so-called Congo Free State) or else collapsed due to the impossibility in the modern international order of entrusting non-state actors with the powers of war-making.
In the 21st century, when key tech corporations have begun to exercise a sort of technological imperialism over many small states (and have destabilizing effects even in such large home empire-states as the U.S.A.), the book offers the sort of proverbial historical rhyme that many idea-mongers appreciate. However, such is not this book’s tone. Writing in the language of institutional theory, Phillips and Sharman analyze the company-states through such constructs as principal-agent problems, actor-network theory, and so on. While their language does not accommodate itself to recent shifts toward sensitivity in the post-colonial humanities, the precision and rigorousness offered by Outsourcing Empire would in fact be extremely useful to an anti-colonialist/anti-imperialism activism that wishes to understand in order to act.