Saturday, October 09, 2010

The Company

The Company: A Short History of a Revolutionary Idea (Modern Library Chronicles)
I have just started reading The Company: A Short History of a Revolutionary Idea by John Bicklethwait and Adrian Wooldridge, two people in senior positions with The Economist magazine. Given the orientation of the magazine, I expect the book to be strongly in favor of liberal economic practice, and the role of the corporation in modern economies.

The authors stress the role of the Companies Act of 1862 which brought together three key elements of the corporation:

  • the corporation as an "artificial person" that could act in ways comparative to the ways in which a real person could act in the economy
  • the corporation could issue tradable shares to any number of investors and
  • the investors would have liability limited to their investment in the firm.
They also stress that the British corporation created in the 19th century was not limited to a single purpose, and thus a railroad corporation could build any number of different lines; today we see corporations such as 3M in businesses very different than their original focus.

The business enterprise involving a number of people in a common business has a history going back thousands of years, as the authors show. Yet the modern corporation, in its larger forms and especially in its multinational reach was perhaps the central institution of the 20th century. We will have to see whether the Internet and the evolving global information infrastructure will see the market or some other institution come to dominate thought in the 21st century.

I can already tell that the authors, as one would expect from long term journalists, tell a good story in clear prose, This short book covers material that is hard to find in other histories.

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