By 1803 possibly the richest and largest commercial organisation in the world, the East India Company was practically running the Indian subcontinent as a vast commercial concern. The company’s business model may sound familiar:
“keeping supply and production costs low while maximising the price of goods sold in England. It ended up outsourcing as much as it could, including manufacturing, shipping and retailing. The value it added was in the selection of goods and in keeping the supply chain humming.”
The British government recently announced its revised plans to establish at least 10 ‘free ports’ in the UK next year (this was first announced in 2019). These ports will run without import and export duties and with low taxes for any businesses using them. At the same time, the Chancellor of the Exchequer, Rishi Sunak, has refused to disclose whether he will profit from a surge in the share price of the Covid-19 vaccine manufacturer Moderna, one of the biggest investments held by the hedge fund he co-founded before entering parliament. It seems that government and commerce are becoming one in the post-Brexit economy. I therefore believe we could look back to another time when a similar thing happened to get an idea of the economic plan that awaits us in Brexit Britain according to the Tory government.
The British East India Company (EIC) was founded by a Royal Charter in 1600, granted to a group of English merchants by Queen Elizabeth I. It may seem odd that a foreign ruler grants permission for her own citizens to begin commercial exploitation of another land, but that is how things rolled in the 17th century. Even at this very initial stage of the EIC we can see a similarity to Brexit; both are reliant on legislation, law and power with the goal of economic gain. Both are dependent on trade and international relations.
It was the defeat of the Spanish Armada in 1588 that allowed the founders of the EIC to plan their trade further afield. With the defeat of the other great European empire on the seas, it became possible to ply the sea lanes without the sustained threat of another great power. The EIC was to be a joint stock company, which is a “business entity in which shares of the company’s stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares. Shareholders are able to transfer their shares to others without any effects to the continued existence of the company”. Such a company allows for investment from stockholders and passive partners. This was necessary as setting up long distance ocean trading in 1600 was a very expensive business. It also made it possible for the barriers between governance and commerce to become permeable. This in particular may sound familiar to anyone following the developments around the exit of the United Kingdom from the European Union and trading block.
The EIC worked from a standard form; first establishing ‘factories’ in coastal ports. The factory was part warehouse, part office, part clearing station and part defensive stronghold. From these factories deals were done and alliances forged with local power holders.
Once the factories were established they became the monumental points that could be joined together as a result of military actions, standover tactics and bribes. By this I mean that the strong points of an economic network were established at key trading and strategic points, usually along the coast of India so as to make shipping easier in and out. This economic and trade network expanded throughout the subcontinent of India, gradually taking more and more control of the mechanisms of economy. This began in 1600 and slowly grew in span, influence and power.
By the mid-eighteenth century the Mughal Empire had become divided into a number of successor states. For the forty years since the death of the Emperor Aurangzeb in 1707, the power of the Emperor had gradually fallen into the hands of his provincial viceroys or subahdars. The three most powerful were the Nizam of the Hyderabad State in the Deccan region (Asaf Jah), of south and central India, who ruled from Hyderabad, the Nawab of Bengal (Murshid Quli Khan), whose capital was Murshidabad, and the wazir or Nawab of Awadh (Sa’adat Ali Khan, Burhan ul-Mulk). The European Trading companies still acknowledged the sovereignty of the Emperor at Delhi, Bahadur Shah I, but their relations with these regional rulers were of much greater importance. In addition the relationship between the Europeans was influenced by a series of wars and treaties on mainland Europe.
Since the late seventeenth century the European merchants had raised bodies of troops to protect their commercial interests and latterly to influence local politics to their advantage. Military power was rapidly becoming as important as commercial acumen in securing India’s valuable trade, and increasingly it was also the means of securing riches by another route: the right to collect land revenue. Then came the arrival of Robert Clive in India, the rich lands of the Coromandel Coast were contested between the French Governor General Joseph François Dupleix and the British. This rivalry included the British and French supporting various factions as Nawab of the remaining parts of the Mughal Empire. Clive was the first of the “soldier-politicians” (as they came to be called) who helped the British gain ascendancy in India. While the British would later be challenged in the South by Tipu Sultan of Mysore, Clive’s fame and notoriety principally lie in his military conquest of the province of Bengal.
Robert Clive, or 1st Baron Clive KB, FRS, Clive of India was virtually a free agent as long as he attained the goals his superiors desired. A merchant and agent who became a soldier in the service of his employer, The East India Company. He had began as the son of minor local gentry and a street thug when we was a teenager in the late 1730s, forcing protection money from local shopkeepers in his home village in Shropshire, breaking windows and fingers if they did not pay him and his gang. But by 1752 the Prime Minister William Pitt the Elder was describing Clive, who had received no formal military training whatsoever, as the “heaven-born general”, endorsing the generous appreciation of his early commander, Major Lawrence. The Court of Directors of the East India Company voted him a sword worth £700, which he refused to receive unless Lawrence was similarly honoured. When Clive died by his own hand at the age of 49, his fortune was worth about £500,000 (around £33 million today) and he owned properties in England, France and India.
The intimate dance between the corporate and the state was without boundaries in the case of the EIC. As the Financial Times observes:
Historians propose many reasons for the EIC’s astonishing success: the fracturing of Mughal India into tiny, competing states; the military edge of more advanced European soldiers; and the innovations in governance, taxation and banking that allowed the Company to raise vast sums of ready money at a moment’s notice.
But the same article goes on to argue that an overriding factor in the economic success of the EIC was the support of the British parliament, to the point of up to 40 MPs being former employees, directors and then current stock holders of the EIC. This totally dissolved the barriers between the corporate and commercial and the administration and running of a country. This is also present in the Brexit formula. John Redwood, Jacob Rees-Mogg, Rishi Sunak, Crispin Odey, Nigel Farage all seem to have benefitted from Brexit financially, while “more than 80% of funds raised by the Conservatives for the 2019 general election came from the secretive Leader’s Group.” There is little opposition to money making within and around government in the Post-Brexit UK. But as Scottish National Party MP Tommy Sheppard said “‘this is very serious. It shows how the rich and powerful can buy influence with the British government,’. ‘What are they getting in return?’”
Union, solidarity and collectivisation are the enemies of the free market. Both the EIC and Brexit Britain realised this. Breaking up the collectives — whether they be opposing parties, regulatory bodies, the law, unions or trade blocks — means opportunities are made for making money in the gaps left behind. We only need to look at the recent history of the drug trade to see how governments and trade make bad partners in the service of a nation with the free market calling the shots. Politics becomes about exploitation, advantage, reprisals and commercial value. This was pointed out well in the recent Al Jazeera documentary on the history of the drug trade in the age of Empires:
Drug Trafficking, Politics and Power: The Era of Empires
From colonial China's opium wars to Cold War US politics, we trace rise of global drug trade and its political backers.
Government in the service of the people is becoming an increasingly quaint notion. But enterprise and the power of money have long been discolouring the waters of government, going right back to Gaius Julius Caesar and his populist and business orientated governance of Rome. With depleting resources and the pressures of global climate change added to the mix today, free market governance is not something we can afford.