The Godly Algorithm (99: Corporate Models)

The British model

In time the highly profit-minded British excelled beyond all others and exercised control over so very many foreign territories and their plenteous natural resources that the sun never set on the British Empire, as they used to say. In this respect, beginning soon after the year 1600, the jewel in the British crown became the American colonies to which England—uniquely among nations—sent its own citizens to colonize and work the land as residents, economically subservient to overseers in distant England. This arrangement quite unintentionally gave the British-American colonists something to lose, thus creating in them a new and independent mindset which was not overly long in coming to the fore.


Most profitably, the mother country required the colonists to ship their raw materials to England. There, English workers paid slave wages processed them into manufactured finished goods such as pots and pans and axes. These finished goods were then shipped back to America where the colonists could buy, at marked-up retail, these little life necessities they were not permitted to manufacture for themselves. Sound familiar? What goes around comes around.


Any American colonists caught making finished products for themselves were punished and their facilities destroyed. You don’t hear nearly so much about the “economic” causes of the American Revolution as about its “political” causes. But the similarity to today’s global trade arrangements whereby American workers rendered unemployed when their jobs are shipped overseas to cheap-wage countries, then left no option but to buy imported pots and pans at full retail, will be apparent to the reader who has not fallen asleep. May we just observe in passing that economic arrangements of this one-sided nature tend to make revolutions fairly inevitable.


After the exasperated American colonists in high ill temper eventually separated themselves from their one-sided financial arrangements with merry old England, the British soon refocused their attentions on the large geographic area today known as India, Pakistan and Bengladesh—places very rich in natural resources—and proclaimed it the new jewel in the British crown. Nevertheless they rankled for a century over the parting of their former American jewel and sided with the South in our Civil War. They say George III never did get over “his” loss of the Americans, and remained irritated for life.


Capitalism is the system, the corporation is the vehicle. The vehicle for stealing the new eastern jewel’s great wealth and shipping it home to England was a super-corporation arrangement, which the most huge modern mega-corporations can only envy, called…


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…The East India Company

Originally set up to challenge (replace) Portugal’s dominance of the Spice Islands trade, the East India Company (EIC) was chartered by Elizabeth I in 1600 and operated for 274 years. Evolving quickly in corporate ways, it soon looked much like modern business corporations with separate division managers and wealthy merchant investors.


The latter gradually took a backseat to heavy investment by the Queen Herself and British aristocrats who looked out for its interests—and their own. In turn, the EIC continued the old guild practice of annual payments to the government, perhaps a precursor of the idea that modern corporations really ought to pay some taxes for the sake of appearances. The East India Company eventually controlled fully half the world’s trade in such “basic” commodities as silk and cotton, salt, “English” breakfast tea, and opium.


The company employed its own private armies and in general behaved as if it were an independent nation subject to no higher authority. It had employed 3,000 regular troops in 1750, just seven years before the 1757 Battle of Plassey after which it took over India and ruled as sovereign. Just six years later (1763) the EIC had 26,000 troops, rising to 67,000 by 1778—about the time England became militarily distracted in the American colonies. By 1803 this unregulated corporation’s private army numbered 260,000 troops.


The EIC ruled over India, criminally exploiting and extracting its wealth, for 101 years. The company finally ceded control to the British Crown in 1858, less than a year after native troops rose against their British officers in the Sepoy rebellion—often called India’s First War of Independence. Not without justification, the modern mega-corporation Halliburton, so deeply involved in the Bush Administration’s allegedly preemptive invasion of Iraq, has been among a few modern corporations compared to the loose-cannon model that was the East India Company. But, so far, these are just pikers:


In many ways the EIC was a model of corporate efficiency: 100 years into its history, it had only 35 permanent employees in its head office. Nevertheless, that skeleton staff executed a corporate coup unparalleled in history: the military conquest, subjugation and plunder of vast tracts of southern Asia. It almost certainly remains the supreme act of corporate violence in world history. For all the power wielded today by the world’s largest corporationswhether ExxonMobil, Walmart or Googlethey are tame beasts compared with the ravaging territorial appetites of the militarised East India Company. Yet if history shows anything, it is that in the intimate dance between the power of the state and that of the corporation, while the latter can be regulated, it will use all the resources in its power to resist.

William Dalrymple, The, March 4, 2015


The Boston Tea Party versus the EIC

It was the East India Company that was targeted when our Sons of Liberty implemented the Boston Tea Party. Aboard three newly arrived EIC ships—the Beaver, Dartmouth and Eleanor—were about 46 tons of the company’s tea, bagged in 340 chests and destined for retail sale at the EIC’s non-negotiable price. As it happened, that price was set low so as to undersell the existing colonial market, thereby driving out competitors and giving EIC a tea monopoly in the American colonies. These machinations being widely understood among the colonials, the three ships’ arrival set off a series of angry town meetings for three weeks before the night of decisive action regarding the “pernicious tea.”


After the sun was full set on December 16, 1773, the Sons of Liberty—some badly disguised as native Americans—used an assortment of tomahawks and axes to smash open all 340 chests and chop deep into the baled tea to ensure it could not survive its imminent dump into Boston harbor’s saltwater. It was hard work and took a while.


The raiders were civil people of proper manners. After completing the job they swept the ships’ decks clean and returned to proper place anything it had been necessary to move. One accidentally broken padlock, the personal property of a ship’s captain, was promptly replaced the next day by the patriots. Soon after in London, the EIC would report damages of £9,659—about $1,700,000 in today’s currency—not counting the lock.


We then were ordered by our commander to open the hatches and take out all the chests of tea and throw them overboard, and we immediately proceeded to execute his orders, first cutting and splitting the chests with our tomahawks, so as thoroughly to expose them to the effects of the water. In about three hours from the time we went on board, we had thus broken and thrown overboard every tea chest to be found in the ship, while those in the other ships were disposing of the tea in the same way, at the same time.

                                                George Hewes, a participating Son of Liberty


The modern models

As our modern times were about to emerge, there already had emerged two broad types of corporations: 1) those that manufacture or broker useful objects they can sell for a profit, such as pots, pans and tea, and 2) those that produce nothing useful at all, but just go straight for the profits by stealing or manipulating other peoples’ monetary wealth.


The latter have especially grown and prospered. Modern examples include hedge funds, a variety of “private equity” brigands, and financialized “holding” umbrellas which merge giant banks, giant insurers and other holders of enormous wealth with the inherent risks of investing and stock trading—including the big retirement funds so many Americans happily anticipate receiving. Not to worry, such risks can usually be manipulated off onto some uninformed patsy whereby to assure the objective of disproportionate profit.


To these modern examples, the creative ingenuity into which self serving corporate managers and testosteronic bright boys can direct their intensely competitive energies approaches infinity, easily finding ways over, under, around and through governmental regulations set up with intent to protect the better interests of All The People. Anyone doubting this may try to comprehend the fine print on a bundled-mortgages derivative “instrument” sold at great profit and high commission prior to the Wall Street meltdown of 2007-08. Or even just explore how the evasive term “derivative” was derived.


Where are we today?

And so with this thumbnail summary of the peculiar human tool called the corporation we arrive at completely modern times when corporations have grown far bigger, and far more powerful, than ever before in all human history, reflected in the glorified glass of a pile of skyscrapers marking the lookalike central downtown zones of every big city, everywhere, all over the world. Methinks even the EIC would be impressed.


The corporation is properly called a tool because a “tool” is a human creation used as a means to an end. The tool is never an end in itself—it exists as an intermediary device, i.e., as a wrench turns a bolt, a car speedily transports you so you don’t have to walk, or a corporation enables a group of go-getters to collaborate in making a disproportionately huge profit by one means or another. The wrench, the car and the corporation are mere tools, means to help us achieve some ends. The capitalistic end, of course, is profit.


All this being true, you will immediately see the error in the United States Supreme Court’s longstanding opinion that a corporation is the equivalent of a “person,” allegedly having the same rights as a living breathing person. A person is an end in himself/herself. A corporation is not; it is a mere tool serving as means to an end. Therefore, the United States Supreme Court, our nation’s supposedly ultimate arbiter of right and wrong, is self evidently wrong—and with enormous ill consequences for what we all perceive as “justice.” What shall we do about such a grievous wrong, a wrong persisting under protection of the law, just like slavery used to be condoned and protected by law?


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