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37 of 40 people found the following review helpful:
4.0 out of 5 stars
The Triumphalist History of the Company, March 27, 2003
The authors, John Micklethwait and Adrian Wooldridge, have squeezed 5,000 years of business history into The Company (A Short History of a Revolutionary Idea), the newest addition to the important series, Modern Library Chronicles. I approached this particular edition was some trepidation as the subject matter seemed a little dry (there is, after all, a chapter called "The Triumph of Managerial Capitalism".) The book is more interesting than expected and is written with some humour as well as a certain amount of patience for the less business informed reader. The strong caveat, though, is that the authors do stress the triumph of the company in creating everything that is good in the world, making their case less often then I suspect they wanted to. They are honest about the bad, such as the Belgian Congo and Enron, but try to make clear that positives exist with enormous negatives. Trying to find a positive in the holocaust of the Congo is not, in fact, possible but the authors cheerfully give it a shot. Despite their obvious boosterism, this is an interesting book and a worthwhile introduction to one side of an argument.
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21 of 21 people found the following review helpful:
4.0 out of 5 stars
Overgrown Economist Article, August 11, 2005
This short, breezy history of the business corporation begins with the Dutch East India Company and ends with Enron. As befits a book by two Economist writers, "The Company" reads like an Economist special supplement: the analysis spans the globe; factoids are mixed with sweeping generalizations; interpretations masquerade as straightforward statements of fact; and dry subjects are enlivened with humor, literary touches, and insights from deep thinkers (like Coase and Chandler). "The Company" is a very good read. Unfortunately, it doesn't treat any subject in depth. The endnotes show that the authors worked exclusively from secondary sources. It's hard to know whether the authors are as sure of their material as their cocky tone suggests: the section on well-known recent developments (mergers, corporate "unbundling," Silicon Valley, globalization, etc., etc.) is filled with debatable judgments, confidently asserted. This inevitably raises doubts about the book's treatment of distant, unfamiliar historical episodes. One thing "The Company" does prove is that a limited-liability joint-stock company (i.e., a corporation) is a handy vehicle for amassing capital from multiple dispersed investors. Something like it would have to exist in any capital-intensive, non-socialist economy. But "The Company" also shows that the particulars of corporate form are conditioned by history, law, and culture; corporations vary radically from country to country and era to era. The Microsoft of 1995 had little in common with the I.G. Farben of 1925 but for the fact that both were limited-liability joint-stock companies. In this regard, the authors draw a helpful distinction between Anglo-American "shareholder" corporations (operated for the benefit of owners) and German-style "stakeholder" corporations (which include workers and community representatives on their governing boards). The corporate model chosen by a nation has big implications for labor relations, investment decisions, and politics. This is a radical message for Americans who see corporations as the creations of "the marketplace" and beyond the control of the community. If "The Company" awakens American readers to the variety of corporate models to choose from, it will have served an admirably subversive purpose. Plus it's short! Note: A new book called "Icarus in the Boardroom" covers some of the same ground as "The Company." It too is short and breezy, but it is much more sophisticated and it really unpacks the legal and economic forces that drive corporate evolution. I would recommend it over this book.
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21 of 23 people found the following review helpful:
3.0 out of 5 stars
Useful descriptive account but normatively disappointing, June 16, 2003
Although I would recommend this text to generalist readers seeking a (remarkably) concise introduction to history of the business corporation, I came away somewhat disappointed. There is little doubt Micklethwait and Wooldridge are correct in their claim that the corporation is now the key economic institution in Western nations. Yet, it did not have to turn out that way. As Micklethwait and Wooldridge usefully remind us, two centuries ago, leading business and economic thinkers (including the great Adam Smith) derided the joint stock company. What explains the relatively rapid development in the mid-19th century of a recognizably modern corporation and, in turn, that entity's emergence as the dominant form of economic organization? Micklethwait and Wooldridge offer a fairly conventional answer to that question, based largely on new technologies -- especially the railroad -- requiring vast amounts of capital, the advantages such large firms derived from economies of scale, the emergence of limited liability that made it practicable to raise large sums from numerous passive investors, and the rise of professional management. Readers familiar with the work of business historian Alfred Chandler will find relatively little new in this part of the story, although Micklethwait and Woolridge's treatment has the advantage for generalist readers of being considerably more accessible than is most of Chandler's work. Instead of offering any novel historical analysis, Micklethwait and Wooldridge's principal potential contribution (albeit one they failed adequately to realize) is the normative thesis to be derived from the historical account. In their introduction, Micklethwait and Wooldridge's lay out a claim that will be familiar to readers of Michael Novak's work (surprisingly, however, they seem unaware of his seminal work). Like Novak, Micklethwait and Wooldridge argue not only that the corporation is one of "the West's great competitive advantages," but also that the number of private-sector corporations a country boasts is a relatively good guide to the degree of political freedom it provides its citizens. (xx) Unfortunately, this insight goes nowhere. The normative claim is entirely plausible. The rise of modern corporations did more than just expand the economic pie. The legal system that facilitated their rise necessarily allowed individuals freedom to pursue the accumulation of wealth. Economic liberty, in turn, proved a necessary concomitant of personal liberty-the two have almost always marched hand in hand. In turn, the modern public corporation has turned out to be a powerful engine for focusing the efforts of individuals to maintain the requisite sphere of economic liberty. Those whose livelihood depends on corporate enterprise cannot be neutral about political systems. Only democratic capitalist societies permit voluntary formation of private corporations and allot them a sphere of economic liberty within which to function, which gives those who value such enterprises a powerful incentive to resist both statism and socialism. As Michael Novak has observed, private property and freedom of contract were indispensable if private business corporations were to come into existence. In turn, the corporation gave liberty economic substance over and against the state. Regrettably, after laying it out, Micklethwait and Wooldridge fail to pursue this thesis. Instead, their book lapses into a rather sterile historical description.
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