Andrew Phillips and J.C. Sharman have written a brilliant exposition of “Company-States”—corporate entities endowed with sovereign powers that ruled vast swathes of the globe throughout the seventeenth, eighteenth, and nineteenth centuries—and the impact that they had in shaping the nature of empire and its colonial legacy. Outsourcing Empire documents the rise and fall of the company-state as a normatively approved form of governance that was juridically distinct from its state sponsor. Phillips and Sharman critically recast the conventional understanding that European colonial expansion was a fundamentally state-driven enterprise. They demonstrate that, influenced by the tension between profit and power, these hybrid actors innovatively engaged in the emergent international order and left an indelible mark.
Phillips and Sharman build their thesis chronologically through the early modern and industrial periods, cataloguing the company-state's origin, spread, demise, and (brief) resurrection. They source the company-state's normative underpinning in seventeenth century European governance, which featured territorially nonexclusive forms of rule that legitimated the exercise of sovereign power by non-state actors. The emergence of the corporation, with its separate legal personality, permitted a new model combining sovereign prerogatives and economic authority with the capacity to attract private capital and assume risk against the prospect of substantial profit.
Chapter 1 situates the company-state's origin in the early modern threat of Habsburg hegemony on the continent, which drove states such as the Dutch Republic and England to adopt this fusion of political and economic models. By delegating zones of sovereignty, these states extended their political and economic reach while avoiding the high entry costs of overseas trade. The authors specifically highlight how delegates such as the Dutch East India Company (VOC) and the English East India Company (EIC) creatively exercised their sovereignty to maximize profits and outcompete state rivals. Chapter 2 documents the spread of company-states to the Atlantic, with new ventures attempting to replicate company-state successes in Asia. This iteration of company-states was, in general, less successful, because of greater control and influence over their activities by the state fostered by relative proximity to Europe. Shorter distances in the Atlantic fostered more liberal interference by state sponsors; greater competition also drove political pressures for metropolitan governments to chip away at the monopoly powers on which company-states relied. Chapter 3 observes the company-state's downfall, which Philips and Sharman attribute to two key developments. First, the advent of political economy as a governing philosophy beginning with the works of Adam Smith and Thomas Malthus, which held sovereignty to be an exclusive, indivisible aspect of state power; and second, the increasing necessity (and cost) of intervention in company-states’ affairs arising from misrule and unprofitability. By the nineteenth century, the company-state was seen as an outmoded, illegitimate institution. As company-states strained under the costs of rule no longer believed valid, their state sponsors gradually withdrew their extraordinary privileges, assuming direct control. Chapter 4 canvasses the company-state's brief resurgence in the late nineteenth century, premised on delivering “colonialism on the cheap” by downloading the costs of empire to private investors. However, possessing fewer sovereign powers and facing greater metropolitan oversight, these ventures never achieved more than marginal commercial success, and ultimately met the same end as their earlier incarnations.
Philips and Sharman demonstrate that the company-state thrived when vested with broad powers in a permissive context that allowed for innovation and experimentation in their use, free from state intrusion. They assert that these factors distinguished the early success of the VOC and EIC from attempts that followed. Later ventures were never able to operate at arm's length from the state, regardless of the authority they wielded on paper, and were doomed as they became entangled in and subsumed by the imperial project. The Hudson's Bay Company (HBC) is the notable exception—chartered in 1670, the HBC retained its prerogatives until 1869—which Philips and Sharman describe as proving the rule. Despite its proximity to Europe, the HBC's operations remained temporally isolated from the metropole by virtue of its annually frozen namesake. Moreover, the HBC kept a low profile throughout its sovereign tenure, attracting little political attention in London and never requiring state subsidy.
Philips and Sharman highlight company-states’ impact through their innovative uses of sovereign power. Not bound by the political constraints of their state sponsors, company-states inserted themselves into indigenous hierarchies, allegiances, and social orders in search of profits. In the seventeenth century, the EIC was simultaneously the suzerainof Bencoolen on Sumatra and a satrap of the Mughal Emperor on the subcontinent. The HBC dealt with the Cree on largely equal terms. With their indigenous subjects and partners, these sovereign hybrids crafted novel legal and social orders, resulting in sui generis “extended polities” that were neither states nor commercial ventures.
Outsourcing Empire, however, dogmatically espouses an Austinian paradigm of power, whereby company-states’ political control was legitimated by their official (if not practical) monopoly on violence. This is supported by an accounting of the bellicosity of the VOC and EIC, and later the abject cruelty of the Congo Free State. But, as Philips and Sharman point out, the HBC was fundamentally pacifist and peaceable, nearly to a fault. Theoretically, the authors here miss the opportunity to explore the normative and juridical understanding of company-states’ claims to sovereignty and possession. Substantively, while Philips and Sharman focus on larger Atlantic charters, such as the HBC, they overlook the political, legal, and cultural contributions of their smaller American contemporaries such as the Plymouth Company, the London Company, and especially the Massachusetts Bay Company.
These are minor points. Outsourcing Empire convincingly adds nuance to the assessment of European colonial legacies and how they ought to be understood. The weight of their contribution now creates a presumption for future historians of these eras and locales to consider the impact of these entities. Philips and Sharman show how the story of empire was written as much by the decisions of merchants with paper crowns as by the kings who backed them.
