The Political Economy of the Early Modern Corporation: Market Formation and Social Responsibility, 1600–40

A burgeoning revisionist historiography of early modern English corporations has argued for their pivotal contribution to domestic political development, and more expansively, the early modern European imperial project. Corporations appear in these accounts as successful bioprospectors, initiators of consumer change, and facilitators of knowledge exchange. Modern assessments of their economic performance, however, have largely followed the Smithian critique that these were economically inefficient enterprises, and prone to pernicious monopolies and rent-seeking behaviours. This paper adopts a new perspective on the problem by examining debates over corporate legitimacy and social responsibility from 1600-1640. Using the concept of market formation and relating it to the work of Karl Polanyi, the paper argues that despite voluble critiques, contemporaries believed that corporate organization was often necessary to create an orderly trade, develop infrastructure, and establish commercial and political relationships. By establishing and “governing” economic markets, corporations performed socially responsible functions and were able to defend themselves with reference to their public benefits. Early modern commercial corporations thereby derived their legitimacy from their claims for market formation. While these arguments develop Polanyi’s claims about the key role of state-sponsorship in the development of capitalist institutions, they also enable an analysis of early debates about corporations and their social responsibilities. To explore these problems, the paper will utilize archival material from government and parliamentary sources to discuss two key episodes: the chartering of the East India and Virginia companies (1600-1607) and the promotion of domestic corporations by the government of Charles I in the 1630s. By doing so, the paper provides new insights into early economic thought in England and demonstrates how corporations were legitimized through their association with market formation.