The Company

Micklethwait and Wooldridge, then at The Economist, wrote a short history of the joint stock company as an institution, from ancient precedents through the chartered trading companies to the modern multinational.

Their central argument is that the limited liability joint stock company is one of the most consequential institutional inventions in history, and that its key features developed slowly and for specific reasons. The corporate form requires legal personality, so the entity can own property and contract in its own name; perpetual existence, so it survives its members; transferable shares, so ownership can change without disrupting the enterprise; and limited liability, so investors risk only what they invest, which is what makes it possible to raise capital from strangers.

The historical narrative covers the Roman societates, medieval guilds and Italian partnerships, the chartered companies including the English and Dutch East India Companies which combined commerce with sovereignty, the British legislation of 1856 and 1862 that made general incorporation available without a specific charter, the American development of the large managerial corporation, and the twentieth-century multinational.

They also cover the recurring political argument about corporate power, which they trace from the South Sea Bubble through the trust-busting era to the present.

The book is short and is a synthesis for general readers rather than original research. Its treatment of the company's costs and of the critical literature is proportionately lighter than its treatment of the institution's benefits, which reflects the authors' position.