Free Economics Dissertations - Introduction The History Of The Company Is An Extraordinary Tale. What Began
INTRODUCTION
The history of the company is an extraordinary tale. What began as a state-sponsored charity has sprawled into all sorts of fields, reconfiguring geography, warfare, the arts, science, and, sadly, the language. Companies have proved enormously powerful not just because they possess most of the legal rights of a human being, without the attendant disadvantages of biology: they are not condemned to die of old age and they can create progeny pretty much at will. This privilege of immortality, not to mention the protection that the artificial corporate form has afforded various venal people down the ages, has often infuriated the rest of society, particularly governments. Hence, there has been a lengthy series of somewhat bad-tempered laws trying to tamper with the concession, from the statute of Mortmain, which Edward I issued in 1279 to stem the flow of assets being transferred beyond his feudal writ to the ‘dead hand’ of corporate bodies (particularly monasteries), to the 2002 Sarbanes-Oxley Act, through which Congress tried to make bosses more accountable for the sins of ‘their companies.
DEFINATION
There are two ways to define a company. The first is merely as an organization engaged in business: this definition, as we shall see, includes everything from informal Assyrian trading arrangement to modern leveraged buyouts. The second is more specific: the limited-liability joint-stock company is a distinct legal entity (so distinct, in fact, that its shareholders can sue it), endowed by government with certain collective rights and responsibilities. This was the institution that the Utopians ‘Astonishing Fact’, the Companies Act of 1862.unleashed, and which is still spreading around the world, conquering such obstinate copiers as the Chinese Communist Party and the partners of Goldman Sachs.
The most powerful economic power of the nineteenth century Britain, brought together the three big ideas (William Gilbert), behind the modern company: that it could be an ‘artificial person’, with the same ability to do business as a real person; that it could issue tradable shares to any number of investors; and that those investors could have limited liability (so they could lose only the money they had committed to the firm). Just as important, the Victorians changed the point of companies. It was no longer necessary to seek special sanction from parliament to set one up or to limit its business to a specific worthy aim (like building a railway between two cities); now it was possible to set up general-purpose corporations at the drop of a hat. All that was necessary was for seven people to sign a memorandum of association for the company to be registered and for it to use the word ‘limited’ to warn creditors that they would have no recourse to the company’s owners.
