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The Princeton Economic History of the Western World #82
Going the Distance: Eurasian Trade and the Rise of the Business Corporation, 1400-1700
A historical look at the early evolution of global trade and how this led to the creation and dominance of the European business corporation
Before the seventeenth century, trade across Eurasia was mostly conducted in short segments along the Silk Route and Indian Ocean. Business was organized in family firms, merchant networks, and state-owned enterprises, and dominated by Chinese, Indian, and Arabic traders. However, around 1600 the first two joint-stock corporations, the English and Dutch East India Companies, were established. Going the Distance tells the story of overland and maritime trade without Europeans, of European Cape Route trade without corporations, and of how new, large-scale, and impersonal organizations arose in Europe to control long-distance trade for more than three centuries.
Ron Harris shows that by 1700, the scene and methods for global trade had dramatically Dutch and English merchants shepherded goods directly from China and India to northwestern Europe. To understand this transformation, Harris compares the organizational forms used in four major China, India, the Middle East, and Western Europe. The English and Dutch were the last to leap into Eurasian trade, and they innovated in order to compete. They raised capital from passive investors through impersonal stock markets and their joint-stock corporations deployed more capital, ships, and agents to deliver goods from their origins to consumers.
Going the Distance explores the history behind a cornerstone of the modern economy, and how this organizational revolution contributed to the formation of global trade and the creation of the business corporation as a key factor in Europe’s economic rise.
Before the seventeenth century, trade across Eurasia was mostly conducted in short segments along the Silk Route and Indian Ocean. Business was organized in family firms, merchant networks, and state-owned enterprises, and dominated by Chinese, Indian, and Arabic traders. However, around 1600 the first two joint-stock corporations, the English and Dutch East India Companies, were established. Going the Distance tells the story of overland and maritime trade without Europeans, of European Cape Route trade without corporations, and of how new, large-scale, and impersonal organizations arose in Europe to control long-distance trade for more than three centuries.
Ron Harris shows that by 1700, the scene and methods for global trade had dramatically Dutch and English merchants shepherded goods directly from China and India to northwestern Europe. To understand this transformation, Harris compares the organizational forms used in four major China, India, the Middle East, and Western Europe. The English and Dutch were the last to leap into Eurasian trade, and they innovated in order to compete. They raised capital from passive investors through impersonal stock markets and their joint-stock corporations deployed more capital, ships, and agents to deliver goods from their origins to consumers.
Going the Distance explores the history behind a cornerstone of the modern economy, and how this organizational revolution contributed to the formation of global trade and the creation of the business corporation as a key factor in Europe’s economic rise.
488 pages, Hardcover
Published February 11, 2020
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Displaying 1 - 2 of 2 reviews
June 27, 2020
This book covers two very interesting and intertwined topics - the rise of the joint stock corporation in 16th and 17th Century commerce in England and the Netherlands and the dominance of England and the Netherlands in long distance Eurasian trade at the same time. Mr. Harris asks why did this form evolve in this time in these places and how did it operate as a competitive advantage. Mr. Harris is at his best when he discusses the organization of long-distance trade in the pre-modern era in different places and when he describes how little Europeans participated in that trade, other than as consumers in that period. Mr. Harris does an excellent job of looking not just at trade flows by Chinese, Indian and Middle Eastern merchants, but also how such trade was organized - who financed it? who conducted it? how were proceeds divided? what legal rules did it operate in? Mr. Harris surveys a vast time and area and looks in detail at the contractual and personal relationships a ships voyage or a caravan entailed. Mr. Harris also does an excellent job of discussing how the corporate form arose out of the separation of the Catholic Church and states in Western Europe. The need for perpetual ownership of property in religious institutions gave rise to the corporate form. Particular state circumstances in England and the Netherlands, in particular the ability of the ruler to credibly guarantee that it would not expropriate the property of the corporation, allowed these states to use the corporation to raise large pools of capital from the public and deploy these assets for a long period of time. Mr. Harris thus concludes that he organizational revolution of the joint stock company was the main advantage England and the Netherlands had over the other groups that had previously dominated the trade.
My issue with Mr. Harris' work is his need to wrap the whole historical work into a explicit theoretical framework. This makes the work feel like Mr. Harris is presenting a scientifically deterministic argument - with no other path of development possible. At a minimum, Mr. Harris has the work backwards. He starts with the theoretical framework and then tells the story in light of that framework. I do not feel he developed the theoretical insight from the historical research, rather he forced the research into the theoretical framework that comes before and after the history in this book.
This book was interesting, but not easy to read. I doubt it was meant for a general audience, but rather an academic audience. Perhaps, therefore, this criticism is unfair. However, I had to start this book over twice and I think Mr. Harris could have adapted a clearer writing style. In addition, his choice to lay out an explicit theoretical framework before laying out his research made the beginning very difficult.
In the end, I feel I learned much about the rise of commerce and corporations in Early Modern Europe. In particular, Mr. Harris does a great job of explaining why England and the Netherlands were fertile ground for the growth of joint stock corporations. He also does a great job of explaining pre-modern Eurasian trade, which had left much of Europe behind. He does a fairly good job of noting why the joint stock corporation did not migrate to the rest of Europe, much less India, Asia and the Middle East for hundreds of years. The wheat of this book is just surrounded by an annoying chaff of too much theoretical gobbly gook.
My issue with Mr. Harris' work is his need to wrap the whole historical work into a explicit theoretical framework. This makes the work feel like Mr. Harris is presenting a scientifically deterministic argument - with no other path of development possible. At a minimum, Mr. Harris has the work backwards. He starts with the theoretical framework and then tells the story in light of that framework. I do not feel he developed the theoretical insight from the historical research, rather he forced the research into the theoretical framework that comes before and after the history in this book.
This book was interesting, but not easy to read. I doubt it was meant for a general audience, but rather an academic audience. Perhaps, therefore, this criticism is unfair. However, I had to start this book over twice and I think Mr. Harris could have adapted a clearer writing style. In addition, his choice to lay out an explicit theoretical framework before laying out his research made the beginning very difficult.
In the end, I feel I learned much about the rise of commerce and corporations in Early Modern Europe. In particular, Mr. Harris does a great job of explaining why England and the Netherlands were fertile ground for the growth of joint stock corporations. He also does a great job of explaining pre-modern Eurasian trade, which had left much of Europe behind. He does a fairly good job of noting why the joint stock corporation did not migrate to the rest of Europe, much less India, Asia and the Middle East for hundreds of years. The wheat of this book is just surrounded by an annoying chaff of too much theoretical gobbly gook.
June 25, 2022
This is a complex book with a lot going on. There is much to learn from the book about early modern Eurasian trade The book is focused on economic and legal history and Professor/Dean Harris does a fine job at presenting the material. However, it is also important to understand the particular focus of the book as I suspect that it is not for everybody.
“Going the Distance” is studying the rise of the corporation in international (Eurasian) trade, but the focus is more on the corporate form, rather than on any particular corporation. There are a number of ways to organize commercial transactions and combine those transactions into larger entities with longer lifespans. These different ways of organizing can become embedded in different social settings that include formal sets of rules, informal customs and practices, enabling laws from local governments, shared histories, and other factors. These are call “institutions”. An assumption of the book is that institutions are tools that can help the parties engaging in trade to conduct their business effectively and efficiently. This suggests that over time, parties to transactions will tend to gravitate towards institutions that will better enable them to take part in trade and prosper from doing so.
Harris is interested in how the corporate form came to be the dominant institution for organizing trade transactions in the period prior to 1700. (How Europe came to dominate trade and politics in Eurasia after 1700 is a well known story - Colonialism, A History of …). While the book’s argument is complex, Harris is arguing that institutions such as the corporation migrated throughout Eurasia as individuals conducted trade and experimented with how to best organize and then shared their results with other traders. I don’t want to say much more about the story Harris is telling, except to say that the dominance of the corporate form at this time is not much of a secret. The migration story is interesting and important, especially versus claims that the corporate form was imposed on others by the barrel of British or Dutch guns. (That came later.). The story of the evolution of the corporation is enhanced through a series of short minicase studies on various precursors to the corporation. He also includes chapter length case examples of the British East India Company (EIC) and the Dutch East India Company (VOC). These are the two organizational forms which established the superiority of the corporate organization form and enabled it to come to dominance of world trade and commerce.
“Going the Distance” is not just a history of Eurasian trade. It is also a history of how economic and other historians have tried to explain trade. It is also a scholarly literature review about institutional theory as well. This means that there may be some chapters that more general readers might not find interesting. Not to fear, they can be skipped. Harris has organized his book well and different readers can skip chapters and still maintain the consistency of the arguments.
This book is not an easy read and presumes some background. It is well worth wading into.
“Going the Distance” is studying the rise of the corporation in international (Eurasian) trade, but the focus is more on the corporate form, rather than on any particular corporation. There are a number of ways to organize commercial transactions and combine those transactions into larger entities with longer lifespans. These different ways of organizing can become embedded in different social settings that include formal sets of rules, informal customs and practices, enabling laws from local governments, shared histories, and other factors. These are call “institutions”. An assumption of the book is that institutions are tools that can help the parties engaging in trade to conduct their business effectively and efficiently. This suggests that over time, parties to transactions will tend to gravitate towards institutions that will better enable them to take part in trade and prosper from doing so.
Harris is interested in how the corporate form came to be the dominant institution for organizing trade transactions in the period prior to 1700. (How Europe came to dominate trade and politics in Eurasia after 1700 is a well known story - Colonialism, A History of …). While the book’s argument is complex, Harris is arguing that institutions such as the corporation migrated throughout Eurasia as individuals conducted trade and experimented with how to best organize and then shared their results with other traders. I don’t want to say much more about the story Harris is telling, except to say that the dominance of the corporate form at this time is not much of a secret. The migration story is interesting and important, especially versus claims that the corporate form was imposed on others by the barrel of British or Dutch guns. (That came later.). The story of the evolution of the corporation is enhanced through a series of short minicase studies on various precursors to the corporation. He also includes chapter length case examples of the British East India Company (EIC) and the Dutch East India Company (VOC). These are the two organizational forms which established the superiority of the corporate organization form and enabled it to come to dominance of world trade and commerce.
“Going the Distance” is not just a history of Eurasian trade. It is also a history of how economic and other historians have tried to explain trade. It is also a scholarly literature review about institutional theory as well. This means that there may be some chapters that more general readers might not find interesting. Not to fear, they can be skipped. Harris has organized his book well and different readers can skip chapters and still maintain the consistency of the arguments.
This book is not an easy read and presumes some background. It is well worth wading into.
Displaying 1 - 2 of 2 reviews