Andrew Phillips & J.C. Sharman, Outsourcing Empire: How Company-States Made the Modern World. Princeton: Princeton University Press, 2020. v+ 253 pages. Hardcover, $29.95.

• Author: Moriarty, Brendan
• Position: Article 14

Neither a nation-state nor a city-state, the company-state was a pioneering model for both capital accumulation and international relations as European governments sought to colonize the world on the cheap, and, in doing so, helped shape the world as it is today. In Outsourcing Empire: How Company-States Made the Modern World, political scientists Andrew Phillips and J.C. Sharman present a broad and succinct summary of the history and form of company-states. Company-states were hybrid institutions that blended the profit-seeking activities of commercial ventures with a bundle of delegated sovereign prerogatives, from minting coins and administering justice to waging war and negotiating treaties.

Phillips and Sharman cover the rise of company-states, company-states in the Atlantic, the fall of company-states, and their brief resurrection during the scramble for Africa, with an introduction and conclusion as bookends. The core thesis of the book is that European governments sought to create and/or expand their empires on the cheap, and did so by issuing charters that had state powers so as to attract vast amounts of patient capital. These company-states were notable for their innovations in finance, including the joint-stock ownership form, the concept of limited liability, and governing boards. Additionally, they were usually granted monopoly trading rights over certain areas.

Starting with the Dutch and English East India Companies, these company-states enjoyed early success for two reasons. First, they were able to distance themselves, metaphorically and literally, from the wars in Europe between host states, owing to their charter-guaranteed autonomy and locations. Second, they were able to address bureaucratic problems endemic in the Spanish and Portuguese imperial administration, such as the principal-agent problem. Additionally, the hybrid nature of company-states--semi-public yet semi-private institutions--allowed administrators to strike a diverse set of deals with local polities; whereas the monarchs of Europe would never bow down, even symbolically, to chieftains in Africa and Asia for access to spice trades or mining concessions, company-states had no such problem, submitting to such arrangements if it meant that they could maximize their profits.

After the initial success of the Dutch and English East India Companies, company-states were chartered all over Europe and sent across the globe. These newer company-states were less...