On Adam Smith and Thomas Jefferson:
Reading Smith afresh and delving into his analysis of the East India Company, it is shocking how his penetrating critique of the corporation has been so comprehensively suppressed. Nothing of his scepticism of corporations, their pursuit of monopoly and their faulty system of governance, enters the speeches of today’s neo-liberal advocates. Promoting his vision of free trade, they conveniently ignore that this can only be achieved with steadfast curbs on corporate power. Smith may have been a believer in open markets, but freeing the world for corporations formed no part of his vision. Smith strongly approved of the prevailing restrictions on the establishment of joint stock corporations introduced in the 1721 Bubble Act, and it took almost another century after The Wealth of Nations for these constraints to be removed in Britain.
Across the Atlantic, corporations would also play a highly limited role in the newly independent United States. With memories of the East India Company vivid in the public imagination, corporations were tightly circumscribed in the new republic, with time-bound charters that could be revoked for misconduct. Significantly, the writers of the US Constitution made no mention of corporations, suggesting the limited role that they expected them to play in the new Republic. Future US President, Thomas Jefferson, in particular, worked tirelessly to resist concentrations of economic power, writing in 1816 that ‘I hope we shall crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our government in a trial of strength, and bid defiance to the laws of our country.’
More recently, John Kenneth Galbraith has imagined that if Smith were to come back to earth, ‘he would be appalled at a world, where, as in the United States, a thousand corporations dominate the industrial, commercial and financial landscape and are controlled by their hired management’.
“A Stark Utopia”, p114-115
