Lessons from the rise and fall of the East India Company: part 1 of 2

Thus far this week (see here, here, and here), we have reviewed Adam Smith’s tedious and painstaking reconstruction of the rise and fall of the East India Company. What lessons can we learn from this epic episode in the history of mercantilism? As it happens, two of the next three paragraphs of Smith’s 1784 pamphlet (namely, paragraphs 27 & 29) move from the specific (the East India Co.) to the general: how to align the interests of the East India Company’s “servants and dependants” (i.e. employees) with those of the proprietors” (shareholders). In paragraph 27, Smith writes: “It might be more agreeable to the company that their own servants and dependants [i.e. the employees of the corporation] should have either the pleasure of wasting or the profit of embezzling whatever surplus might remain after paying the proposed dividend of eight per cent than that it should come into the hands of a set of people with whom those resolutions could scarce fail to set them, in some measure, at…