Outsourcing Empire: How Company-States Made the Modern World.

• Author: Norgaard, Julia R.

Outsourcing Empire: How Company-States Made the Modern World

By Andrew Phillips and J. C. Sharman

Princeton, N.J.: Princeton University Press, 2020.

Pp. viii, 253, $29.95 hardcover.

The distinction between the public and private domains is something we often take for granted today, particularly in the West. Andrew Phillips and J. C. Sharman's book Outsourcing Empire: How Company-States Made the Modern World illuminates how the history of these two domains, in particular their past hybridization, laid the foundations for our modern world. The specific hybridization of the public and private spheres the authors consider is known as the "company-state," an institution with the power of a king and the financial promise of a transoceanic merchant enterprise.

In the early seventeenth century, European powers faced both increased geopolitical and military competition. To financially facilitate these challenges, they sought to further expand their spheres of influence by obtaining control over non-European resources. Due in large part to principal-agent problems, European rulers did not have the institutional means by which they could extend their power across continents. Thus, the company-state emerged. These new institutional experiments began from "the early 1600s as the most prominent and consequential means of bridging this gap between rulers' grasp and their reach" (p. 10). Phillips and Sharman document the economic, political, and societal factors that led to the rise, persistence, and eventual decline of the company-state.

Company-states were hybrid public/private institutions in a time when hard distinctions between public and private domains did not exist. They offered a timely mix of characteristics that flourished at a very particular "historical juncture in Western Europe's development" (p. 17). European rulers, in particular the English and Dutch, wanted to combine the financial capital of a merchant enterprise with the power of a sovereign. Phillips and Sharman discuss the range of institutional advantages that made company-states an attractive choice to meet the needs of European rulers at the beginning of the seventeenth century. These characteristics include their limited-liability corporate structure, ability to solve principal-agent problems, and in-house capacity to organize violence.

The corporation, started centuries earlier, offered the legal and constitutional foundations for the rise of the company-state. The...