By Cadence Gunther
Our financial systems were built for a colonial world. The first stock market was created to trade shares of the Dutch East India Company, and one of the first central banks (the Bank of England) was designed to fund the government’s land expansion agenda. The East India Company (EIC) was more than just a pioneer of limited liability and corporate personhood; it was the first multinational corporation to transition from a merchant entity to a sovereign conqueror of an entire nation. This paper seeks to look at the EIC’s brutal colonial past and how many modern corporations and markets are still shaped by an imperial and extractivist mindset. Although overt colonial rule has been formally dismantled and its practices outlawed, contemporary capital markets continue to replicate colonial logics – maximizing profit and minimizing risk in ways that disproportionately harm local populations.
India once repersented approximatley 25% of the world’s GDP prior to British colonial rule, making it one of the world’s richest countries in the 17th century (Simas 2020). The economic drain over the following centuries was a byproduct of British Colonialism, enabled by the EIC. The Indian spice trade was originally dominated by Spain and Portugal until England defeated the Spanish Armada in 1588. This gave the EIC an opportunity to break the pre-existing monopoly on Indian goods and form a treaty with the Mughal Emperor in 1612. Originally, the company operated individual voyages that were separately subscribed to as temporary joint stock companies until the formation of a permanent joint stock company in 1657. As seen with the Dutch East India Company, this allowed for limited liability, tradable shares, and permanent capital. Over the 17th century, the EIC expanded its presence, establishing trading outposts primarily trading silk, indigo, and saltpetre for South Indian spices; however, the EIC was yet to establish a dominating foothold over India (Britannica 2026).
Over the 18th century, the EIC transformed from a corporation to a political power. Winning the Battle of Plessey allowed the EIC to install a puppet leader, Mir Jafar, as the new nawab of Bengal (a very prosperous region in India). Following this, Robert Clive, the commander of the EIC’s British forces, was assigned Governor of Bengal (National Army Museum 2026). With his new position, Clive was granted the Diwani of Bengal, which gave the EIC the right to collect taxes and exercise some judicial power in the region (Cohn 1996). According to Clive, this made the EIC the “Sovereigns of a rich and potent kingdom” (Clive 1765, in Marshman 1863). This reform initiated the ‘Dual Government’ system, a framework in which the EIC assumed the Diwani (fiscal administration), while the Nawab retained the Nizamat (civil and judicial governance). With this change also came the rise of the Company’s stock price as investors understood the economic consequences of complete fiscal control of the region. This created a self-funding colonial mechanism: the British levied heavy taxes on the Indian populace and used that very revenue to finance the export of Indian commodities to European markets (Dutt 1906). There were no aligned incentives between the tax collector (the EIC) and the local population (the Indian people). This was clearly demonstrated by the Bengal famine in 1770, which was primarily caused by over-taxation (Cohn 1996). For around the following century, the EIC’s power only grew, expanding its political power beyond Bengal and exporting Indian wealth to Britain.
The state played a large role in enabling this. Firstly, Queen Elizabeth I issued the initial charter giving the EIC a monopoly on trafficking goods from the East Indies in 1600 (Encyclopedia.com 2026). King Charles II’s Charter of 1661 marked a pivotal expansion of the EIC’s power, delegating essential sovereign rights – such as the ability to mint coin, exercise jurisdiction over its settlements, and wage private warfare – directly to the Company’s directors (East India Company 1661). All this essentially allowed for a private company with no local interest – beyond resource extraction – to function as a colonial power. The British Parliament continued to formally validate and support the Company’s territorial acquisitions through the Regulating Act of 1773. The Crown deemed the EIC as too big to fail, lending it £1.4 billion during its near collapse, which was incidentally caused by the self-inflicted Bengal famine. This, along with the Pitt’s India Act of 1784, placed the Company’s civil, military, and revenue administration under the direct control and superintendence of the British Crown (Dutt 1906). The British Monarchy consistently prioritized the protection of British actors and profits over the welfare of the Indian populace, effectively granting the EIC a mandate for exploitation within territories it did not even formally govern.
Our world has not evolved far beyond this. Despite better marketing and more emphasis on giving back to local communities, actions rarely go beyond a strategically designed slogan. Companies still, first and foremost, are designed to provide shareholders with a return, no matter the human cost. As long as a company’s wallet isn’t impacted by its extractionist activities, it faces limited incentives to change its behaviour. Ultimately, Clive thought no differently in 1765, despite the profits of the EIC being earned off the backs of Indian locals, he felt entitled to each penny ‘earned’: “What pretence could the Company have to expect, that I, after having risked my life so often in their service, should deny myself the only opportunity ever offered of acquiring a fortune without prejudice to them, who it is evident would not have had more for my having had less?” (Clive 1765).
Current multinational corporations and the states that enable them are prime examples of neo-colonial practices. Large multinationals use their economic power as political currency, receiving exemptions from local authorities regarding legal standards. One example of this is cobalt mining in the Congo conducted by large tech companies like Tesla and Apple. Several large tech companies were sued by local families due to their exploitation of local populus, use of child labour, and unsafe working conditions (BBC 2019). While these conglomerates claim to be propping up local economies, in reality they circumvent global labour laws to maximize the firm’s profits. While this instance resulted in a lawsuit, most cases don’t. By granting these conglomerates exclusive access to vital resources, local governments enable them to monopolize labour markets and revenue streams. This systemic dispossession strips local populations of their agency, leaving them vulnerable to the whims of private institutions that lack any mandate for their welfare. (Khalid 2025).
While the EIC was abolished in 1858 (UK Parliament), its colonial presence still echoes. Modern corporations continue to exercise forms of quasi-state power, particularly through their influence over markets, labour, and even public policy. In some cases, the welfare of entire populations can be significantly shaped by private entities whose primary obligation is to maximize shareholder value rather than broader social welfare. As seen historically with both the British and Indian governments, often governments fail to intervene effectively, either due to willful ignorance or lack of power. This underscores the importance of robust state regulation to prevent exploitation and ensure that corporate activity aligns with public interests. Companies are inherently designed to prioritize profits, hence to counterbalance this imperial structure, states must be designed to protect their people.
References
Primary Documents & Archives
Clive, Robert. Letter to the Court of Directors of the East India Company, September 30, 1765. Clive Papers. National Library of Wales, Aberystwyth.
Clive, Robert. Letter to the Court of Directors, September 30, 1765. Quoted in John Clark Marshman, The History of India, 315. London: Harrison, 1863.
East India Company. The Charters Granted to the East-India Company, from 1601 to 1772. London: Printed by J. Nourse, 1773. Digital version at Archive.org, https://archive.org/details/bim_early-english-books-1641-1700_the-east-india-companies_east-india-company_1661.
Books & Journal Articles
Cohn, Bernard S. “Law and the Colonial State in India.” In Colonialism and Its Forms of Knowledge: The British in India, 57–75. Princeton: Princeton University Press, 1996.
Dutt, Romesh. The Economic History of India Under Early British Rule: From the Rise of the British Power in 1757 to the Accession of Queen Victoria in 1837. 6th ed. London: Kegan Paul, Trench, Trübner & Co., 1906.
Thakur, Kundan Kumar. 2013. “British Colonial Exploitation of India and Globalization.” Proceedings of the Indian History Congress 74: 405–15.
Digital Articles & News
BBC News. “West Africa’s eco: What you need to know about the new currency.” December 23, 2019. https://www.bbc.com/news/world-africa-50812616.
Blakemore, Erin. “How the East India Company became the world’s most powerful monopoly.” National Geographic, July 10, 2019. https://www.nationalgeographic.com/culture/article/british-east-india-trading-company-most-powerful-business.
Britannica, T. Editors of Encyclopaedia. “East India Company.” Encyclopedia Britannica. Last modified February 12, 2026. https://www.britannica.com/topic/East-India-Company.
Encyclopedia.com. “English East India Company (EIC).” Encyclopedia of Western Colonialism since 1450. Accessed March 14, 2026. https://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/english-east-india-company-eic.
Khalid, Audhora. “Silicon Valley’s Invisible Empire: The New Colonialism.” Honi Soit, March 12, 2025. https://honisoit.com/2025/03/silicon-valleys-invisible-empire-the-new-colonialism/.
National Army Museum. “Battle of Plassey.” Accessed March 12, 2026. https://www.nam.ac.uk/explore/battle-plassey.
Simas, Kayla. 2020. “Did You Know… India Was Once the World’s Richest Country?” Medium, July 10, 2020. https://medium.com/did-you-know-short-fun-facts/did-you-know-india-was-once-the-worlds-richest-country-820ad50cb37a.
UK Parliament. “East India Company and Raj 1785-1858.” Accessed March 10, 2026. https://www.parliament.uk/about/living-heritage/evolutionofparliament/legislativescrutiny/parliament-and-empire/parliament-and-the-american-colonies-before-1765/east-india-company-and-raj-1785-1858/.
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