Many countries in the world today can be described as company-states. In fact, I would say that most of them are company-states. China, however, is not a company-state.
Chinese people are accustomed to distinguishing between the state and the company, between the private and the public, and between private entities and public entities. But in our own history, things were different during the pre-Qin period, before 221 BC. The distinction between public and private was not so clear-cut. In the West, this ambiguity persisted much longer.
It was not until the revival of Roman law in the thirteenth century that we began to see that, in countries such as England, everything from the throne and public offices to landed property, cities, parishes, colonial estates, and plantations had the same legal status. What were they? They were all private legal persons, which could be transferred, bought and sold, divided, and inherited. Even English clergymen could pass their positions on through inheritance. Even English royal authority could be treated as something that could be bought and sold or divided.
Today, when Chinese professors teach sovereignty theory, they usually begin with Grotius and other thinkers of that tradition. But I do not think this approach can adequately explain what sovereignty actually is. Why does the discussion of sovereignty immediately begin with the principles that it is supreme domestically, independent externally, indivisible, and inalienable? The problem to which these principles were responding did not exist in Chinese history. Rather, they addressed the transferable and divisible corporate shares and interests that characterized Europe toward the end of the Middle Ages.
Once we resolve this problem, we can look at the world through a new lens. We then discover that the countries of the world today can, broadly speaking, be divided into six categories.
The first category is Type A: the original company-state, represented by Europe. In recent years, my main focus of study and research has been Venice, Genoa, the Netherlands, England, and France. I wanted to understand where the institutions of the modern state actually came from.
I have identified one very important factor: saltpeter. Saltpeter was needed to manufacture gunpowder. Marx said that gunpowder blew apart the breastplates of knights. But Marx saw only the first layer of the story. A deeper and more important development was the challenge saltpeter posed to the war financing and public debt of European monarchies.
This new form of war financing directly contributed to the emergence of modern public debt, as well as annuities, insurance, and finance more broadly. These developments were then reinforced by the concept of the legal person that emerged from the revival of Roman law.
Take countries such as Venice and Genoa, for example. They waged wars by borrowing money. But what happened when they could not repay their debts? They converted them into perpetual debt.
There was also the question of Christian doctrine. Christianity prohibited the charging of interest, so these arrangements had to be reworked. They would say, in effect, “This is not a loan. I am not charging interest. This is an annuity, right? It is perpetual.” In this way, they could pay annuities indefinitely while circumventing the prohibition on interest. The rise of Jewish financiers was also, in part, a response to the need to circumvent these Christian restrictions.
The emergence of the modern state, then, is a history of warfare. The modern state system has been driven by war.
Once these states emerged, they began to expand overseas. But at the same time, few people realize that China also had its own Type B original company-states. Among early Chinese migrants in Southeast Asia, the company was the organizational model they adopted.
In China’s Minnan dialect, there is a term, kong-si, which sounds like and is written the same way as the Chinese word for “company.” These companies were organized around ancestral halls. In Minnan villages, such organizations formed the basis of collective activity. When people migrated, conducted business, or engaged in maritime trade, they often organized themselves through these companies.
As Chinese companies in Southeast Asia expanded, they encountered Dutch and British companies. The two types of companies came into conflict. In places such as Malaysia, and North Borneo in particular, historical systems of governance were established by Chinese Minnan companies. Later, Dutch and British companies defeated our Chinese companies and established their own company-states. After the founding of modern nation-states, Chinese companies began to reemerge in new forms. Beginning in the late nineteenth century, a new type of Chinese company emerged, which combined Chinese and foreign elements. Examples include Kian Gwan Kongsi and Tai Wo Kongsi. These enterprises subsequently developed various forms of association with large modern oil companies and other monopolistic corporations.
So, in a country such as Malaysia, the state is not the same as the kind of state we commonly imagine. In places such as North Borneo, for centuries, governance was exercised by companies. The state, in effect, was the company.
But why was Type A able to develop systematically and become the dominant form of the modern state?
The reason is that, beginning in the seventeenth century, the companies established by the Dutch and the British were backed by state power dominated by their respective parliaments. What emerged was a company as a legal person driven by the power of the state as a legal person.
I recently read a book about the seventeenth-century East India Company, though I have forgotten the author’s name. The East India Company’s archives and correspondence are fascinating. They offer a remarkably revealing picture of how the company captured the state, how it used the state, and how, ultimately, a symbiotic relationship emerged between the British state and the East India Company.
By contrast, our Chinese companies in the Nanyang, or Southeast Asia, lacked the backing of state power. Moreover, after the Qing dynasty came to power, its ruling regime, which had originated among a people with a nomadic background, was hostile to this kind of organization. It therefore viewed coastal companies with suspicion and sought to restrict them. As a result, the two sides experienced a process of relative decline and growth: one rose as the other fell.
The third category is the secondary company-states formed through colonial expansion by white settlers, including the United States, Canada, Australia, and New Zealand.
The fourth category is imposed company-states. These are colonial and semicolonial countries, which account for more than half of the countries in the world today. Across Southeast Asia, the Middle East, Africa, and Latin America, most countries were established as imposed company-states by colonial powers that drew borders along lines of latitude and longitude or according to their respective spheres of influence.
There is also room for further subdivisions within this category. India, for example, retains a certain degree of independence, as do Vietnam and Thailand.
In fact, international scholars have not explored these questions in depth. I first proposed this framework around 2019. Since then, I have seen scholars in the international academic community begin to examine related questions. Examples include the article Company-states and the Creation of the Global International System, published in the European Journal of International Relations (EJIR), and Outsourcing Empire: How Company-States Made the Modern World, published by Princeton University Press in 2020.
However, these works still use the company to explain the formation of the international system. They have not yet taken the next step of using the company to explain the formation of the state itself.
The sixth category consists of non-company-states, including former communist states. Consider the debates over building socialism in Britain involving Stalin, Trotsky, and others. Viewed through my framework, these debates can be understood in a new light. The problem they faced was fundamentally a systemic one.
There are also a small number of feudal monarchies, such as the United Arab Emirates, right?
The seventh category is China, which stands alone as a distinct type. It is a meta-type that cannot be incorporated into the international system.
I would argue that explaining the history of Type A original company-states is one of the most important questions in understanding the origins of the modern state. It is also one of the most consequential topics for challenging the prevailing theories of the democratic state.
Editor: Zhiyu Wang
