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 to modern times.

During the revival of Roman law in the thirteenth century, 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, or corporations, which could be transferred, bought and sold, divided, and inherited. Even English clergymen could pass their positions on through inheritance.

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 after 221 B. C.. 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 of 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 of  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,   North Borneo in particular, historical systems of governance were established by Chinese Minnan companies. Later, Dutch and British companies defeated Chinese companies and established their own company-states. After the founding of modern nation-states, Chinese companies began to reemerge in new forms.

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. What emerged was a company as a legal person driven by the power of the state as a legal person.

I recently read some books about the seventeenth-century East India Company. Including A Business of State: Commerce, Politics, and the Birth of the EastIndia Company by Rupali Mishra. 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, Chinese companies in the Nanyang, or Southeast Asia, lacked the backing of state power. 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, Africa,  Caribbean region, and some part of the Middle East, 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.

In fact, international scholars have not explored these questions in depth, excpet for Philip J. Stern’s The Company-State（2011）,Jennifer Pitts’s Boundaries of the International（2018）, and Chartering Capitalismed. by Emily Erikson（2015）.I first proposed, in 2019, a framework that treats the company-state as the origin of Western political systems and of most modern states.Since then, I have seen examples include the article “Company-states and the Creation of the Global International System”by Andrew Phillips and J. C. Sharman,published in the European Journal of International Relations (EJIR), and their 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 and small number of feudal monarchies.

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