Emily Erikson's "Between Monopoly and Free Trade"

Emily Erikson is an assistant professor in the department of sociology and the school of management (by courtesy) at Yale University, as well as a member of the Council of South Asian Studies.

She applied the “Page 99 Test” to her new book, Between Monopoly and Free Trade: The English East India Company, 1600-1757, and reported the following:

I don’t know how often this rubric hits exactly the right mark, but page 99 happens to be the page in which I report the coefficients for a key statistical model estimating the effect of information gathered via informal social networks on the likelihood of a ship of the English East India Company traveling to a port in Asia. It is indeed a central moment in the book, which revolves around the way that social networks gave the English Company a significant competitive advantage, and thereby shaped two core institutions of capitalism, the multinational corporation and global market structures.

There is a tendency to think of social networks as a recent phenomenon, given the rise of Facebook, LinkedIn, and other network media platforms. But the book shows that social networks were crucial to the evolution of the company form, particularly in the English East India Company. The title, Between Monopoly and Free Trade, refers to two different transitions, one in time and one in organizational structure.

The English Company was a nationalist monopoly and product of the mercantilist age of strong government interventionism and protectionist economic policies, but survived well into the age of free trade – and indeed has a large hand in promoting the adoption of liberal trade policy in Britain. The organizational structure of the company evolved in a way that allowed for individual incentives to prosper as employees were allowed to trade for their own profit while employed by the firm -- as if Fed Ex employees were allowed to run a profitable local courier service on the side. It sounds like an unlikely arrangement in our age of non-competes, but was enormously profitable for the firm. It turns out that social networks were an essential ingredient in the glue that kept these otherwise potentially unruly entrepreneurial individuals tied to the larger company, injecting the entire enterprise with some desperately needed innovation and dynamism. Thus the company was a little bit of a monopoly and a little bit of a free market, with the parts held together by social networks.

Learn more about Between Monopoly and Free Trade at the Princeton University Press website.

--Marshal Zeringue