Welcome to my regular newsletter, Age of Invention, on the causes of the British Industrial Revolution and the history of innovation. If you enjoy it, please share it with someone who might be interested. You can subscribe here: I discussed last time how the use of patent monopolies came to England in the sixteenth century. Since then, however, I’ve developed a strong hunch that the introduction of patent monopolies may also have played a crucial role in the birth of the business corporation. I happened to be reading Ron Harris’s new book,
Limiting liability allowed ordinary people to invest without risking devastating loss, and this opened the way for raising a lot more money than could be obtained from a few rich people.
However, I think a big benefit from joint stock companies was the ability of people to gain wealth independent of the King. Most wealth at that time was in the form of land and originally the King owned all the land. He gave out pieces of it to friends and family but they remained dependent on the King. Once people had a source of wealth independent of the King they could begin to acquire political power, which always requires and gets its power from money. By the 1680s this power enabled Parliament to take real power from the King forever.
Thanx very much for this.
Interestingly, you do not mention limiting liability, which lawyers often argue is the most important legal innovation of the business corporation.
Limiting liability allowed ordinary people to invest without risking devastating loss, and this opened the way for raising a lot more money than could be obtained from a few rich people.
However, I think a big benefit from joint stock companies was the ability of people to gain wealth independent of the King. Most wealth at that time was in the form of land and originally the King owned all the land. He gave out pieces of it to friends and family but they remained dependent on the King. Once people had a source of wealth independent of the King they could begin to acquire political power, which always requires and gets its power from money. By the 1680s this power enabled Parliament to take real power from the King forever.