In Going the Distance: Eurasian Trade and the Rise of the Business Corporation, 1400–1700, Ron Harris considers why Eurasian trade was transformed from a process that was conducted in short stages in 1400 to a direct trade route by 1700. He proposes that the change was caused by new methods of business organization. Harris reviews the business structures that were in place at the start of the period and compares them to the joint-stock business corporation that had become the dominant form by the end. He finds that the Dutch and the English were distinctive in adopting that model, which did not become prevalent in other countries that participated in Eurasian trade. Harris proposes that they adopted two structural elements from the Catholic Church: separation from the state and a hierarchical structure. Four further features were then added, Harris argues: joint-stock, lock-in of investment, transferability of shares, and protection from expropriation.
Harris examines the economic context of Eurasian trade in chapter 1. He considers the extent to which advantages in military or naval technologies may have provided the Dutch and English with the competitive edge in Eurasian trade. He concludes that, while they might have obtained some benefits from improvements in military technology, organizational innovations remained the most significant explanation for Dutch and English dominance. His examination of theoretical frameworks in chapter 2 positions the Going the Distance within the field of institutional economics.
In the second part of Going the Distance, Harris focuses on the way long-distance trade was organized prior to the establishment of the Dutch and English East India companies. The case studies he provides are likely to be of particular interest to economic and business historians seeking to expand the geographical scope of their research. In chapter 3, Harris examines the activities of itinerant traders, mercantile networks, and family firms, and outlines the procedures for organizing loans and operating ships that existed before the emergence of the Dutch and English East India companies. In chapters 4 and 5 he considers institutions that originated in one location but were then adopted in others, what Harris terms “varying organizational blocks” (93). Of these, he places particular focus on the sea loan and the commenda.
In part three (chapters 6–8), Harris addresses long distance trade in greater detail. He evaluates family firms and mercantile networks in chapters 6 and 7 and focuses on trade by rulers and states in chapter 8. The family firm, Harris suggests, could often successfully operate at the level of Europe, India, or China, but was less well equipped to operate across the full range of the Eurasian trading route. Mercantile networks, however, could offer greater geographical coverage but lacked appropriate infrastructure. Rulers played an important role in the operation of Eurasian trade in Ming China and in sixteenth-century Portugal. Harris proposes that with his large tax base and an administrative infrastructure, the Chinese emperor was in a better position to engage in expensive long-distance voyages than was the Portuguese king.
In the final part of Going the Distance Harris focuses in detail on the English and Dutch East India companies. He argues that around 1600, some of the challenges intrinsic to Eurasian trade began to be resolved by the adoption of the joint-stock corporation. In chapter 9, where Harris examines the legal context to the corporation, he explains that separation from state was a distinctive feature of the joint-stock corporation that did not appear in, for example, China and Portugal. The hierarchical structure, meanwhile, replaced the family or social connections that were present in the family firms and mercantile networks. Both elements drew their inspiration from the Catholic Church.
In chapters 10 and 11, Harris focuses on the Dutch East India Company and the English East India Company, respectively. Harris proposes that the two companies superseded the other participants in Eurasian trade because they were able to raise larger amounts of capital, were not distracted by warfare, and the scale of their operations provided greater access to information than did earlier business structures. In chapter 12, he discusses why the joint-stock company did not emerge in other locations, notably China. Among the reasons Harris identifies are a lack of precedents for organizations separate from the state, the absence of a stock-market, and a focus on family businesses.
Harris concludes by returning to the contribution that his findings make to the study of institutional economics. Harris proposes that ruler-initiated trade, family businesses, and mercantile networks all achieved some success in Eurasian trade. The hierarchical structure of the corporation, however, facilitated the collection and dissemination of information, which in turn helped to attract investors. The separation from the state, meanwhile, removed the distraction of political objectives and kept the focus on making profit.
Harris's comparisons between the different countries are a particular strength of the book. There is occasionally some imbalance between the amount of attention to the existing academic literature and that to his analysis, and I would have liked to have had more elaboration on Harris's findings and conclusions. Overall, however, Going the Distance is a useful review from an institutional economics perspective of issues normally addressed by economic and business historians.
