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The Company: A Short History of a Revolutionary Idea
By John Micklethwait and Adrian Wooldridge
Modern Library, 2003, 192 pp.
We take the company for granted; it is how businesses are typically organized. In this engaging and well-written short book, the authors, both correspondents for The Economist, demonstrate that although there are some older antecedents, the modern company dates from the mid-nineteenth-century United Kingdom and United States. The modern company has two key characteristics: a separate, indefinite legal existence and owner liability limited to the capital advanced to the company. The former permits the company to make contracts for buying and selling and to outlive its founders, while the latter allows it to raise capital in abundance. The modern company has proven to be a remarkably productive form of social organization and it has adapted very well to a wide variety of conditions. But as the authors remind us, it is not truly independent, remaining a creature of the political system to which it is ultimately responsible.
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