A Company That Was Nobody

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Last week, the president of Argentina used the Financial Times opinion page to propose a new legal category: corporations operated by AI agents. Companies with no human inside. Yuval Noah Harari read it and got worried, publicly; he called it an all-purpose key handed to machines, one that opens our financial, economic and political systems. The president replied by quoting Harari's own book back at him: humans have always used fictions to organize collective work.<br>I will not litigate Argentine politics, and whether the experiment works there is a decade away from an answer. Admire the government behind the proposal or despise it; ideas do not inherit the virtues or the sins of their messengers, and this one is older and bigger than any government. What interests me is the idea itself, because it might be the most hopeful economic story of the next fifty years.<br>To see why I'm optimistic, you have to go back to a merchant's living room in Amsterdam, and to the second-to-last name in a ledger.<br>The fiction that bent the curve<br>On the night of August 31, 1602, the book in that Amsterdam living room was about to close. For a month anyone had been able to walk in and sign it; the company's charter said so, in writing: all the residents of these lands may buy shares. No minimum, no maximum. The second-to-last name that night was Neeltgen Cornelis, the maid of the house: one hundred guilders, two hundred days of her wages. On the first page sat the directors, twelve thousand apiece, six canal houses each. Same book, same rules. The very last line belongs to the bookkeeper's own servant: the first shareholder registry in history (you can still leaf through it in the Dutch National Archives) closes with two housemaids.<br>Second to last in the book, two hundred days of wages. The page is still in The Hague. The book they signed created the Vereenigde Oostindische Compagnie, the Dutch East India Company, better known as the VOC: the first enterprise with permanent capital and shares that any stranger could buy and sell. It's hard to feel today how big a leap that was. Before the VOC, business was personal in the worst sense: if your venture sank (and ventures sank, often literally), your creditors took your house, your bed, and then your freedom. Debtors' prison was not a metaphor. Only two kinds of people started ventures, the rich, who could absorb the loss, and the desperate, who had nothing left to take.<br>The VOC's innovation fits in a sentence: you can only lose what you put in. That's the whole trick. A legal fiction: the company is a person, the person is liable, you are not. No engine, no chemistry, no physics. An agreement to pretend, enforced by courts. And that pretense changed who was allowed to try: a maid with a hundred guilders could own a piece of a voyage to the other side of the world. Risk became divisible. Trying became survivable.<br>Now hold that next to the oldest fact about our species. For most of human history, poverty wasn't a problem; it was the condition. Somewhere between three-quarters and nearly nine in ten of the people alive in 1820 lived in extreme poverty, and 1820 was not an unusually bad year; it was the peak of everything that came before. GDP per capita was a flat line for millennia.<br>Then, in roughly one century, the line went vertical.

Part of what happened: the nineteenth century did to the corporate fiction what Gutenberg did to the book. It made it cheap. Incorporating had taken an act of Parliament or a royal charter, which in practice meant friends in velvet rooms. Then the windows began to open, one jurisdiction at a time: New York first, in 1811, for manufacturers; most American states by mid-century; Britain in 1855, when the Limited Liability Act turned incorporation into a form you filled out at a window; France and Germany within fifteen years. What followed was the largest escape from poverty in the history of the species: from the overwhelming majority of humanity to under ten percent today. Deirdre McCloskey calls it the Great Enrichment and credits permission over capital, empire, or coal: ordinary people, finally allowed to have a go. History is never that tidy; we ran the experiment once, at full scale, with no control group, so take the attribution with the grain of salt it deserves. What came out the other side was the modern world.<br>Centuries after that midnight in Amsterdam, Nicholas Murray Butler, then president of Columbia University, told a New York audience that he weighed his words when he called the limited liability corporation the greatest single discovery of modern times: greater, he insisted, than steam or electricity, which would be reduced to comparative impotence without it. That was 1911, with the curve in full vertical. I used to find the line excessive. I no longer do.<br>Steam and electricity gave us power. The fiction gave us permission.

An empty suit that actually...