The history of the S.P.A. from the societas of Republican Rome to Facebook

Technological revolutions are not necessarily great technological inventions. In fact, one of the central inventions in history is a legal institution: the joint-stock company. The story of this invention is told by William Magnuson in the book 'Profit. A History of Large Companies from Ancient Rome to Meta'.

Think of the construction of the aqueducts of the Roman Empire; the trade with the Orient; the splendour of Renaissance Florence; the construction of the American railway; and the mass production of automobiles (Fordism), and the economic growth fuelled by millions of barrels of oil extracted every day. This was made possible by the combination of three factors, limited liability, share ownership, and separation between the directors and owners of the company, which allowed investors' money to be channelled into large enterprises, benefiting from the profits but assuming the business risk limited to the capital invested. In the days of the Roman societas or the Compagnie de Indias, the profit opportunities of spas were extremely attractive. They were also risky, but the limited liability allowed for a maximum loss of invested capital.

The wealth accumulated by the Medici over two generations was such that it renewed the architecture of Florence and only Lorenzo's meticulous work managed to disperse it. Ten pounds of nutmeg bought from the East India Company for half a penny were resold at £1.60, a profit of 32,000 per cent: between 1601 and 1612 the return on investment was 155 per cent. The societas were emanations of the sovereign power as what we would today call the objects of the companies were activities of direct public interest. The societas of Rome built roads and aqueducts; the Company of the Indies operated 'for the glory of this our kingdom of England and the progress of the exchange of merchandise'; the Union Pacific Railroad was founded at the behest of Abraham Lincoln to build the railroad that would unite the two coasts. The power relied on the initiative and capital of private individuals as the public budget was modest and the use of public enterprises for such operations could not be imagined: for centuries, the SPVs made up for the lack of a developed public sector.

The history of corporations shows a tendency constant in the expansive phase of the enterprise: the motivational drive to pursue aims that go beyond mere profit for the benefit of investors, insofar as they are aimed at pursuing what we would today call the collective and widespread interests of a local community (the railway), of a nation (oil), global (means of transport and connection). But when the expansive phase has been reached and the enterprise has reached such a size as to be able to generate wealth equal to or greater than the public institutions themselves, that is, generated the widespread need for consumption (e.g. accessible cars or network connections between individuals) there lurks the risk that that motivational drive veers in an individualistic direction, initiating the phase of decline. At the expense were the Roman societas, the Medici, up to robber barons such as the tycoon Rockefeller, who in 1911 saw his Standard Oil dismembered into seven companies. Power giveth, power taketh away. The history of spas provides useful lessons for the present day. That the sole objective of corporations, even the big ones, is profit for the shareholders is an imbalance of the recent past. It is legitimate to reason that the big ones can balance the sacrosanct objectives of capital remuneration with broader social objectives (see the discussion in Brussels on the Corporate Due Diligence Directive in global value chains).

Corporations too big to fail are a risk to the resilience of democracy. Today, a handful of corporations hold the data of three quarters of the world's citizens, and another handful hold the keys to the next industrial and technological revolution (chips and AI). Finally, the multinationals that we have described as stateless and as powerful actors as states themselves, are once again becoming instruments of power and geopolitics; with what consequences?