Harriet Maltby is a Government and Economics Researcher at the Legatum Institute.

The Empire may be dead, but we need its spiritual resurrection. The horse of British imperialism that the apologists have been flogging for decades needs brushing down and returning to the starting gates. This is to be what Gerard Lyons, Chief Economic Adviser to Boris Johnson, has termed a ‘global century’ and our imperialist history, for all its faults, has much to teach us about keeping Britain at the front of the pack.

You may not think that the Mayor’s economic guru and one of the pre-eminent historians on the East India Company, Huw Bowen, have lessons in common to teach us. But what both said when speaking recently at the Legatum Institute shows that they do.

Behind the hand of the Conservatives’ ‘Long Term Economic Plan’ lies an argument about the ‘global race’ and the need for Britain to compete in order to prosper. This argument is well founded, for Lyons speaks of a shift in economic focus, from the hegemony of the developed West, to a far more globalised world. Our future lies in a much smaller share of a far larger cake.

Yet Lyons’ global economy, marked by this shifting locus, is also still driven by hard power, influence through international political institutions, and soft power.  Britain is well placed to increase its economic share via these levers.  We have a strong military, a seat at the top table of global institutions, and are endowed with both global companies as well as innovative and ambitious entrepreneurial talent. It is here, in the soft power of brands and influence, that the East India Company has much to teach.

The picture of Empire as one of Crown imperialism, of state-sanctioned plunder and exploitation, has some credence. Yet the Empire in India was not built by the Crown, but by the exploratory trade of the private commercial East India Company after 1709. The early success and expansion of the Company in its small outposts in Bombay, Calcutta, and Madras brought textiles and tea to Britain, contributing to the development of the domestic manufacturing sector. This development was entwined with other London industries, notably the financial sector. The Company built a financial strength that saw its stock dominate the City of London and it secure a place at the heart of the nation’s public finances. Edmund Burke even suggested that the fortunes of the Company and the country were inseparable.

Private enterprise, not the state, drove eighteenth century British prosperity and can do so again if we regain this imperialist spirit of discovery.

Looking into the ‘global’ twenty first century, our prosperity again rests in the hands of our entrepreneurs.  Lyons describes free trade as the ‘engine of global prosperity’.  It is as true now as it was in the eighteenth century. The question is, what can Britain do to ensure we take best advantage of our wealth of innovative and ambitious talent?

It is clear that to take advantage of our privileged position government must work to remove barriers to this trade and enterprise.  The success of the East India Company was sparked by the granting of a trade monopoly by the state, much in the same way as modern pharmaceutical companies are granted patents. By guaranteeing the Company’s medium-term income, it made the significant private investment required to open up new trade routes, commercially viable.

In our modern global economy, the barriers to innovation and trade are very different. Granting such monopolies of trade would clearly be inappropriate, yet government still has a role in removing barriers. Be it the UKTI’s work on improving knowledge (especially among SMEs looking to export), or Britain’s negotiations at Doha and elsewhere to see trade tariffs reduced, the power of British business to shape our future prosperity, as the East India Company did, can be unleashed by a government that sets our ambition and potential free.

However, whilst government is part of the solution, it can also be part of the problem. Crony capitalism proved the downfall of the Company, threatening the very prosperity that it had brought Britain. The Company, faced with unrest in India, developed a private army to rival that of the British state and gained, through the Treaty of Allahabad in 1765, the right to collect taxes in the Eastern Region. The Company became the pseudo-sovereign, a security mirrored in its privileged and central position at home, killing the spirit of enterprise. Subsequently, as government opened up free trade to India and China in the nineteenth century, the Company was blind to the need to innovate in order to compete. The great dynamic force of British enterprise died a stagnant, bureaucratic leviathan.

The early successes and ultimate dissolution of the East India Company teach us that free trade and free market competition are king. Britain is in a privileged position marching into the global century and government once again has its role to play in removing the barriers to this trade, unleashing the creativity and ambition of the private sector that once drove the creation of the British Empire. It must then step back and allow competitive forces to reign. We should not be apologising for our imperialist past, but learning from it.  Empire is over, but prosperity need not be.