William Dalrymple’s The Anarchy – a vivid account of how the East India Company (EIC) rose from small beginnings to take advantage of opportunities thrown its way and grab a subcontinent-sized empire – illuminates a great deal about the complexities of today’s world, and not just in the ways the author recounts. As the world’s first joint stock corporation, which eventually became too big for the Mughal state to handle, EIC’s rapacity is converted by Dalrymple into a cautionary tale about the behaviour of today’s multinationals whose sole principle is the maximisation of shareholders’ profit – whether Amazon, Google or Facebook. You could say ‘move fast and break things’ was EIC’s credo too, long before it was adopted by latterday tech companies.

But EIC made a few things too, before it broke them. And it did so collaboratively with Indians (this includes both the making and the breaking). You might say Calcutta during the first half of the 18th century was the equivalent of today’s Shenzhen. Under EIC’s tutelage, it went from being a few sleepy villages to one of the great trading cities of Asia, through which fabulous wealth flowed. Two things made this possible.

One, Bengal was India’s richest province. Among other things its weavers wove magic, making Bengal the world’s textile manufacturing hub as well as Europe’s single biggest supplier of goods in Asia. Two, much of this trade flowed through Calcutta, which the EIC initially built as a free enterprise zone where commerce flourished, traders could escape extortionate taxation by Bengal governor Murshid Quli Khan, and contracts were enforced.

Additionally Calcutta was a vibrant multicultural, polyglot city where the arts and entertainment flourished, and intermarriage was common. Calcutta also had security, enforced by European arms. This is important because the surrounding countryside was often devastated by Maratha raids. Distinguished Calcutta citizens of the time, such as Nabakrishna Deb or Ramdulal Dey, numbered among refugees from such raids who rose to become business tycoons. Not surprisingly, they worked closely with the British. So did Jagat Seth – described in British chronicles as “the greatest shroff and banker in the whole world”.

However, when Robert Clive defeated Siraj-ud-Daulah and won the keys to the state’s revenue from Mughal emperor Shah Alam, what followed was straightforward plunder. You could call Clive a bit of a combination of Mark Zuckerberg, Bernie Madoff and Nirav Modi. Thanks to Clive’s exertions, Bengal was ruined and its people starved.

EIC’s role as a buccaneering corporation, and Indian businessmen’s collaboration with it, have deeply coloured the Indian nationalist imagination since – making it leery not only of multinational corporations, but also of local businessmen (Jagat Seth assumes the role of Judas in the nationalist narrative) and the free market in general. The doctrine that the state must occupy and control the ‘commanding heights’ of the economy – as well as India’s ‘tilt’ away from the West and towards the socialist bloc when the Soviet Union existed – flows, arguably, from that historical trauma. As recently as 2008 senior BJP leader Sushma Swaraj argued that the US-India nuclear deal – which ended India’s nuclear isolation – put Indian sovereignty at stake, likening the deal to EIC obtaining trading permits in India.

However, it’s worth noting some nuances here. EIC may well have been the first MNC, but it was hardly operating under free market conditions – Queen Elizabeth granted it a monopoly of all British trade with India and Asia as far back as 1600. When EIC did permit a limited free market in the area under its control in the first half of the 18th century, Calcutta flourished and grew (as did Bombay and Madras). It’s only after Clive obtained the diwani of Bengal and thus revenue collection powers, that things went rapidly downhill.

EIC became a state in other ways too. Its army grew to 200,000 men by the time it captured Delhi in 1803 – double the size of the British army itself. Besides, it worked in close tandem with the British state, received protection from the British army and navy as well as bailouts when in financial trouble (remember “too big to fail”?). As Dalrymple has noted, by the early 19th century EIC had become a public-private partnership – to be duly “nationalised” after the crushing of the 1857 Revolt.

Thus, while the historical trauma caused by the EIC experience is entirely understandable, that experience may have been misread in the nationalist consciousness. An old-style rent-seeking, command economy with autarkic powers will not necessarily safeguard India against another EIC; instead it could replicate some of the negative aspects of EIC. Look at telecom today, where the mismatch between absurdly high spectrum prices and low tariffs has gutted a once vibrant and booming sector critical to India acquiring a modern infrastructure. It’s state policy and the prioritisation of earning high revenue over the needs of the economy that killed the proverbial golden goose.

The political class has failed to push forward the “India story”, which looked so promising during the last decade. As columnist Swaminathan Aiyar has noted, three sectors of the Indian economy soared to world class in the last decade – auto, pharma and software/BPO – driven by reforms. But with the reform impetus having run dry, no equivalent sector has risen this decade. Unsurprisingly GDP growth has hit the skids, down to 4.5% last quarter. India’s fear of joining trading blocs indicates how uncompetitive it has become, when textiles from Bengal once ruled the world (interestingly, Bangladesh these days seems to be clawing back some of Bengal’s former position as a textile trading power).

“Learning from history” doesn’t always work; we may learn the wrong lessons. We need to set aside colonial traumas and move past them – harking back, instead, to India’s formidable pre-colonial past as a trading power.