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What is Quakernomics?
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In October 2010 I gave a talk at the Friend's Meeting House Ipswich on the theme What is Quakernomics? I was prompted to look into this topic after attending the Zero-Growth Economics conference at Friends Meeting House in Euston in 2009, and by the Quakernomics blog. |
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| Introduction This essay was written to accompany a talk I gave at Ipswich Meeting House on the question: ‘What is Quakernomics?’ While I have drawn from Quaker literature and tradition, I must point out that my arguments and conclusions here are my own, and that I in no way speak for the Quakers. I should add that this essay is a first draft and its conclusions are highly tentative. Quakers were at the heart of industrial capitalism in the 18th and 19th centuries, peaking perhaps in the 1860s, and with one of the last great names – Cadbury’s – sold to Kraft in 2010 for £11 billion. During their heyday and well beyond it Quaker business people put capitalism to the service of social ends through caring for their workers and broader philanthropic activity. This is the ‘Quakernomics’ of an old tradition. But what of Quakernomics in today’s world? What could it be today, and how could it address the problems of social justice in an era of super-capitalism and climate change? The Quakers can be understood as part of the religious left. A journalist commentating recently on the American religious right pointed out that their moral crusade has only two issues: abortion and gay marriage, on which Jesus said nothing. On the other hand the Bible has over 2,000 verses devoted to the moral obligations concerning poverty. Quakers, since their origins in the 17th century, have been concerned with all aspects of social justice, including poverty, and particularly the poverty and other ills brought about by war. But the religious left in the UK and America are simply not as focussed a political group as the religious right, and so their influence has been perhaps limited. This discussion paper looks at the potential for Quakernomics by starting with a fresh look at capitalism. Is it the evil that thinkers from Marx to Michael Moore think must be eliminated? Or, as the Quaker history shows, can it be regulated to serve social ends? A brief look at the history of Quaker industry shows that Quakers worked with capitalism rather than against it, and that this can be understood in the light of Weber’s ideas in The Protestant Ethic and the Spirit of Capitalism. However the political and economic conditions today are very different from the heyday of Quaker business or early Protestantism. What then would a Quakernomics look like, adapted to the modern setting of multinational companies, highly complex banking and financial regulation, finite world resources and the threat of climate change? First, a brief introduction to the Quakers. The Quakers The Quakers, known more formally as The Religious Society of Friends, grew out of a 17th century movement led by George Fox. He built on the Protestant conviction that a direct experience of God was central to religion, and that priests and church hierarchy were unnecessary. The Quakers thus became a non-conformist group which suffered considerable persecution in their early days, partly because one of their most deeply held principles was non-violence. This manifested itself in the refusal to bear arms, and has led the Quakers to be classified as a ‘peace church’, alongside the Church of the Brethren, Mennonites and Amish. As non-conformists the Quakers were restricted from many spheres of public life, including University attendance, and most professions. Even farming became difficult for many Quakers because of their refusal to pay the necessary tithes to the Church in rural areas. This led them, like many other non-conformists, into urban centres and to business activity. The Quakers thus found themselves at the heart of the Industrial Revolution, or to put it another way, at the heart of the emerging modern form of capitalism. However, they brought to business practice their religious principles, now summed up under four so-called ‘testimonies’: Peace, Equality, Truth, and Simplicity. These testimonies are not fixed textual articles of faith, but adapt over time, and are found in the activism of Quakers in the world. The additional new testimony of ‘earth and environment’ has recently become an important Quaker concern. The Quaker way of doing capitalism can be understood as embodying the Quaker testimonies. A Fresh Look at Capitalism Definition of Capitalism The average 17-year-old has is likely to have a better understanding of sex than capitalism, and for most people this doesn’t change through adult life. The very word ‘capitalism’ seems to conjure up something not particularly nice, perhaps like ‘sewerage’. Apparently, it is not something appropriate for polite conversation. However, if pressed people will give definitions like:
I would like to give a definition that I think is more fundamental to capitalism than any of these:
From this perspective capitalism is essentially a problem of surplus, and who or what social groups get to control it. Who controls the initial surplus that is to be invested; who chooses where that surplus will be invested; and who benefits from the return? All the other apparently central features of capitalism are implied by this basic definition, though not inevitably. The ownership of capital is largely in private hands in non-communist countries, but significant capital even in countries like the US and UK is commonly owned, or state-owned to put it another way. Whoever owns the capital, there may well be exploitation of workers, and such exploitation may involve long hours, poor pay, poor working conditions, and no job security. Marx documented such exploitation in the mid-19th C extensively in Volume I of Capital, though he never considered what might be fair pay, conditions etc, as he saw capitalism as an unfettered evil. We will see that the Quaker industries suggest otherwise. Capitalism is usually associated with the division of labour, as suggested above, and also growth. However some modern production methods have re-introduced the idea of increasing the range of tasks that a worker carries out in production, and, more significantly, there are now strong arguments for ‘steady-state’ capitalism, or ‘zero-growth’ economics. None of these work against the idea of capitalism as the investment of a surplus for a return. But let us first consider a very ancient form of capitalism: agriculture. Agriculture as Proto-Capitalism The earliest important surpluses were of food, in particular grain which could be stored at least until the following harvest. Archaeologists have found grain silos from the 16th century BCE in Egypt and from the 8th century BCE in Palestine, the size of which show that large surpluses of an ancient wheat variety were stored communally. We can only speculate as to how the community used the surplus, but we do know that grain formed the first currency, and so the grain silos were effectively the first banks. In Japan, rice was a currency up to quite recently, as shown in the film The Seven Samurai, where the farmers take a jar of rice into town to pay for their accommodation and to hire the samurai they need to defend their village. We can speculate that the Egyptian grain-silo operated, not so much as a retail bank, but as an investment bank. One of its functions may have been as a safety-net, to keep the community in food during a bad harvest, but it is obvious that the surplus was also used to pay people to do work other than farming. Enter the first form of ‘worker’. Also enter the first soldier and the first slave. To run an army you need a surplus of food, usually grain (the Roman army lived on a bread made from spelt flour and honey), and to enslave people likewise. Thus the first investments of this early capitalism included the hire of labour for productive ends – to work more fields and create an even bigger surplus of grain, and for less obviously productive ends, such as an army, or slave labour for the building of pyramids. Individual farming families probably kept their immediate surpluses in their own storage, so they wouldn’t perhaps use the grain silo as a retail bank, as modern citizens use NatWest for example to hold a current account. Instead the silos operated as investment banks, where the powers-that-be could divert the surplus into large-scale collective projects. On this basis early civilisations could build cities, fortifications, irrigation schemes, and create expressions of their culture and religion such as magnificent tombs and pyramids. The surplus could also pay workers to make surpluses of other useful things such as pottery, which could be bartered for grain, or – as humans gradually discovered – could be exchanged for tokens. Food as the first currency was replaced by money. Hence agriculture itself is the first surplus-producing system, which showed that a surplus could generate a further surplus. This proto-capitalism was built on the realisation that if you paid people in food to make goods that in turn could be exchanged for more food – or money – and then wealth could steadily grow. Hence he grain silos got larger, and became the first ‘banks’. Modern banks are no different. But where should you deploy your surplus? What branches of human production were likely to generate a further surplus? Enter the stock exchange. This is where those needing a surplus – now called ‘capital’ – could meet those who wanted to put their surplus, or capital, to work for them. Clever people could see where people were willing to spend their small surpluses – to start with on basic items like clothing, utensils and the means of shelter, and then, as standards of living grew, this expanded to leisure items. Investment was born, and with it banking rose in importance, and all the complex financial instruments that grew with it. The smart investment advisor, who could anticipate trends in demand, and assess the likelihood of a company’s efficiency in meeting the demand, could help themselves and their clients get rich by buying and selling stocks. For many this became a form of gambling, but to a large extent this is gambling with a social purpose: to back the new producers of goods and services that people wanted. Capitalism, then, is a problem of surpluses, and goes all the way back to the development of agriculture and the storage of foodstuffs, mainly grain. What really accelerated the importance of capitalism to society was the Industrial Revolution, which allowed enterprises to produce far more goods per worker than before, harnessing non-human energies like animals, wind and water to start with, and then the energies from fossil fuels. At the same time the use of machinery required more capital investment than merely the subsistence wages for the worker, the equivalent to Egyptian grain. Enter the time of big money. Enter the time of the Quaker industrialist, at the heart of many of Britain’s industries – and also banking. Societies without Surplus To place the agrarian societies with their economies of grain surplus in perspective it is necessary to briefly consider what went before: the hunter-gatherer society. Anthropologists have made extensive studies of such societies and have shown that they produced no significant surpluses of anything. At most meat might be dried and kept for a month or so, but no significant accumulation of it was possible. Hence by and large it was not possible to hire labour or enslave individuals, because to feed them took food away from your own family group. Hunter-gatherers like the Lakota Native Americans, the Inuit in Alaska, or the Yukaghirs in Siberia developed none of the features of agrarian society: hierarchies, a priestly caste, armies, or slavery. None of the negative features of capitalism in other words were options for hunter-gatherer cultures. Neither of course were the benefits, which include the key components of ‘civilization’: the arts, sciences and politics as we now understand them. Neither was there the safety-net that grain surpluses provided over the yearly cycle. In a famous early documentary called Nanook of the North about an Inuit family, we learn that Nanook himself died of starvation not long after filming. If, for a month or so, the animals don’t turn up where you expect them, you die. Capitalism, then, grew out of agriculture, and the impetus for that may well have grown out of the desire for a more reliable form of food production. Economists however place the start of modern capitalism around the seventeenth century, just the time that the Quakers came into being. This was also roughly the time that Native American hunter-gatherer people increasingly found their way of life curtailed by white settlers who engaged in capitalist forms of farming and also gradually the new capitalist industries. Hence the comments of the Native Americans are instructive, as is their way of life in general. Here is Sitting Bull’s assessment of the white economy, as of 1885: ‘How can white men be so unmindful of their own poor? … The white man knows how to make everything, but he does not know how to distribute it.’ At around the same time another Native American called Charles Eastman, who largely adopted white ways, commented that the white man often failed to observe his own religion and his own laws. On the other hand there are a number of records that indicate that the Native American found an exception to that in the behaviour of Quakers they encountered. Electrical Analogy It is clear from the example of Egyptian grain-surpluses that even with proto-capitalism there was great scope for the increase in human misery as there was for new benefits. It all came down to power-structures. A town with an egalitarian system of decision making could harness the grain surpluses for the good of all. But exploitation of the farmers who grew the grain could easily be achieved if the surplus was in the hands of a ruthless elite who could pay soldiers to extract a large proportion of the farmer’s crop. Worse, that soldiery could be used to capture slaves, which in turn could be fed on a minimum diet and worked to death on the pyramids, or other grandiose projects. From the very beginning then, capitalism was a powerful force that needed careful regulation if it were not to make many people poor and miserable at the expense of the few who grew rich on the surplus the poor created. I’d like to offer an analogy here as a demonstration of why capitalism needs careful and extensive regulation if it is to bring its benefits to all. If we consider high-voltage electricity as an essential to modern life, then the way we regulate it is instructive. High-voltage electrical cables bring the power we need in our homes from the power stations. If people are exposed to high voltages even for brief moments, it can kill them, and even the voltages used in our homes are dangerous. Hence insulation of various kinds and very strict regulations concerning insulation are part of the physical and regulatory infrastructure of all industrialised nations. Only qualified electricians are allowed to install mains wiring in our houses, and if they get it wrong there is a risk of fire or shock. Capitalism can be seen as a force similar to high-voltage electricity: it underpins all industrial economies, but without good insulation it can harm or even kill people. The recent financial crisis, instead of being like a high-voltage electrical fault insulated from the community, turned out to have harmed millions in the loss of savings, the loss of jobs, and the loss of homes. Without insulation electrical faults can burn the house down. That ‘insulation’ in this analogy is represented by economic regulatory frameworks. However, these regulatory frameworks arise out of economic policies that are inseparable from political beliefs. Unlike the science and engineering of electricity, there is no value-free science of economics that could regulate capitalism. Hence economic theories about the regulation of capitalism belong broadly to the political left or the political right. Regulatory frameworks of the right hold that raw capitalism poses no danger to people and insist on the minimum ‘insulation’, and even that minimum is designed with maximising the accumulation of capital in mind. Frameworks of the left prioritise social goals and hence believe in extensive regulatory frameworks to protect ordinary people. The extreme right believe that all regulation is bad because it obstructs the workings of the free market. For them the free market serves all individual and social needs. The extreme left believe in the overthrow of capitalism itself, in particular the abolition of private property; or in a less extreme form as in the old Labour Clause Four, of the taking into public ownership of major industries. The Quakers live in the middle somewhere, at least if one goes by their history. The electrical analogy I have put forward here has a significant implication for capitalism: that in essence it is a neutral force. That force can be used for good or bad, and it seems that the Quakers used it for good. When then was the nature of the self-imposed regulatory framework that guided them in their business? Extreme Positions on Capitalism From Marx to Moore: Abolish it There is an honourable tradition of thought on the Left that opposed the view I have put forward that capitalism in its essence can be thought of as a neutral force. For the far Left the essence of capitalism was private ownership and the exploitation of those without capital and who were forced to work for a wage. For them, no amount of regulation could check the inherent evil of capitalism: it had to be abolished. A recent expression of this view, which probably owes little to the Marxist tradition, comes from Michael Moore, the American documentary filmmaker. In his movie, Capitalism: A Love Story, he documents some of the poverty to be found in America after the shocks of Hurricane Katrina and the 2007 banking crisis. He concludes by saying that capitalism is an evil, and you can’t regulate an evil, you have to eliminate it. His proposed alternative, rather naively, is democracy. While democracy is in itself not an alternative economic system, there is no doubt that democratic decision-making can help regulate capitalism. In reality however Moore isn’t offering any viable alternative. In a recent article on Ralph Milliband, the father of former Labour cabinet ministers Ed and David, The Independent pointed out that, unlike his sons, Ralph was a Marxist who didn’t believe in the reform of capitalism, but its overthrow. My impression of the Marxist tradition, or of those seeking to overthrow capitalism from whatever background, is that the energy devoted to that goal is lost from what is ultimately a more pressing goal: how exactly to regulate capitalism. An inner conviction that capitalism in its essence is wrong must make it more difficult for left-wing thinkers to state clearly what they want from capitalism and how to regulate it, i.e. for social ends. Hence the Quaker tradition, which did just that, is so illuminating. There are of course important economists of the Left, whose work is essential if capitalism is to be regulated for social ends. But the economists of the Right have for some time now won the argument on how to regulate capitalism, and even on its very nature. Milton Friedman and the Chicago School Milton Friedman was an economist at the University of Chicago and Nobel Prize winner for his ideas. He was an economic advisor to President Ronald Reagan. His book Capitalism and Freedom was highly influential in promoting ‘free-market’ economics, and sold half a million copies. As well as providing the basis for Reagan’s liberalisation of US economics – known as ‘Reaganomics’ – Friedman’s ideas were the basis of Margaret Thatcher’s economic revolution in Britain, which saw the privatisation of most of the nationalised industries, weakening of the labour unions, and deregulation of the City. Friedman believed that the market should reign supreme and wherever possible it should be left alone by Government. For him competition amongst the producers of goods and services would always weed out the inefficient and ensure the best goods and services at the lowest prices. Competition amongst workers would naturally reward intelligence and hard work with high wages, and if workers didn’t like the wages and conditions of one employer they would disadvantage that employer in the marketplace by selecting another, rather as one does products. At every turn his book advocates private enterprise as the sole provider of all services, including education, health care, pensions, and even national parks. In other words he advocates ‘small government’ and low taxation. All social goals should be fulfilled by the market, or, where that isn’t possible, by private charitable organisations, such as those run by religious groups. A social goal like full employment is a complete contradiction of his free-market philosophy: without the fear of unemployment, workers will sell their labour too high, and raise costs for business. Needless to say a minimum wage is also frowned upon as an unnecessary interference with the market. (It is an irony then, that a minimum wage was introduced in the US before it was in much more socialist Britain.) Perhaps just one quote from Friedman’s book epitomises his opposition to what the Quakers stood for in business: ‘Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible. This is a fundamentally subversive doctrine.’ It is interesting that Friedman talks about a ‘trend’ that would require business to pursue other social goals than just profit. He was observing perhaps the socialism of European countries in the 1950s, but seems unaware of the Quaker tradition which had placed the pursuit of a wide range of social goals above profit in its industries starting in the 18th century. Friedman’s characterisation of such a trend as a ‘subversive doctrine’ is a measure of the resistance that the Quaker approach faces in a free-market world. Some believe that Friedman’s doctrines of the free market – or laissez-faire or neo-liberalism – have led to the current global financial crisis. But let us look at a few examples of the broad range of criticism levied against his ideas. While Quakers object in principle to unregulated capitalism, the following books, with up to thirty years experience of the free-market to draw on, document some of the outcomes of this experiment. Criticisms of Laissez-Faire Naomi Klein’s Shock Doctrine One of the most damning indictments of free market doctrines is found in Naomi Klein’s 2007 book The Shock Doctrine: The Rise of Disaster Capitalism. It makes the analogy between the sudden application of free-market ideas in formerly state-run economies to the use of electro-shock treatment in psychiatry. This analogy has been widely criticised as overblown, and perhaps it is, but if even a fraction of what Klein has documented as the effects of the ‘Chicago School’ of economic therapy on developing countries is true, then from any perspective there must be something wrong with Friedman’s ideas. Most important to her thesis is the case of the deployment of Chicago School economics in South America. A mild-mannered professor of economics is free to put forward any economic theory resulting from his research, and we should in the first instance assume that he is well-meaning and sincere. But, according to Klein, once those theories became part of US foreign policy, and the US was happy to support South American dictators in forcing them on their populations through violent means – and against the expressed democratic wishes of those people – then mere ‘economics’ becomes something else. It becomes the ugly face of capitalism, and in the end it becomes easy to assume that capitalism is nothing more than exploitation carried through with violence. Ha-Joon Chang: 23 Things Ha-Joon Chang’s 23 Things They Don’t Tell You About Capitalism refutes the doctrines of the radical free market in a gentle and perhaps more lasting indictment than Klein’s. I say ‘lasting’ not because Klein may be wrong, but because Chang uses humour rather than shock to get us thinking about economics. So far the book has been well-received, and it may yet be the closest in spirit to Quakernomics. While some of the terrible things that Klein describes cannot be shrugged off by the free-marketeers because the actual events are not in dispute, they can always point out that in the end the countries that suffered the shock of economic liberalisation are now in a much better economic state. Not so, says Chang: the fact is that many countries did better before liberalisation, precisely because Government did intervene in the markets. He has many examples to back this up, but of course, most people don’t work in economics and don’t have the time to judge the overall legacy of liberalisation. However Chang’s real strengths from a Quaker point of view lie in his gentle insistence, from many points of view, that successful economic ventures are collaborative efforts. The whole community is involved, not just the ‘heroic’ entrepreneurs, and that of all the stakeholders in a business, meaning the entrepreneurs, the shareholders, the workers, the Government and the suppliers, it is the shareholders to whom least attention should be paid. Why? Because they are only in it for the short-term. Friedman, if you remember, insists that all that matters is profit for the shareholders. Chang clearly has no beef against capitalism itself, but shows instead that even from a purely economic point of view dogmatic free-market doctrines make no sense. For him it doesn’t even matter about the ownership of capital: state-owned industries can do very well indeed in global market. Chang’s has a professional, and I would say level-headed, enthusiasm for capitalism, once the imbalances of the free-market are corrected. However, his work has a limitation: the assumption of growth. Other economists are now recognising the limits to growth and introducing ideas like ‘zero-growth’ or ‘steady-state’ economics. Quakers in the Industrial Revolution responded to the rapid changes that it brought, and were even at the forefront of those changes. Without fixed dogmas, they are able to reinterpret and expand their ‘testimonies’, hence the adoption of a quite new one: ‘earth and environment’. In line with their growing concern over depleted resources, the environment and looming climate change, the Quakers hosted a conference on Zero-Growth Economics at the Euston Meeting House in 2009. More on this later. The Spirit Level Quakers have responded with great interest, along with many others, to a book by Richard Wilkinson and Kate Pickett published in 2009: The Spirit Level: Why More Equal Societies Almost Always Do Better. The book is essential a series of statistical presentations that argue for the thesis of the book’s title. With equality being a central principle of the Quakers, it is no surprise that The Spirit Level has met their approval. It is no surprise either that the influential right-wing British think-tank Policy Exchange has attacked the book, or that other experts have disagreed with some of its statistical analysis. Again, the average citizen has little way of disentangling such complex data. What matters to Quakers however is not that equality improves such indicators regarding a society as decreased violence, and increased health and longevity, though that would be great, but because better economic equality is a reflection for them of equality in the eyes of God. In other words there are times when Quaker ideals are religious, as well as egalitarian. What The Spirit Level does provide is yet more arguments against free-market doctrines. Taken alongside the other books mentioned here – and of course a wide range of other thought on the subject – we find good reason to suggest that capitalism in itself is a neutral force, but has to be carefully regulated for social goals. Those goals may include increasing wealth for all, but that might in itself be subordinated to other goals, for example the imperative to fight climate change. The free market cannot begin to deliver on that. Religion and Capitalism Capitalism, Atheism and Religion Modern capitalism grew out of the Enlightenment period which also saw the separation of religion from the public sphere. Church and State began to operate independently, in the UK by a gradual process of change, in the US by Constitution. Yet religion plays a big part in both the origins of modern capitalism and in its regulation. Weber In his book The Protestant Ethic and the Spirit of Capitalism Max Weber set out to show how the Protestant religious impulse gave birth to modern western capitalism. For Weber, the ‘spirit of capitalism’ was, in general, that of ascetic Protestantism. It is certainly true that capitalism grew rapidly in Protestant lands, and was taken up more slowly in Catholic countries. Weber suggests that for the Protestant, ‘moneymaking – provided it is done legally – is, within the modern economic order, the result and the expression of diligence in one’s calling…’ He adds: ‘If God show you a way in which you may lawfully get more than in another way (without wrong to your soul or to any other), if you refuse this, and choose the less gainful way, you cross one of the ends of your calling, and you refuse to be God’s steward, and to accept His gifts and use them for him when He requireth it: you may labour to be rich for God, though not for the flesh and sin.’ In essence, this was the approach of Quakers to capitalist activity. More specifically, as we shall see, their approach to business grew out of their testimonies, and out of a unique way of managing their affairs, now called ‘the Quaker business method’. Effectively, they applied a voluntary code of regulation on their own business, in direct contradiction to Friedman’s beliefs, and were still able to compete effectively in a market that at that time had very few of the controls on free enterprise that even Friedman would find reasonable: for example the principle, slow in coming, that young children should not work in factories. Quakers and the Industrial Revolution Quaker Businesses We saw earlier that Quakers as non-conformists were shut out of many normal callings, and hence gravitated to business. Their ‘Protestant ethic’ made them industrious, and their reputation for plain speaking and honesty led them naturally to banking. From early in the Industrial Revolution, to their peak in the mid-late nineteenth century, and then up to the mid-late twentieth century, Quakers held a commanding presence in British economic life. Some of the most famous names in Quaker business are still household brands: Cadbury’s for chocolate and Lloyds for banking, to give two examples, though they are no longer under Quaker control. Quakers played a central role in the early development of the railways in Britain. The world’s first passenger train ran on what was called the ‘Quaker Line’ in 1825, known to most people as the Stockton and Darlington Railway. It was the brainchild of a Quaker called Edward Pease, whose family were engaged in weaving, wool-trading, coal-mining and banking. A later Pease helped found the Fabian Society, which in turn laid many of the foundations of the Labour Party. Crucial to Quaker success was the family, and the extension of families by inter-marrying amongst Quakers. All the great Quaker industries were family-run, which made it possible to gather sufficient capital for these ventures. Many rural banks were set up by Quaker families, including those now known as Barclays and Lloyds, and they were amongst the first credit institutions lending to small businesses and to the customers of industry in order that they could purchase products. In other words Quakers were at the forefront not only of modern capitalist industry, but also of modern capitalist finance. Although at the forefront of the temperance movement, Quakers also ran breweries, such as Truman, Hanbury and Buxton, and were active in almost any enterprise requiring the application of science or bookkeeping. Indeed the Quaker tradition of keeping records stood them in good stead in banking. Their record keeping was a habit originating from the days of persecution, where they kept an accurate account of the ‘sufferings’ of their fellow-Quakers, including the often unfair loss of goods through seizure by bailiffs. Many, many household names in the Victorian period were products from Quaker industries, including Horniman’s tea, Reckitt’s starch, porcelain from Wedgewood, and of course sweet goods from Cadbury’s, Fry’s, Rowntree’s and Huntley and Palmers. The great recorder of daily life through the new medium of photography, Francis Frith, was a Quaker; and the Francis Frith website today still delivers thousands of prints of a vanished past to enthusiasts. He and a number of co-authors wrote important Quaker tracts that began the liberalisation of the Quaker movement and paved the way for the philanthropic and educational reforms for which the movement is well known today. In almost every case, Quaker businesses made provision for their workers far beyond the meagre legal requirements of the day, and the Quaker industrialists who grew rich on their businesses did so not for personal gain, but for philanthropy. This was also true of Quakers who left for America, of whom it has been said: ‘they went to do good, but landed up doing well.’ For some British Quakers who did well it is true that they lost the initial impetus to simplicity and to caring for the poor, and would join the Church of England and the Conservative party: the temptation to become ‘insiders’ was too great. But mostly Quakers retained their adherence to their ‘testimonies’ and used their businesses to put their beliefs into practice. The Cadburys The Cadburys are perhaps the best-known Quaker family, or at least produced the best-known products. John and Benjamin Cadbury received the Royal Warrant as manufacturers of chocolate and cocoa to Queen Victoria in 1854. In 1861 John’s sons George and Richard Cadbury took over the business. George, described as a ‘mystic and businessman’ bought Woodbrooke country house for the Quakers as Study Centre, and in 1893 the brothers bought land for the creation of a factory and model village for their workers in the countryside, naming it Bourneville. It became an outstanding example of an enlightened capitalist enterprise, complete with a school and hospital, and the involvement of workers in the improvement of the business. The Quaker Business Method I mentioned earlier that Quakers had kept alive a tradition of careful bookkeeping, and that this helped them in business, particularly banking. However there is another feature of Quaker life that may also have been important or perhaps even crucial to the success of their endeavours: the so-called ‘Quaker business method’. This has nothing in the first instance to do with commercial business, but is rather the way that Quakers reached decisions concerning their way of life in broad religious and practical matters. Quakers in the UK attend ‘Meetings’, which are often in purpose-built structures equivalent to Christian churches. They are however empty of all religious symbols and priests. All those that attend Meeting for Worship are free to speak, and what they say is equally regarded as ‘ministry’. The only division of roles lies in the appointment of Elders, who have purely administrative roles. To run the business of a Meeting there are regular Business Meetings, formally known as ‘Meetings for Worship for Business’. They begin and end in traditional Quaker silence, though otherwise are recognisable as a form of committee with a Clerk and assistant. Items on the agenda are discussed, but there is no voting in the case of disagreement. Instead views for and against the item continue to be heard until the Clerk judges that ‘the feeling of the Meeting’ can be discerned, and all can agree on a minute. These minutes are read out and written down by the Clerk at the time of their agreement, and not afterwards by a secretary. It is more than democracy, because in theory at least nothing is minuted until all agree to it or at least permit the minute to stand, which of course can take considerable amounts of time. As the Quakers like to say, goes beyond mere consensus. The aim, in religious terms, is to discern the ‘will of God’, but in more modern times that is certainly not taken literally. The Quaker business method as just described is probably one of the best-kept secrets of the Quakers, but other religious groups have been known to regard it so highly as to want to emulate it. In the 1970s a Jesuit wrote his PhD thesis on it, with the aim in mind of adopting the method for his own tradition (The Society of Jesus). He named the resulting book ‘Beyond Majority Rule.’ Now, those that experience this method amongst the Quakers are bound to change their views on collective decision making, and that must have affected the early Quaker industries and how they operated. At this time however, I am not clear on this. Quakernomics I Whatever the role of the Quaker business method in the success of their industries, we are now in a position to sum up the traditional approach of Quakers to economics. I’ll call it ‘Quakernomics I’ to distinguish it from a contemporary Quakernomics – ‘Quakernomics II – for reasons that will soon be clear. To keep it short, I’ll summarise Quakernomics I like this:
Economics in the 21st Century So, we have a definition of Quakernomics I that sums up the Quaker approach to economics in the 18th and 19th centuries, and probably well into the 20th century. But much has changed by the early 21st century. These changes include:
Perhaps the most important of these changes in terms of how Quakernomics II will look different from Quakernomics I is in the loss of family control over business. We saw that the key to the Quaker tradition was the family ownership of business, and the inter-marrying between Quaker business families. It is this more than anything that enabled the network of Quaker industries to grow and to answer the needs of the time for social justice as the Quakers understood them. However, from the middle of the 18th century onwards, companies of middle size that could still be controlled by a single family found themselves in competition with larger firms capitalised through the stock market, and with limited liability under joint-stock laws. This was especially true of banking, so for example Lloyds, which had traded for over a hundred years as a family-owned bank, became a joint-stock enterprise in 1865. Family fortunes were insufficient to drive the huge ventures of late Victorian capitalism, and of course by the early 21st century this was all the more true as the multi-national dominated. Friedman dismissed state interventions in the free market designed to protect workers as ‘paternalism’, and, since the various socialist advances of the 20th century, one could regard the enlightened Quaker concern for their workers discussed above as an outmoded paternalism. Socialists don’t want good employment practice to depend on the personal inclinations of individual captains of industry: they want the state to guarantee them. But when the state over the last thirty years has backed off from many measures designed to protect workers, where does that leave Quakernomics? Surely this means that the principles embodied in Quakernomics I have to be broadly transferred from the private, family-run business to the state. Quaker families can no longer insulate a significant part of the workforce from the high voltage of contemporary capitalism: that has to fall to government. This means big government not small, and it implies that Quakernomics II must entail the advocacy of big government. I’ll elaborate on that shortly. Quakers no doubt have been influenced through the 20th century by Marxist and socialist traditions that believe in the collective ownership of industrial capital. Although the consensus may be that communism has failed, many Quakers are probably sceptical of capitalism now in a way that they were not in the early days. That scepticism may be fuelled by the idea that capitalism is necessarily of the sort advocated by the Chicago School. I hope to have shown here that this is not the case however, and that Quakernomics II should be as willing to engage with capitalism as its forerunner. But perhaps Quakers have most to contribute now in the area of ‘steady-state’ capitalism, that is a vision of society that has to halt or perhaps even reverse our levels of consumption. The dual threat of vanishing natural resources and harmful climate change has led to Quakers adopting their new ‘testimony’ of earth and environment. Yet it is an old testimony, that of simplicity, that is perhaps their real resource here. I wrote an essay a while back contemplating a particular problem that I identified in the phrase ‘No Natural Ceiling to the Middle-Class Lifestyle’. Long before I was involved with Quakers I pursued an instinctive frugality at odds with the increasingly materialistic world I lived in, and so responded positively to one of the Quaker posters which says: ‘Simplicity, if voluntarily adopted, is a source of strength’. Yet in the middle-classes that surrounded me, there was no concept of a limit to the material acquisitiveness deemed essential for the ‘good life’. All governments around the world are seeking a way out of the deficits they face through economic growth, a growth fuelled by the continued purchasing activity of the middle-classes. From a Quaker point of view this makes no sense now; what is needed instead is a fair redistribution of the existing wealth on this planet, sufficient many times over for our basic needs – if we voluntarily adopt simplicity. What might Quakernomics II become? The ideas I have put forward so far lead to some very tentative projections for Quakernomics II. Some of the discussion so far is based in well-known Quaker history and practice, and some of it is based in well-known economic theory. But I have added some speculative elements of my own, including the analogies of the early grain silos as banks in a society that practiced a form of proto-capitalism, and the analogy of capitalism as a neutral force like high-voltage electricity, that requires very careful regulation to prevent its shocks hurting ordinary people, particularly the poor. The most important development in the economic life of Britain, and most other countries, over the last thirty years has been the advent of an extreme free-market approach by government, leading to the current financial crisis. To put this in the language of recent political debate, we have seen the triumph of an economic philosophy which insists that ‘Big Government’ is bad, and that its twin policies of high taxes and interference in the market are mistaken. The new ruling coalition in the UK of Conservatives and Liberal Democrats appears, under the apparent necessity of making very rapid reductions in the UK deficit, to be dismantling much of big government in order to make it small. In the place of big government we have a new idea of ‘Big Society’, and we will have to wait and see how this experiment turns out. But, as government shrinks, it seems likely that the economy will become more Friedmanite, rather than less. It is on these grounds that I suggest that Quakernomics II may be best engaged in an advocacy of Big Government, i.e. a defence of the extensive and careful regulation of capitalism in order to ensure that it serves social ends. Quakers already petition Government on a range of discrete issues that are perceived as important protections for the vulnerable. But a strategic campaign, presenting coherent arguments for more state regulation of capitalism rather than less, would be properly an economics, in the sense of an overarching programme. As a religious group it is clear that the Quakers are broadly part of the ‘religious left’, though perhaps some or many Quakers would not like that appellation. (I originally discovered this idea in a book by an American rabbi, Michael Lerner: The Left Hand of God.) However, if Quakernomics II is to argue for extensive state intervention in capitalism, then it is an economics of the left and not the right. If the Quakers were to accept the idea of the belonging to the religious left, then it may well find allies in other religious groups such as Tich Natch Hanh, who pursue what they call ‘practical Buddhism’. As part of this advocacy for Big Government, Quakernomics II could well adopt as its second strand the issue of zero-growth or steady-state capitalism. The adherence of Quakers to the principles of simplicity stands them in good stead here. And it is clear that small government, so favoured by the free marketeers, will remain powerless to halt accelerating consumption of resources and runaway climate change. These are my tentative conclusions, which need extensive elaboration to clarify how they could work in practice. I must stress again that they are entirely my own, and that I do not speak for the Quakers on this. However I do hope that I have properly represented the Quaker tradition, and that my proposed transformation of its early economic approach, so that it can respond to the social needs of 21st century, retains core Quaker values, its ‘testimonies’.
Chang, Ha-Joon, 23 Things They Don’t Tell You About Capitalism,
London: Allen Lane, 2010
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