The Need for a New Economic System – Part 8: The Cooperative Movement
TRANSCEND MEMBERS, 14 Sep 2015
John Scales Avery, Ph.D. – TRANSCEND Media Service
John Scales Avery
READ: PART 1 – PART 2 – PART 3 – PART 4 – PART 5 – PART 6 – PART 7 – PART 9
Robert Owen and Social Reform
During the early phases of the Industrial Revolution in England, the workers suffered greatly. Enormous fortunes were made by mill and mine owners, while workers, including young children, were paid starvation wages for cruelly long working days. However, trade unions, child labor laws, and the gradual acceptance of birth control finally produced a more even distribution of the benefits of industrialization.
One of the most interesting pioneers of these social reforms was Robert Owen (1771-1858), who is generally considered to have been the father of the Cooperative Movement. Although in his later years not all of his projects developed as he wished, his life started as an amazing success story. Owen’s life is not only fascinating in itself; it also illustrates some of the reforms that occurred between 1815 and 1850.
Robert Owen was born in Wales, the youngest son of a family of iron-mongers and saddle-makers. He was a very intelligent boy, and did well at school, but at the age of 9, he was apprenticed to a draper, at first in Wales. Later, at the age of 11, he was moved to London, where he was obliged to work eighteen hours a day, six days a week, with only short pauses for meals. Understandably, Robert Owen found this intolerable, and he moved again, this time to Manchester, where he again worked for a draper.
While in Manchester, Robert Owen became interested in the machines that were beginning to be used for spinning and weaving. He borrowed a hundred pounds from his brother, and entered (as a partner) a small business that made these machines.
After two years of moderate success as a small-scale industrialist, Owen saw the newspaper advertisement of a position for manager of a large spinning mill, owned by a Mr. Drinkwater. “I put on my hat” Owen wrote later, “and proceeded straight to Mr. Drinkwater’s counting house. “How old are you?”, he asked. “Twenty this May”, was my reply. “How often do you get drunk in the week?”… “I was never”, I said, “drunk in my life”, blushing scarlet at this unexpected question. “What salary do you ask?” “Three hundred a year”, was my reply. “What?”, Mr. Drinkwater said with some surprise, repeating the words, “Three hundred pounds! I have had this morning I know not how many seeking the situation and I do not think that all of their askings would amount to what you require.” “I cannot be governed by what others seek”, said I, “and I cannot take less.”
Apparently impressed by Robert Owen’s success as a small-scale industrialist, and perhaps also impressed by his courage, Mr. Drinkwater hired him. Thus, at the age of 19, Owen became the manager of a large factory. Mr. Drinkwater had no cause to regret his decision, since his new manager quickly became the boy wonder of Manchester’s textile community. Within six months, Drinkwater offered Owen a quarter interest in his business.
After several highly successful years in his new job, Robert Owen heard of several mills that were for sale in the village of New Lanark, near to Glasgow. The owner, Mr. Dale, happened to be the father of the girl with whom Robert Owen had fallen in love. Instead of directly asking Dale for permission to marry his daughter, Owen (together with some business partners) first purchased the mills, after which he won the hand of the daughter.
Ownership of the New Lanark mills gave Robert Owen the chance to put into practice the ideas of social reform that he had been developing throughout his life. Instead of driving his workers by threats of punishment, and instead of subjecting them to cruelly long working hours (such as he himself had experienced as a draper’s apprentice in London), Owen made the life of his workers at New Lanark as pleasant as he possibly could. He established a creche for the infants of working mothers, free medical care, concerts, dancing, music-making, and comprehensive education, including evening classes.
Rather than the usual squalid one-room houses for workers, neat two-room houses were built. Garbage was collected regularly instead of being thrown into the street. New Lanark also featured pleasant landscaped areas.
Instead of leading to bankruptcy, as many of his friends predicted, Robert Owen’s reforms led to economic success. Owen’s belief that a better environment would lead to better work was vindicated. The village, with its model houses, schools and mills, became internationally famous as a demonstration that industrialism need not involve oppression of the workers.
Crowds of visitors made the journey over narrow roads from Glasgow to learn from New Lanark and its visionary proprietor. Among the twenty thousand visitors who signed the guest-book between 1815 and 1825 were the Grand Duke Nicholas of Russia (who later became Czar Nicholas I), and Princes John and Maximilian of Austria.
Robert Owen’s ideas of social reform can be seen in the following extract from an “Address to the Inhabitants of New Lanark”, which he presented on New Year’s Day, 1816: “What ideas individuals may attach to the term ‘Millennium’ I know not; but I know that society may be formed so as to exist without crime, without poverty, with health greatly improved, with little, if any, misery. and with intelligence and happiness increased a hundredfold; and no obstacle whatsoever intervenes at this moment except ignorance to prevent such a state of society from becoming universal.”
Robert Owen believed that these principles could be applied not only in New Lanark but also in the wider world. He was soon given a chance to express this belief. During the years from 1816 to 1820, apart from a single year, business conditions in England were very bad, perhaps as a result of the Napoleonic Wars, which had just ended. Pauperism and social unrest were widespread, and threatened to erupt into violence. A committee to deal with the crisis was formed under the leadership of the Dukes of Kent and York.
Because of Owen’s reputation, he was asked for his opinion, but the committee was hardly expecting the answer that they received from him. Robert Owen handed the two Dukes and the other committee members a detailed plan for getting rid of pauperism by making paupers productive. They were to be settled in self-governing Villages of Cooperation, each with between 800 and 1,200 inhabitants. Each family was to have a private apartment, but there were to be common sitting rooms, reading rooms and kitchens. Near to the houses, there were to be gardens tended by the children, and farther out, fields to be cultivated by the adults. Still farther from the houses, there was to be a small factory.
Owen’s idea for governmentally-planned paupers’ collectives was at first rejected out of hand. The early 19th century was, after all, a period of unbridled laissez-faire economics. Owen then bombarded the Parliament with pamphlets advocating his scheme. Finally a committee was formed to try to raise the money to establish one Village of Cooperation as an experiment; but the money was never raised.
Unwilling to accept defeat, Robert Owen sold his interest in New Lanark and sailed for America, where he believed that his social experiment would have a better chance of success. He bought the town of Harmonie and 30,000 acres of land on the banks of the Wabash River in Indiana. There he established a Village of Cooperation which he named “New Harmony”. He dedicated it on the 4th of July, 1826. It remained a collective for only two years, after which individualism reasserted itself. Owen’s four sons and one of his daughters made their homes in New Harmony, and it also became the home of numerous scientists, writers and artists.
Owen’s son, Robert Dale Owen, became a member of the U.S. House of Representatives, where he introduced the bill establishing the Smithsonian Institution. In 1862 he wrote an eloquent letter to Abraham Lincoln urging emancipation of the slaves. Three days later, probably influenced by Owen’s letter, Lincoln read the Emancipation Proclamation to his cabinet. Another son, Richard Owen, served as President of the University of Indiana, and was later elected as the first President of Purdue University.
When Robert Owen returned to England shortly after dedicating New Harmony, he found that he had become a hero of the working classes. They had read his writings avidly, and had begun to establish cooperatives, following his principles. There were both producer’s cooperatives and consumer’s cooperatives. In England, the producer’s cooperatives failed, but in Denmark they succeeded, as we will discuss below.
One of the early consumer’s cooperatives in England was called the Rochdale Society of Equitable Pioneers. It was founded by 28 weavers and other artisans, who were being forced into poverty by mechanization. They opened a small cooperative store selling butter, sugar, flour, oatmeal and candles. After a few months, they also included tobacco and tea. From this small beginning, the Cooperative Movement grew, finally becoming one of the main pillars of the British Labour Party.
Robert Owen’s attention now turned from cooperatives to the embryonic trade union movement, which was struggling to establish itself in the face of fierce governmental opposition. He assembled the leaders of the working class movement and proposed the formation of the “Grand National Moral Union of Productive and Useful Classes” The name was soon shortened to “The Grand National Consolidated Trades Union” or simply the “Grand National”.
Owen’s Grand National was launched in 1833, and its membership quickly grew to half a million. It was the forerunner of modern nationwide trade unions, but it lasted only two years. Factory-owners saw the Grand National as a threat, and they persuaded the government to prosecute it under anti-union laws. Meanwhile, internal conflicts helped to destroy the Grand National. Owen was accused of atheism by the working class leaders, and he accused them of fermenting class hatred.
Robert Owen’s influence helped to give raw laissez faire capitalism a more human face, and helped to spread the benefits of industrialization more widely. Through the work of other reformers like Owen, local trade unions succeeded, both in England and elsewhere; and in the end, successful national unions were finally established. The worst features of the early Industrial Revolution were moderated by the growth of the trade union movement, by child labor laws, by birth control and by minimum wage law
http://www.worldscientific.com/worldscibooks/10.1142/6480
https://en.wikipedia.org/wiki/Robert_Owen
http://robert-owen-museum.org.uk/
http://www.biographyonline.net/business/robert-owen.html
RUSTING OF THE IRON LAW
The Iron Law of Wages of David Ricardo (1772-1823) maintained that workers must necessarily live at the starvation level, since their wages are determined by the law of supply and demand. If the wages should increase above the starvation level, more workers’ children would survive, the supply of workers would increase, and the wages would fall again.
This gloomy pronouncement was enthusiastically endorsed by members of the early 19th century Establishment, since it absolved them from responsibility for the miseries of the poor. However, the passage of time demonstrated that the Iron Law of Wages held only under the assumption of an economy totally free from governmental intervention, and the belief that workers will always reproduce without restraint.
Both the growth of the political power of industrial workers, and the gradual acceptance of birth control were important in eroding Ricardo’s Iron Law. Birth control is especially important in countering the argument used to justify child labor under harsh conditions. The argument (still used in many parts of the world) is that child labor is necessary in order to save the children from starvation, while the harsh conditions are needed because if a business provided working conditions better than its competitors, it would go out of business. However, with a stable population and appropriate social legislation prohibiting both child labor and harsh working conditions, the Iron Law argument fails.
https://en.wikipedia.org/wiki/Iron_law_of_wages
http://www.class.uh.edu/history/cox/Doc1302IronLawofWages.htm
THE COOPERATIVE MOVEMENT
Besides writing more than half of the hymns presently used in Danish churches, the Danish poet-bishop N.F.S. Grundtvig (1783-1872) also introduced farmers’ cooperatives into Denmark and founded a system of adult education.
At the time when Grundtvig lived, the Industrial Revolution had already transformed England into a country that exported manufactured goods but was unable to feed itself because of its large population. In this situation, Denmark began a prosperous trade, exporting high quality agricultural produce to England (for example dairy products, bacon, and so on).
Grundtvig realized that it would be to the advantage of small-scale Danish farmers to process and export these products themselves, thus avoiding losing a part of their profits to large land-owners or other middlemen who might do the processing and exporting for them. He organized the small farmers into cooperatives, and in order to give the farmers enough knowledge and confidence to run the cooperatives, Grundtvig created a system of adult education: the Peoples’ Colleges. The cooperatives and the adult education system contributed strongly to making Denmark a prosperous and democratic country.
https://en.wikipedia.org/wiki/N._F._S._Grundtvig
https://en.wikipedia.org/wiki/Folk_high_school
http://www.uwcc.wisc.edu/icic/orgs/ica/mem/country/denmark/ag-coops.html
http://ica.coop/en/media/co-operative-stories/kab-how-cooperative-housing-works-denmark
https://en.wikipedia.org/wiki/Arla_Foods
https://en.wikipedia.org/wiki/Coop_Norden
https://en.wikipedia.org/wiki/Danish_Agro
SOCIALISM IN SCANDINAVIA – BERNIE SANDERS
Senator Bernie Sanders of Vermont, who is currently rapidly gaining momentum as a candidate for the US Democratic Party presidential nomination, says that he is a socialist. When asked to explain in detail what he means by this, Senator Sanders says that he believes that the the United States would benefit from some of the features Scandinavian socialism, for example greater income equality, free medical care for all, free higher education for those who qualify, and the elimination of poverty through a comprehensive social security net.
Since I have been a permanent resident of Denmark since 1973, (teaching at the University of Copenhagen ), I can perhaps try to explain how the economic system works in this country. The systems in the other Scandinavian countries are very similar.
Denmark has not eliminated capitalism by any means, but privately-owned businesses as well as all citizens, are heavily and progressively taxed, those with the highest incomes being taxed the most. Even those in the middle-income brackets pay roughly 50% in direct income tax. In addition there is a sales tax of 20% or so on all purchases, as well as property taxes on house ownership.
In return for the high taxes that they pay, Danish citizens receive a large array of social services: free medical care for all, free elementary education and higher education, free day care centers for working mothers, a highly-developed public transportation infrastructure, and a safety net for the weaker members of society. A resident of (for example) New York might have his or her income taxed at a much lower rate, but this is balanced by the need to pay out much of it for university education, medical bills, and so on. One of the great achievements of the Scandinavian system is that it has eliminated poverty.
The relatively equal distribution of incomes in Denmark and in other Scandinavian countries has produced a high quality of life. A number of social problems are linked with excessive inequality. As the English economist John Hobson noted, if the rich are too few in number, they are unable buy back the total output of an economy. Furthermore, very unequal societies suffer more from high crime rates, high infant mortality, mental illness, drug use, disease and unhappiness than do societies where wealth is more equally distributed.
Denmark consistently holds a high place in the list of nations ranked according to a “Satisfaction With Life Index”. I agree with Bernie Sanders, that the United States would benefit from having an economic system more nearly like the egalitarian systems that have made Scandinavian countries prosperous, peaceful and contented.
https://en.wikipedia.org/wiki/Satisfaction_with_Life_Index
http://human-wrongs-watch.net/2015/07/04/will-the-real-issues-be-discussed-in-2016/
https://en.wikipedia.org/wiki/Bernie_Sanders
httpv://www.youtube.com/watch?v=9_LJpN893Vg
GHANDIAN ECONOMICS
In his autobiography, Mahatma Gandhi says: “Three moderns have left a deep impression on my life and captivated me: Raychandbhai (the Indian philosopher and poet) by his living contact; Tolstoy by his book ‘The Kingdom of God is Within You’; and Ruskin by his book ‘Unto This Last’.” Ruskin’s book, “Unto This Last”, which Gandhi read in 1904, is a criticism of modern industrial society. Ruskin believed that friendships and warm interpersonal relationships are a form of wealth that economists
have failed to consider. He felt that warm human contacts are most easily achieved in small agricultural communities, and that therefore the modern tendency towards centralization and industrialization may be a step backward in terms of human happiness. While still in South Africa, Gandhi founded two religious Utopian communities based on the ideas of Tolstoy and Ruskin, Phoenix Farm (1904) and Tolstoy Farm (1910).
Because of his growing fame as the leader of the Indian civil rights movement in South Africa, Gandhi was persuaded to return to India in 1914 and to take up the cause of Indian home rule. In order to reacquaint himself with conditions in India, he traveled tirelessly, now always going third class as a matter of principle.
During the next few years, Gandhi worked to reshape the Congress Party into an organization which represented not only India’s Anglicized upper middle class but also the millions of uneducated villagers who were suffering under an almost intolerable burden of poverty and disease. In order to identify himself with the poorest of India’s people, Gandhi began to wear only a white loincloth made of rough homespun cotton. He traveled to the remotest villages, recruiting new members for the Congress Party,
preaching non-violence and “firmness in the truth”, and becoming known for his voluntary poverty and humility. The villagers who flocked to see him began to call him “Mahatma” (Great Soul).
Disturbed by the spectacle of unemployment and poverty in the villages, Gandhi urged the people of India to stop buying imported goods, especially cloth, and to make their own. He advocated the reintroduction of the spinning wheel into village life, and he often spent some hours spinning himself. The spinning wheel became a symbol of the Indian independence movement, and was later incorporated into the Indian flag.
The movement for boycotting British goods was called the “Swadeshi movement”. The word Swadeshi derives from two Sanskrit roots: Swa, meaning self, and Desh, meaning country. Gandhi described Swadeshi as “a call to the consumer to be aware of the violence he is causing by supporting those industries that result in poverty, harm to the workers and to humans or other creatures.”
Gandhi tried to reconstruct the crafts and self-reliance of village life that he felt had been destroyed by the colonial system. “I would say that if the village perishes India will perish too”, he wrote, “India will be no more India. Her own mission in the world will get lost. The revival of the village is only possible when it is no more exploited. Industrialization on a mass scale will necessarily lead to passive or active exploitation of the villagers as problems of competition and marketing come in. Therefore we have to concentrate on the village being self-contained, manufacturing mainly for use. Provided this character of the village industry is maintained, there would be no objection to villagers using even the modern machines that they can make and can afford to use. Only they should not be used as a means of exploitation by others.”
“You cannot build nonviolence on a factory civilization, but it can be built on self-contained villages… Rural economy as I have conceived it, eschews exploitation altogether, and exploitation is the essence of violence… We have to make a choice between India of the villages that are as ancient as herself and India of the cities which are a creation of foreign domination…”
“Machinery has its place; it has come to stay. But it must not be allowed to displace necessary human labour. An improved plow is a good thing. But if by some chances, one man could plow up, by some mechanical invention of his, the whole of the land of India, and control all the agricultural produce, and if the millions had no other occupation, they would starve, and being idle, they would become dunces, as many have already become. There is hourly danger of many being reduced to that unenviable state.”
In these passages we see Gandhi not merely as a pioneer of nonviolence; we see him also as an economist. Faced with misery and unemployment produced by machines, Gandhi tells us that social goals must take precedence over blind market mechanisms. If machines are causing unemployment, we can, if we wish, and use labor-intensive methods instead. With Gandhi, the free market is not sacred; we can do as we wish, and maximize human happiness, rather than maximizing production and profits.
Mahatma Gandhi was assassinated by a Hindu extremist on January 30, 1948. After his death, someone collected and photographed all his worldly goods. These consisted of a pair of glasses, a pair of sandals and a white homespun loincloth. Here, as in the Swadeshi movement, we see Gandhi as a pioneer of economics. He deliberately reduced his possessions to an absolute minimum in order to demonstrate that there is no connection between personal merit and material goods. Like Veblen, Mahatma Gandhi told us that we must stop using material goods as a means of social competition. We must start to judge people not by what they have, but by what they are.
https://en.wikipedia.org/wiki/Gandhian_economics
http://bollier.org/blog/gandhian-economics-and-commons
http://caravan.squat.net/ICC-en/Krrs-en/ghandi-econ-en.htm
http://www.mkgandhi.org/ebks/untothislast.pdf
https://en.wikipedia.org/wiki/Unto_This_Last
http://www.efm.bris.ac.uk/het/ruskin/ruskin
Ghandi’s vision of an “India of villages” rather than an “India of cities” has much in common with the Transition Town movement, which we will discuss next.
TRANSITION TOWNS
The Transioion Town Movement of today is a response to the end of the fossil fuel era and the threat of economic collapse. It can be thought of as a modern branch of the Cooperative Movement. In 2006, the Transition Town of Totnes in Devon, England was the first to use this name, which implied a transition from globalism, consumerism and growth to a sustainable, local and self-sufficient economy. The ideal was to produce locally all the necessary food for the town, and as much of other necessities as possible. In this way, the energy expendatures involved in transportation could be avoided.
Today there are more than a thousand Transition Towns and they are located in 43 countries. Many of them have local currencies, which are legal tender within the town. If the pioneers of this movement are right in saying that this is the only sustainable model for the future, we may wonder whether mega-cities will be able to survive in the long-term future.
https://en.wikipedia.org/wiki/Transition_town#cite_note-Statistics-13
https://en.wikipedia.org/wiki/Degrowth
https://en.wikipedia.org/wiki/Fiscal_localism
https://en.wikipedia.org/wiki/Ecological_footprint
https://en.wikipedia.org/wiki/Great_Transition
https://en.wikipedia.org/wiki/New_Economics_Foundation
https://en.wikipedia.org/wiki/New_Economy_Coalition#New_Economy_movement
https://en.wikipedia.org/wiki/Ecological_economics
http://commondreams.org/views/2015/07/31/we-are-all-greece
http://www.powells.com/biblio/7-9780871566430-2
SOME CONCLUDING REMARKS
For most of human history, our ancestors lived in small, cooperative village communities. Our inherited emotional nature is especially adapted to such a life, where helpfulness and social reciprocity are natural, and where close life-long friendships are the norm. Humans of today may well feel lost in a cold commercial society, where everything is given a monetary value, and where all human actions are assumed to be based on greed and competitiveness.
In the future, small cooperative communities, like the Ghandian villages or Transition Towns, may be able to give us not only a more sustainable way of life, but also increased happiness, based warm life-long friendships and the pleasure of doing good to others.
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John Scales Avery, Ph.D., who was part of a group that shared the 1995 Nobel Peace Prize for their work in organizing the Pugwash Conferences on Science and World Affairs, is a member of the TRANSCEND Network and Associate Professor Emeritus at the H.C. Ørsted Institute, University of Copenhagen, Denmark. He is chairman of both the Danish National Pugwash Group and the Danish Peace Academy and received his training in theoretical physics and theoretical chemistry at M.I.T., the University of Chicago and the University of London. He is the author of numerous books and articles both on scientific topics and on broader social questions. His most recent book is Civilization’s Crisis in the 21st Century.
This article originally appeared on Transcend Media Service (TMS) on 14 Sep 2015.
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