Robert Owen - the founding father of co-operation
Although there were many instigators of co-operation, both acknowledged and unsung, Robert Owen (1771–1858)3 is generally regarded as the most influential. Owen drew attention to the social and economic problems of the factory system and offered solutions. Owen was something of a gamekeeper turned poacher, having spent many years as a capitalist factory master in the cotton industry at New Lanark Mills on the banks of the Clyde. From his own first-hand experience of experiments with factory reform he was able to demonstrate that owners could increase the efficiency of their factories and, therefore, their competitive power by treating their workers better, not worse. He found that by offering his workers good wages, adequate housing, shorter hours, healthcare and education for both children and adults, his profits increased. Despite Owen’s compelling evidence to the contrary, most factory owners and masters stuck to the received wisdom that they needed to guard their profits and not squander them on looking after the workers’ interests, so very few of them changed their management methods.
The New Lanark community was so fêted that it was visited by the poets Southey, and William and Dorothy Wordsworth, as well as by the Russian Tsar-in-waiting, Grand Duke Nicholas. However, Owen himself was not satisfied with the narrow success he had achieved, remarkable though this was. When in his mid-40’s and worth a quarter of a million pounds, he decided to broaden his perspective from that of narrow factory reform and put on the mantle of social reformer. He saw the struggle facing society as being against the kind of mistakenness and ignorance which made owners feel powerless to challenge the widely held belief in ruthless competition. He did not blame the factory masters for instituting ever more harsh factory conditions in order to cut costs and survive. Not only did the decisions of the factory masters risk the whole enterprise, they also risked having to live as wage labourers themselves if they failed. Owen saw the capitalist system as being responsible for the wickedness and greed of owners and factory masters and argued that this system should be replaced by something less dehumanising. He regarded the popular recourse of the people to rioting, demonstrations and the wrecking of machines as futile and ultimately detrimental to their cause. Instead, he advocated a less confrontational and more constructive alternative which he saw as fostering those aspects of human character which are conducive to the creation of human happiness. In short, he saw social structures, not individuals, as being responsible for the moral degradation of capitalism.
Owen argued that the acquisitiveness of capitalism encourages deception and the dehumanisation of others. This is especially so where employers fail to give either customer or worker full value for money as they cut corners in their quest to acquire as much profit as possible for themselves. Capitalism and competition were seen as encouraging unemployment. The factory system raised output but actually reduced demand by lowering wages and displacing labour, separating it from home and from the rest of worthwhile living. Eventually, Owen argued, exports would dry up as the importing countries went into production for themselves, causing an even greater crisis in Britain. He predicted that the workers would revolt against the conditions imposed upon them by the owners, who were only in pursuit of private gain. This line of reasoning lay behind his involvement in the setting up of the Grand National Consolidated Trade Union and Owen is claimed as one of the founding fathers of the international labour movement.4
What was needed was a social and economic system which kept consumption and production in pace with each other and, in Owen’s view, co-operation was the answer. His ambitious aim was to establish his own brand of Socialism which did not alienate the owners whilst still bringing industry under the control of the workers. Owen argued that exploitation could not occur if money were abandoned as the value standard. Instead, the unit of economic exchange should be labour power. Goods would be valued at the number of labour units used to produce them and exchanged for other goods to the same labour unit value. This would mean that goods would yield their natural value and be justly priced.
To deal with the immediate problems of unemployment and poverty, which were the unfortunate by-products of the factory system, Owen proposed that ‘villages of co-operation’ should be established. These villages required capital to get started since land must be bought and buildings constructed. Ideally, the occupants should be able to provide this capital by pooling their individual resources but, in practice, sponsorship and credit had to be sought. Each community was to comprise approximately 1,000 souls and would require 1,000-1,500 acres of land in order to be completely self-sufficient. All productive and domestic work was to be done communally, e.g. one kitchen and one laundry for the whole village. All goods were to be exchanged with the outside world so as to give a ‘fair deal’ for workers and producers (a concern still being pursued today, e.g. by the Fairtrade Foundation), and without the use of money, thereby obviating the need for concern over value for money.
However, Owen’s ideal vision of self-sufficient rural communities failed to come to fruition. Most urban dwellers did not want to give up the gains in quality of life which industrialisation had brought in order to return to the relatively narrow social and cultural life of a small community with the additional discomforts of rural subsistence living. Disillusioned by the lack of progress he was able to make in establishing his villages in Britain, Owen went to America in 1824 where he, once again, tried to form a model co-operative community at New Harmony in Indiana. Originally called Harmony, the village had been established by George Rapp as a separatist religious community. Harmonists pooled their finances and property, benefiting from food, clothing, housing, and education in exchange for their labour and their conformity to the community’s strict rules (including celibacy). The Harmonists possessed a range of practical skills and lived simply, yet they were neither content nor productive, selling their village to Owen in order to move to better agricultural land and try to heal their disillusionment.
Owen peopled his village with intellectuals and educators driven by idealism rather than economic necessity and who, crucially, tended to lack any practical skills. Other idealists and freeloaders drawn to the experimental community were also unable to contribute the skills necessary to survive. Financial squabbling and conflicts over how the community should be organised further detracted from the efficient achievement of communal tasks. Sadly, despite costing him most of his fortune, Owen’s New Harmony was to prove unsustainable and he returned to Britain in 1828. Although his community had shone in terms of its social and intellectual life, Owen himself judged it to have been a failure.
Contrary to Owen’s predictions, capitalism actually brought generally improved standards of living rather than widespread unemployment and extreme crushing poverty. The revolutions he expected in fact happened more often in non-industrialised countries than capitalist ones. It should not, therefore, be too surprising that Owen’s particular vision of social reform proved to be ill-founded and unworkable. Despite all this, Owen has had a massive influence on social and economic thinking with many of his arguments having been taken up and developed in various forms by many others past and present, including leading figures in the labour movement.
Johnston Birchall5 suggests that, since Owen ultimately aimed to replace capitalism altogether, history will record him as more of an anarchist than a socialist. This description is somewhat monodimensional since ‘anarchy’ implies absence of a social system, whereas Owen had clear ideas about how society should be organised. A more realistic assessment by Arnold Bonner6 attributes the limitations in Owen’s work to his conceit about his own ability and judgement which meant that, although he read much, he failed to study and learn from social thinkers and reformers. Indeed, his view of education did not include the use of books, focussing on having fun instead. It was not uncommon for industrial reformers during the 19th century to be paternalistic in this way. For example, Titus Salt, already an established wool and worsted factory owner, took Owen’s ideas to heart and established the model industrial village of Saltaire, near Bradford, in 1850. The visitor to Salts Mill and Saltaire today will find that the architecture alone is eloquent testimony of Salt’s grandiose ideas and the imposition of these on his workers. This is nowhere more striking than his religiously-motivated exclusion of the public house in favour of a rather grand church.
Terry Thomas, who was Managing Director of The Co-operative Bank until 1997, was among those who have drawn on Owen’s work. Thomas7 heeded the lessons Owen had learnt from his experimentation in organisational settings and used them (in conjunction with inspiration from the Tomorrow’s Company8 concept) as a basis for developing the Inclusive Partnership Approach to business.
The Inclusive Partnership Approach shown above identifies seven partners to whom companies have a responsibility: shareholders/members, customers, employees and their families, suppliers and partners, the community, wider/global society, past and future generations of co-operators. In order to build a successful and long-lived business, so Thomas argued, the Board of a company should regard themselves, not simply as beholden to generate short-term profit and shareholder value, but also as trustees charged with the responsibility of balancing the needs and aspirations of each partner against the others and across time. Thomas articulated this approach thus:
“In dealing with our partners, we have adopted a very simple philosophy: That an important key to business success – and business longevity – is to deliver value to all our partners in a balanced fashion over time. ‘Balanced over time’ because we don’t expect each partner to gain equal benefit from each decision we make – in delivering value to one partner we may, at times, work against the interests of another.”9
3 Donnachie, I. (2000) Robert Owen: Owen of New Lanark and New Harmony, Tucknell Press.
4 Edited extract from Donkin, R (in press) Blood, Sweat and Tears Texere Publishing, reprinted as 'Robert Owen: HR hero 1771-1858' in Human Resources May 2001, pp52-60, London: Haymarket Publishing.
5 Johnston Birchall (2001) contributing to The Co-op, BBC Radio 4, presented by Chris Bowlby
6 Bonner, A. (1961, Revised edition 1970) British Co-operation, Manchester: Co-operative Union Ltd.
7 Thomas, T. (1997) 'Inclusive Partnership: The Key to Business Success in the 21st Century' in Journal of Co-operative Studies, Vol. 30(1) No. 89, pp11-21.
8 Royal Society for the encouragement of Arts, Manufactures and Commerce 1995 Tomorrow's Company: the role of business in a changing world.
9 Terry Thomas, when Managing Director of the Co-operative Bank, used this form of words on public speaking engagements and it is now used by Simon Williams, Director of Corporate Affairs, The Co-operative Bank.
