What is Quakernomics?

1. What is Quakernomics? A Fresh Look at Capitalism

2. Introduction • This talk and discussion is about economics and a religious tradition originating in the UK, the Quakers • ‘Quakernomics’ is an exploration of how Quaker principles apply to economic activity • Quakers were great industrialists and bankers in the 18th and 19th centuries • They used capitalism for social ends • But what about today?

3. First: what is capitalism? • Most people have never studied capitalism, either at school or university • If pressed, people give definitions of capitalism along these lines: • “an economic system based on the private ownership of capital” • “exploitation of the workers” • “endless growth” • “the division of labour” • “an evil that cannot be regulated”

4. Michael Moore

5. Ralph Milliband

6. Extreme positions on capitalism • Karl Marx, Ralph Milliband and Michael Moore wanted to eliminate capitalism • The classical arguments for capitalism are found in the work of Adam Smith • The most extreme form of capitalism is known as laissez-faire or free-market capitalism or neo-liberal capitalism • Its guru is Milton Friedman • His classic work ‘Capitalism and Freedom’ is the bible of free-market capitalism and was the basis of ‘Reaganomics’ and Thatchers’ revolution

8. Milton Friedman • “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.”

9. Criticisms of laissez-faire • Naomi Klein: ‘The Shock Doctrine’ • Ha-Joon Chang: ‘23 Things They Don’t Tell You about Capitalism’ • Richard Wilkinson and Kate Pickett: ‘The Spirit Level’

10. Klein’s book traces the application of Friedman’s ideas through the ‘Chicago School’ and the imposition of its free-market ideas on Indonesia and South America, and their application to the ‘privatisation’ of the second Gulf War – the invasion of Iraq. She compares the application of free-market economics in developing countries to electro-shock treatment and its use in torture.

11. Chang’s book challenges Friedmanite free-market doctrines by showing that mostly they don’t actually work. For example in one of his ‘Things’ he shows that Governments can create successful state-owned industries that out-perform private ones.

12. The Spirit Level shows how the application of free-market ideas leads to harmful inequalities in society. The authors believe that that more equal societies work better for everyone.

13. Can capitalism be regulated? • The Quaker business tradition suggests that capitalism doesn’t have to entail the evils that commentators from Marx to Moore describe • What then is the essence of capitalism? • I suggest: • the investment of a surplus for a return • In other words it is a problem of surplus and who controls it • If it is well-regulated it should not be an evil

14. Grain as the first surplus and currency Public grain silo from the time of King Jeroboam II (8th century BC Palestine) Egyptian grain silos dating to the 17th Dynasty (1630-1520 B.C.) It belongs to a large silo court that comprised the main grain storage facilities of the town.

15. Who controls the surplus? • A grain surplus can be used to hire labour, including soldiers to form an army or police • That labour can make anything from shoes to Pyramids • The surplus can be invested to grow more grain, to obtain a bigger surplus: the origins of growth • A grain surplus can be used to underpin slavery • That surplus can be represented by tokens, hence the origin of money • Who controls the surplus?

16. Capitalism and its regulation • Capitalism and its regulation are two different things • The experience of capitalism that people have is hugely determined by the type of its regulation • At the same time capitalism itself is always evolving and regulation has to respond to that • If laissez-faire capitalism is a form with the minimum of regulation, what can we call a capitalism regulated for the benefit of all? • Quakernomics?

17. Religion and capitalism • Max Weber suggested in a famous book that capitalism grew out of Calvinism • Making money, ‘if not for the flesh and sin’, is legitimate, perhaps even a religious duty • The Quakers and other Protestant movements took this seriously • Doing well is a sign of God’s ‘providence’ • The ‘Protestant (work) ethic’ regulated itself, and therefore the capitalism it engaged with

18. Capitalism as a potential danger • Even under enlightened stewardship, capitalism obviously entails dangers for workers and the environment • My suggestion: • Capitalism can be understood through the analogy with high-voltage electric power • If people are exposed to high voltages even for brief moments, it can kill them, but in essence it is a neutral force • We have extensive insulating technologies, and laws for their use, to make electric power safe • By analogy, capitalism needs extensive regulation: Quakers did this voluntarily, because of their religious beliefs

19. Quaker business in the 18th/19th C The 1825 Stockton and Darlington Railway, one of the first passenger services in the world, was the brainchild of Quaker Edward Pease, who helped pass the law that made it possible, and provided substantial finance for it. The Peases were a Quaker family which 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.

20. Quaker banking 18th/19th C Lloyds Bank was founded by Quakers in 1765, when button maker John Taylor and iron producer and dealer Sampson Lloyd set up a private banking business in Birmingham. The first branch office opened in Oldbury in 1864. The symbol adopted by Taylors and Lloyds was the beehive, representing industry and hard work. The black horse device dates from 1677 when Humphrey Stokes adopted it as sign for his shop. Stokes was a goldsmith and "keeper of the running cashes," an early term for banker. When the bank took over the site in 1884, it retained the black horse as its symbol. This private bank converted into a joint-stock company known as Lloyds Banking Company Ltd. in 1865

21. Quaker banking 18th/19th C Barclays takes its symbol, the spread eagle, from the Quaker banking and goldsmithing firm founded by John Freame in 1728. Eight years later, Freame's brother-in- law, James Barclay, became a partner. Two more Barclays relatives joined the Black Spread Eagle, Silvanus Bevan in 1767 and John Henton Tritton in 1782. The bank then assumed the name it was known by for more than a century - Barclays, Bevan & Tritton. After a change in banking law, Barclays, Bevan & Tritton agreed with two of the other big Quaker-run firms, Jonathan Backhouse & Co and Gurneys, Birkbeck, Barclay & Buxton, and 17 smaller Quaker-run banks, to merge and form a large enough bank to resist all takeover attempts.

22. Other famous Quaker names • Truman, Hanbury and Buxton (beer) • Horniman (tea) • Reckitt (starch) • Wedgewood (porcelain) • Rowntree (confectionary) • Huntley and Palmers (biscuits) • Fry (chocolate) • Francis Frith (photography) • and of course…

23. Cadburys 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.

24. Robert Ransome Robert Ransome, a Norwich Quaker, moved to Ipswich, which was more tolerant towards non-conformists and allowed Quakers to live and work in comparative peace. He founded Ransomes and Co. in 1789, obtained a patent for making cast-iron ploughshares, and began production in a disused maltings in St Margaret’s Ditches, now Old Foundry Road. Ipswich museum was founded in 1846 with the specific remit to educate the working classes in natural history. The primary initiative for this philanthropic venture came from George Ransome, FLS, a member of the Quaker Ransome family of Ipswich.

25. Francis Frith Francis Frith was a photographer who embarked upon the colossal project to photograph every town and village in the United Kingdom. He was ‘recorded’ a Quaker minister in 1872 (at this time there were little more than 250 recorded ministers in England and Wales). He frequently spoke in favour of pacifism and abstinence. Francis Frith and his co-authors 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.

26. Quakernomics I • Quaker businesses combined capitalism with philanthropy and social action • They epitomise the opposite of Friedman’s idea that the goal of business is exclusively to make profit • Their approach to capitalism could be called ‘Quakernomics I’: capitalism put to social ends through the family business • Both Marx and Friedman ignored it

27. Major changes • The Quaker influence on business and finance reached its peak in the 1860s, until the advent of the joint-stock laws and the limited liability company • The potential for the family business to influence the face of capitalism has diminished since then • Since then, some of the enlightened employment practices they pursued have become enshrined in labour laws • Many Western countries, including the UK pursued socialist policies after the war, but… • Many Western countries began to dismantle some of protections of the welfare state with the introduction of free-market economic policies in the 1980s

28. Current situation in the UK • Free-market economic policy, pursued by Thatcher, was to some extent continued under New Labour • The Coalition Government may have little instinct to move away from free-market policies • Its new vision of ‘The Big Society’ is in direct opposition to the left-wing tradition of ‘Big Government’ • The argument for ‘Big Government’ – that extensive regulation of capitalism is essential to ensure that it works for social ends – has perhaps been lost • Under the impetus for rapid deficit reduction, this government may well take the opportunity to ‘shrink the state’, i.e. to dismantle the welfare state, more than even Thatcher dreamt of

29. What is Quakernomics? • Quakernomics I developed when legal protections for workers were unheard of: much has changed since then • What then is a Quakernomics of today, a Quakernomics II, in a society where industry takes its lead from Government, not philanthropic family tradition? • My (tentative) suggestions are: • Quakernomics today has to be a think-tank arguing for ‘Big Government’, and that it can probably only do this by seeking out partner organisations that are broadly on the ‘religious left’

30. Follow-Up The official Quaker website for Great Britain is at: www.quaker.org The website for Quakers in Suffolk, listing local Meetings, is at: ww.suffolkquakers.org.uk Our Meeting in Ipswich is at 10.30 on Sundays: all welcome Mike King’s writings, including the Quakernomics talk is at: www.jnani.org/mrking/writings For a copy of the talk contact Mike King at: mike.king.bt@btinternet.com