Owen

Maybe not that popular, but Robert Owen was a really a hero in his time. Could be described as one of the first utopian socialists (with Thomas More permission). The amazing thing about Robert Owen, is that he wasn’t only utopian, but practical. He transformed a little mill village (New Lanark) in something not far from utopian society. He changed the life of hundreds for good!. Owen’s main contribution to socialist thought was the view that human social behavior is not fixed or absolute, and that human beings have the free will to organize themselves into any kind of society they wished.

During Malthus and Ricardo days wasn’t that hard to understand why that gloomy vision of economy and life in general. From Heilbroner:

“In 1828, The Lion, a radical magazine of the times, published the incredible history of Robert Blincoe, one of eighty pauper-children sent off to a factory at Lowdham. The boys and girls (they were all about ten years old) where whipped day and night, not only for the slightest fault, but to stimulate their flagging industry. And compared with a factory at Litton where Blincoe was subsequently transferred, conditions at Lowdham were rather humane. At Litton the children scrambled with the pigs for the slops in a through; they were kicked and punched and sexually abused; and their employer, one Ellice Needha, had the chilling habit of pinching the children’s ears until his nails met through the flesh. The foreman of the plant was even worse. He hung Blincoe up by his wrists over a machine so that his knees were bent and then he piled heavy weights on his shoulders. The child and his coworkers were almost naked in the cold winter and (seemingly a purely gratuitous sadistic flourish) their teeth were filed down!”.

Probably this story was exaggerated, but surely inhuman practices were accepted and was none business. Even in these days news about slaves appears once in a while in my own country.

Not only bad practices at job were a problem. Technology was the rage, and machinery meant displacement of laboring hands by efficient machines. In 1779 a mob of 8.000 workers attacked a mill and burned it to the ground, because it was taking jobs.

Even Ricardo, who was very respected, admitted that maybe machinery did not always operate to the immediate benefit of the workman. To an observer, the working class were getting out of control, and something must be done. Repression is the first thought, but not the only one.

In those dark times, one small light shone. That light was New Lanark. And as a good light in the dark, New Lanark was visited by over 20.000 moths who wanted to see the miracle by their own eyes. Tsar Nicholas I of Russia was one of those moths. They all came to see that horrible industrial life was not the only and inevitable social arrangement, some good practices were possible too. Some of the good practices were:

• Workers had two room houses, the garbage was neatly piled up awaiting disposal instead of being strewn in filthy disarray.
• Factories: Over each employee hung a little cube of wood with a different color painted each side: black, blue, yellow and white. From lightest to darkest, the colors stood for different grades of performance: white was excellent, yellow good blue indifferent; black bad. At glance, the factory manager could judge the performance of his workforce.
• There were no children under ten or eleven in factories. Those that did, work only for $10 \frac{3}{4}$ hours per day (the norm were 16). Most important, they were not punished; discipline seemed to be wielded by benignity rather than fear.
• The factory manager was available for objections to any rule or regulation, or bad cube rating (just like a good school or university).
• Little children, instead of being in the street by their own, they played in schoolhouses. The small ones were learning the names of plants, animals and trees. Older boys were learning grammar. Regularly, children gathered to sing and dance under young ladies sight. Young ladies were instructed that no child’s question was ever to go unanswered, not child was ever bad without reason, punishment was never to be inflicted, and that children would learn faster from the power of example an from admonition.

Beside all that marvels, New Lanark was profitable. So, this town was not run only by a saint, but by a business saint: Robert Owen, the “benevolent Mr. Owen of New Lanark”. A man that born poor and made a fortune as a capitalist. From a capitals to a opponent of private property. From advocated to benevolence (because it pays dividends) to urge the abolition of money. So take your time if you want to classify him, you will need it.

So first Mr Owen was an entrepreneur (a successful one), then as a capitalist, a philanthropist. When he ran of money, he became a social leader. Most important, he was able to build his dreamed society, and it did work. At least once.

Napoleonic wars threatened with general gluts. To avoid the coming misery, the Dukes of York and Kent and other respectable people formed a committee to look forward for solutions for the arriving gluts. They called Owen to present his views. He didn’t came with just that, he came with the blueprints for a new society: Villages of Cooperation.

For Owen, the problem was that paupers became non productive in general gluts, so the solution was to make them productive. Paupers could become the producers of wealth if they were given a chance to work, and they deplorable social habits could easily be transformed into virtuous ones under the influence of a decent environment. Why would anyone believe that paupers were not able to produce wealth given the resources?. I mean, being pauper is not an illness. Owen knew they were people, just like everybody else.

Villages of Cooperation were an structure to make people productive. Owen proposed their way of living. From Heilbroner:

The families were to live in houses grouped in parallelograms, with each family in a private apartment but sharing common sitting rooms and reading rooms and kitchens. Children over the age of three were to be boarded separately so that they could be exposed to the kind of education that would best mold their characters for later life. Around the school were gardens to be tended by slightly older children, and around them in turn would stretch out the fields where crops would be grown. In the distance, away from the living areas, would be a factory unit; in effect this would be a planned garden city, a kibbutz, a commune.

The committee thanked Mr Owen’s plan, and his ideas were carefully ignored. Laissez faire was the beauty girl and planned economy, well, none seemed to care. But passiveness was not an option for Owen. He sold his interests in New Lanark, and set about building his own community of the future. He chose the place where dreams came true, where the grass is green and the girls are pretty: America (North America please), Indiana. It’s name: New Harmony.

New Harmony was a disaster (maybe it wasn’t so easy to have a community without the strong support of a stable business as New Lanark did with it’s own prosperous mill). After loosing four fifths of is fortune in New Harmony, Mr. Owen went back to England to participate actively in leading a new section of the country: the working classes. Indeed, he started the english working class movement by the name of The Grand National Moral Union of the Productive and Useful Classes. Some marketing genius changed the name to just Grand National. The Grand National gathered 500.000 members. It was huge!

The Gran National was a fiasco too. It appears that England was prepared for a national trade union just as US was prepared for a community paradise. Local union could not control their members and local strikes prospered. Grand National only lasted for two years.

So, who was Robert Owen? He was not only an economist, but a economic innovator who wanted to change the world (and he did it, a bit). While others wrote, he went ahead and tried to change it.

Mr. Owen, my greatest respect to you.

John Stuart Mill

You will have a hard time classifying Mill in political or economic dimension, but surely not in brilliance: he was a genius. But that’s not that special, almost all of the greatest economist were extremely brilliant, but few started to learn greek at the age of three. At seven he read most of Plato dialogues. At thirteen he made a complete survey of all there was to be known in political economy. So, undoubtedly, such a nerd! A nerd that went deep enough to discuss the philosophical conflicts underlying classical economics. The ethical foundations of economics and capitalism were discussed.

Usually considered as a genius, probably owns that to his father, James Mill, close friend of Ricardo and Jeremy Bentham (father of utilitarianism). James was the one that pushed John to a seven days a week study plan (so yes, no friends for the little Mill). The miracle was not that John Stuart Mill wrote masterpieces; the miracle was that he survived childhood!

Utopian socialists are usually dismissed by considering them dreamers, but the thoroughness of Mill thoughts are not questioned.

“A person choose to do x, just if he believes that doing it, he will gain profit “. That was I learned in my first class of economy. That is the base of utilitarianism immortalized by Jeremy Bentham. You could see Bentham as the Newton of the moral universe, a moral scientist. Bentham’s model is based on seeing the “mankind under the governance of two masters, pain and pleasure….Since all human beings like pleasure and hate pain (masochists notwithstanding, although they prefer pain only because it gives them pleasure), they choose to do that which gives them pleasure”. So profit in this case, is pleasure minus pain. So when is time to choose, choose the alternative that maximizes profit (given the restrictions).

“Greatest happiness for the greatest number” is the cry of the utilitarian movement. Under that, relies the assumption that all people count equally when determining happiness, which sounds fair enough. Bentham even devised a method of quantifying pleasure and pain; it’s called felicific calculus (that really sounds like a lot of free time). Does anything from here gives us something useful? Of course!

• In politics, Bentam’s Radicals (Bentham groupies) argued for democracy and free speech. From free speech comes truth, they declared.
• They fought for reducing taxes on periodicals and assembly restrictions.
• They attacked the Corn Laws (entrance barrier to foreign seeds to U.K).
• They argued against punishment in prisons. After all, “a criminal is a person who believes that crime pays”. The problem is that they missed the long term pain (costs).

To utilitarians, god was utility. The invisible hand wasn’t, even if their god usually worked through the invisible hand.

Mill was a Jeremy’s fan. He found the scientific precision that he was looking for, and gave him a sight of society. Not for too long. Around twenty, Mill realized that rational thoughts were just not enough. He missed the ultimate goal; happiness. He arrived at a critical point in his life. In his words:

“Suppose that all your objects in life were realized; that all the changes in institutions and opinions which you are looking forward to, could be completely effected at this very instant: would this be a great joy and happiness to you? And an irrepressible self-consciousness distinctly answered, No! At this my heart sank within me: the whole foundation on which my life was constructed fell down. All my happiness was to have been found in the continual pursuit of this end. The end had ceased to charm, and how could there ever again be any inters in the means? I seemed to have nothing left to live for”

Hopeless, he found something that kept him alive: poetry. But flesh could not live just reading poetry. After a while he found what he was looking for: love. The nerd fell in love. Harriet Taylor was the girl. As usual, things were not that easy. There was a Mr. Taylor too, but as Disney taught us, love prevails. After twenty years of “non-sex relationship”} (he was such a nerd so, it was very plausible), they got married. Mill always noted the influence of his wife and daughter in his masterpieces. In the age of reason, Mill longed for passion (Amazingly, that is not that crazy. Hume insisted that reason always be the “slave of the passions”. Even Bentham introduced reason only as a method of comparing passions, not replace them).

“Whoever, either now or hereafter, may think of me and of the work I have done, must never forget that is the product not of one intellect and conscience, but of three”

After that spring break of feelings Mill would return to Benthamism, not to destroy it, but to improve it. Mill insisted that the greatest happiness depends more than mere pleasure. For example, art is more than pleasure; it lifts the spirit. Mill enhances utilitarianism by invoking Platonic virtues of honor, dignity and self-development. By the way, that’s the reason that Mill became an advocate of public education; to allow people to enjoy more than wordily pleasures, but spirit lifters.

His first masterpiece were two long volumes titled “Principles of Political Economy”. Beside of being a survey of the field, he gave a new perspective that Mill believed of monumental importance:  economy was all about production, not distribution. For distribution, something else was needed (morals?). Scarcity and toughness of nature are real things, and the economic rules of behavior which tell us how to maximize the fruits of our labor are as impersonal and absolute as hard sciences. So economics have nothing to do with distribution.

“Once we have produced wealth as the best we can, we can do with it as we like… The distributions of wealth depends on the laws and customs of society. The rules by which it is determined are what the opinions and feelings of the ruling portion of the community make them, and are very different in different ages and countries, and might be still more different, if mankind so chose…  }“.

So as Robert Owen, Mill thinks that society has the power of make itself in different forms. There is not only one natural solution then.

If society did not like the so-called “natural” results of its activities, it had only to change them. Society could tax and subsidize, it could expropriate and redistribute. It could give all its wealth to a king, or it could run gigantic charity ward; it could give due heed to incentives, or it could, at its own risk, ignore them. But whatever it did, there was no “correct” distribution, at least none that economics had any to reclaim. There was no “laws” to justify how society shared its fruits: there were only men sharing their wealth as they saw fit.

But the thing is that societies arrange their modes of payment as integral parts of their modes of production: for example, feudal societies do not have “wages”, anymore than capitalists societies have feudal dues. So production and distribution cannot be neatly separated.

Maybe, what John was trying to say is that societies would try to remedy its “natural” workings by imposing its moral values. Fixing economy with morals. Indeed, the New Deal (hand of John Maynard Keynes), or Germany welfare are kind of Mill’s vision of a society. So the moral nerd really extended his thoughts.

As a great person which we remember (and not a military), Mill didn’t feel good by his surroundings, and thought about that. In his words:

“I am not charmed with an ideal of life held out by those who think that the normal state of human beings is that of struggling to get on; that the trampling, crushing, elbowing, and treading on each other’s heels, which form the existing type of social life, are the most desirable lot of human kind, or anything but the disagreeable symptoms of one of the phases of industrial progress”

So, based on his bad feelings regard surroundings, seeing it as a problem, he proposed a solution (a moral one):

“That the energies of mankind should be kept in employment by the struggle for riches as they were formerly by the struggle for war, until the better minds succeed in educating the others into better things, in undoubtedly better than they should rust and stagnate. While minds are coarse they require stimuli and let them have them”

Note, that as Adam Smith, John Stuart Mill saw capitalism as just a phase of human development, not a steady state nor a final solution.

If you are fast, and want to draw Mill as a communist, Mill tell you about communism (Not Karl Marx communism. Mill wasn’t aware of his existence then):

The question is wether would be any asylum left for individuality of character; wether public opinion would not be a tyrannical yoke; whether the absolute dependence of each on all, and the surveillance of each by all, would not grind all down into a tame uniformity of thoughts, feelings, and actions… No society in which eccentricity is a matter of reproach can be in a wholesome state.”

Rather than “equality of results”, Mill urged for “equal opportunity”. If some children inherit huge sums from their parents, they possess an unfair advantage over others. This with silver spoons may rely on their parent’s wealth rather than create more; an inefficiency.

Mill also wondered how society could give relief to the poor without dissuading them from getting jobs. He proposed recipients exchange labors for welfare payments (for the physically fit, handicapped should always receive aid from society). Ignored for decades, in 1988 federal governments in the U.S adopted “workfare” programs in which healthy welfare recipients must accept employment or job training. Mill feared that if welfare was too easily doled out, generations of poor people would be born into families weaned of a work’s ethic. He rejected socialist and romantic proposals for raising relief benefits or wages per se.

Where was Mill in a line ended by laissez-faire and government intervention?. In a good place around the middle. The goal of government supporters is to show that greater society happiness requieres intervention: “every departure from [laissez-faire], unless required by some great good, is a certain evil”.

Different from Malthus, a hopeful Mill thought that the working classes could be educated to understand their Malthusian peril, and that they would regulate their number voluntarily. With that pressure removed, Mill’s model took a different turn from Malthus and Ricardo: as before, the tendencies of the accumulation would bid up wages, but as now people is aware of the poverty of having too much children, they wouldn’t have too much. Profits would rise and the accumulation of capital would come to an end, reaching a steady state. Now, rather than seeing the study state as the end for capitalism and economic progress, Mill sees it as the first stage of a benign socialism (that what Smith said too), where mankind would turn its energies to serious matters as justice and liberty, and not economic growth per se.