Summary and Analysis Chapter 5



"Gloomy" describes not only the future described by Malthus and Ricardo, but also the actual world of England in the 1820s. On the Continent, the nation had triumphed in the long struggle against Napoleon, but at home it wallowed in social evils brought on by the factory system. By current standards, working conditions were terrible. Children of ten years and younger labored in such industrial centers as Manchester and Birmingham in poorly ventilated buildings that lacked basic sanitary and safety measures. It was not unusual for children to be whipped — not only for a slight mistake, but to stimulate efficiency.

Food, shelter, and treatment for workers presented additional problems. In some places, children were tortured and sexually abused and had to scramble with the pigs for food. A sixteen-hour working day was common — from six in the morning to ten at night. Many children spent their few hours of sleep on factory cots to save the long trudge home.

Machinery saved labor, but wreaked havoc on workers. New machines were not covered or fenced off, and mangling accidents were common. With no workmen's compensation or health insurance, an injured employee was likely to be thrown into the streets. Mobs known as "Luddites" rallied to wreck and burn mills as a means of expressing their hatred of factories. The populace, alarmed by these disturbances, feared an insurrection of the poor against the rich.

In the midst of this miasma appeared an unusual capitalist — Robert Owen.

Robert Owen (1771-1858)


The early life of Robert Owen resembles a Horatio Alger story. Born into a poor Welsh family, Owen's schooling ended at age nine when he was apprenticed to a linen merchant. Nine years later, he moved to Manchester, borrowed $100, and began manufacturing machinery for the textile industry. Bold for a small capitalist, he became factory manager of a large spinning mill, even though he knew nothing about the trade. By age twenty, Owen advanced to part owner, becoming the boy wonder of the textile industry. A few years later, with borrowed funds, he bought a group of textile mills at New Lanark, Scotland, married the former owner's daughter, and made a fortune.

Within five years, Robert Owen revolutionized mill operation by eliminating the typical evils of the British factory system and transforming New Lanark into a model workers' community, which was visited by writers, reformers, and skeptics — even the Tsar of Russia. By raising wages, reducing hours of work, improving factory sanitation, rebuilding workers' homes, and providing schools for employees' children, he reversed the standard concept of labor relations. Having improved conditions through benevolence, Owen gained productivity and efficiency. With New Lanark as a laboratory to test his hypothesis, he proved that a capitalist's concern for workers is profitable.

What was his philosophy? Owen believed that humanity is no better than its environment. Since people are shaped by environment, improvement of that environment can produce a paradise on earth. Owen shocked business and government leaders by stating that the development of machine production, if organized entirely for profit, would inevitably lead to poverty and degradation for workers. His solution was cooperation. Envisioning Villages of Cooperation — planned communities where 800-1200 persons worked together and lived in private apartments — Owen insisted that kitchens, reading rooms, and sitting rooms be used in common. Young children would be boarded; older children would tend the gardens. The community would carry on a variety of occupations insuring self-sufficiency. At a distance from the commune would be the factory unit.

Naturally, with the concept of laissez faire in full vogue, few persons gave serious consideration to Owen's scheme. In spite of David Ricardo's willingness to test the plan, the idea lacked funds and support. Undaunted, Owen sold the New Lanark mill to finance New Harmony, a cooperative based in Posey County, Indiana, on July 4, 1826. Because he chose poor associates, Owen's scheme lacked sufficient practical planning. One associate defrauded him and set up a whiskey distillery, rival communities sprang up, and the end result was complete failure. Owen lost 80 percent of his fortune. Finally, he sold the land and tried in vain to interest President Jackson and Santa Anna of Mexico in another venture.

Returning to England, Owen continued to stick to his views — notably that money and private property are trustworthy. His philosophy made a deep impression on workers; evolving from his teachings, a series of producers' and consumers' cooperatives developed throughout England, some based on a moneyless system. What survived was the consumer cooperative movement, begun by twenty-eight backers who called themselves Rochdale Pioneers.

Owen, who launched a moral crusade for the working class, inspired the Pioneers but was not directly involved with them. Instead, joining with the leaders of the movement, he formed a Grand National Moral Union in 1833 with a membership of 500,000 workers. This forerunner of modern industrial trade unions called for broad social change, particularly better wages and working conditions, the setting up of cooperatives, and the abolition of money.

For two years, Owen traveled the countryside advocating unionism, but he met failure because he encountered too many obstacles. Not only did government disrupt the movement with anti-union legislation, but local unions failed to control their members, and strikes weakened the movement. Even worse, Owen and his lieutenants quarreled and ended their association.

At the age of sixty-four, Robert Owen, the successful capitalist who disavowed capitalism, realized that his utopian projects had ended in failure. But he did not give up. Instead, he publicized his ideas in tracts and wrote his Autobiography. At the age of eighty-seven, he died, still optimistic. The most romantic of the Utopians, he influenced capitalism by proving that industry could sponsor humanitarian projects and still make profits.


Robert Owen, known as the founder of British socialism, first used the words socialist and communist. However, he created a concept of socialism that is quite different from Karl Marx's concept of class warfare. Owen's philosophy passed down to the Fabian Society of Great Britain, whose leaders included George Bernard Shaw, Sidney and Beatrice Webb, and H. G. Wells, and finally down to Britain's Labour Party, a moderate socialist party. The legacy of Robert Owen includes British socialism, the passage of legislation to correct deplorable working conditions, modern trade unions, and consumer cooperatives.

Saint-Simon (1760-1825)


Count Henri de Rouvroy de Saint-Simon, a French aristocrat, possessed the spirit of democracy and translated his convictions into action by fighting in the American Revolution. Renowned for his pigheadedness, he determined to become a philosopher and launched a survey of human knowledge which, along with an unsuccessful marriage, dissipated his finances and led to a bungled suicide attempt. His search resulted in Saint-Simon's belief in the brotherhood of man, which evolved into an industrial religion.

This half-mad utopian stressed the necessity of work, which led to his conclusion that workers deserve society's greatest rewards, and idlers deserve the least. Reality proved that the opposite situation was true: non-working aristocrats received the greatest share of wealth and did the least work. Saint-Simon proposed to reorganize society along the lines of a factory, with the function of government being economic rather than political. With the aid of scientists, technicians, and capitalists, government should arrange for rewards to be allotted in proportion to each person's social contribution. Rewards should go to active members and not to lazy onlookers. But Saint-Simon offered only theory without working out practical details. After his death, his ideas degenerated into a mystical, hazy religion, with churches in France, England, and Germany.


Saint-Simon, while quite impractical, is called the founder of French socialism. Defining a nation as "nothing but a great industrial society," and politics as "the science of production," he took as his motto: "Everything by industry; everything for industry."

Charles Fourier (1772-1837)


If Saint-Simon was half-mad, then his fellow countryman, Charles Fourier, was altogether crazy. He believed that the earth was geared to life cycles lasting 80,000 years — 40,000 years of "ascending vibrations" and an equal number of "descending vibrations." The advancement of humanity consisted of eight stages. Four stages — Confusion, Savagery, Patriarchism, and Barbarousness — have already passed.

Humanity now looks forward to Guaranteeism and eventually Harmony, the final stage when the sea will become lemonade, peaceable species of animals will evolve, and people will live to 144 years, of which 120 years will be spent in unrestricted sexual delight. Then the seesaw will tip and humanity will work its way backward to Confusion before beginning another life cycle. These eight stages would repeat themselves endlessly.

In spite of his optimistic vision of the future, Fourier saw the practical world as utterly disorganized. As a solution, he proposed to reorganize society into phalanxes, or organized communes, of 1800 persons living under one roof, as in an ultra-modern hotel. Each person would have privacy, and the style of life would vary with one's ability to pay. Since everyone would have to work, there would be farmers, mechanics, and craftworkers. Children would perform dirty work and tend flowers. Residents would labor a few hours each day at whatever job appealed to them. A spirit of competition would exist.

Fourier believed that the phalanx concept would produce profits as high as 30 percent of the investment. Every member would share profits, which would be divided on the basis of 5/12 to labor, 4/12 to capital, and 3/12 to ability or talent. Everyone would be encouraged to become a part owner.

Surprisingly, the idea spread. In the U.S. alone, there were over forty phalanxes, including Brook Farm, Oneida, New Icaria, and Trumbull. However, while some lasted for several years, none proved permanent.


The one factor which utopian socialists shared was idealism: They dreamed of the betterment of humanity. Some of these dreams, particularly Fourier's, were ridiculous, but it takes dreams to stimulate people to progress. Of these utopian dreamers, all dared to be different and to present dreams to scoffers, but Robert Owen's contributions were the most practical and the most lasting. These thinkers were both utopians and socialists — economic reformers who attempted to create an ideal world by changing society. To understand their role, an explanation of several terms is in order:

Utopia: An impractical social, intellectual, or political scheme. "Utopia" also refers to those ideal states which fail because they lack ideal human beings. Utopias are based on what the author thinks ought to be rather than what actually exists. Famous examples include Plato's Republic, Sir Thomas More's Utopia (from which the name comes), Sir Francis Bacon's New Atlantis, and Campanella's City of the Sun.

Socialism: State ownership of the basic means of production. The fundamental objective of socialism is to prevent capitalists and landlords from exploiting workers. Socialists believe that wealth should be distributed equally and that distribution under capitalism is unfair. Their solution is the nationalization of land, forests, minerals, factories, transportation, trade, and banking — with profits distributed by the state to the people rather than to capitalists and landlords.

Under socialism, rent, interest, and a leisure class would not exist. All would work according to ability.

Private property in the form of clothing, household goods, money, shelter, and land would be allowed the individual, but all else would be owned collectively. This is, of course, the modern concept of socialism, which has evolved from the concept of common ownership.

The whole idea of socialism dates to early utopian schemes. As already noted, the term originated with Robert Owen. But, as contrasted with communism, the socialists believe in attaining goals by an evolutionary process through democratic means.

Communism: Redistribution of wealth through revolution and class warfare. Basically, this belief differs from socialism in its method of attaining the same goal.

Utopian Socialists: Reformers who were inspired largely by the ideas of the Age of Enlightenment and the French Revolution, particularly the belief in progress and the perfectibility of humanity. They did not preach class hatred but appealed to the intellectual and capitalistic classes to reform society voluntarily.

Ironically, the term is taken from Karl Marx, who used it scornfully, saying that these reformers were nothing more than impractical idealists. Thus they were named utopian socialists rather than his brand of practical revolutionary socialists. From the utopian socialists came the concept of the welfare state, held by modern socialists of Great Britain and Scandinavia, as well as others.

The last economist to be taken up in this chapter — John Stuart Mill — was not actually a utopian socialist but rather the champion of democratic liberalism, which was a broad-minded view of the principles of laissez faire. However, Mill gradually approached the socialist point of view and, in doing so, he added respectablity to the ideas of the utopian socialists.

John Stuart Mill (1806-73)


The son of James Mill, a famous economist, philosopher, and champion of laissez faire, John Stuart Mill, a child prodigy, learned Greek at the age of three and studied Latin at eight. By the age of twelve, he had read Greek and Roman classics in the original as well as English philosophy and history. He absorbed geometry, algebra, and differential calculus, and wrote books on history. By the age of thirteen, he mastered logic and read major works on economics.

Mill did not write his philosophy of economics, however, until thirty years later. In the meantime, he fell in love with Harriet Taylor, who educated him on the subject of women's rights. Because she was married, their romance remained platonic for twenty years, even though they lived and traveled together. They married after Mrs. Taylor's husband died.

With the publication of his two-volume economic masterpiece, Principles of Political Economy (1848), Mill gained recognition as the greatest economist of his age. The significance of this work is that it dealt a severe blow to the concept of laissez faire. In surveying the field of economics, Mill discovered that laws laid down by classical economists applied to production but not to the distribution of wealth. He argued that, because distribution depended on society's customs and laws, there was no right way to distribute wealth. This profound discovery meant that society could distribute its wealth on the basis of ethics and morality instead of cold, impersonal laws.

In contrast to the despair of Malthus and Ricardo, Mill envisioned hope. He believed that through education, workers would realize the impact of the Malthusian doctrine and would voluntarily regulate population. He maintained that workers should form cooperatives and unions to seek higher wages.

Opposed to government regulation and recognizing communism's threat to individualism, he believed legislation was necessary to protect women and children who worked in factories.

Consequently, by favoring government intervention to remedy injustice, Mill modifed the doctrine of laissez faire. He called for taxes on inheritance and rent. The success of his book led to Mill's publication of a cheap, one-volume edition, priced to reach the working class.


John Stuart Mill, founder of utilitarianism, is known for contributing to political science and ethics. His essay "On Liberty," a manifesto against despotism, is perhaps the finest piece written on individualism. A peaceful and reasonable man, Mill treasured his wife and the pursuit of knowledge. He later called himself a socialist, although his philosophy placed him somewhere between capitalism and socialism. He was one of the first spokespersons favoring equal rights and education for women, the subject of his "Enfranchisement of Women" and The Subjection of Women (1869).


Founder of British Socialism Robert Owen.

Founder of French Socialism Saint-Simon.

Utopia A name which classifies any social, intellectual, or political scheme which is impractical at the time when it is conceived. Also, a reference to ideal states peopled by perfect human beings.

Socialism State ownership of the means of production, which is obtained through peaceful evolution without loss of personal liberty; the nationalization of all land and minerals, public transportation, trade, and banking, as well as factories — with the profits going to the people as a whole rather than to capitalists or landlords.

Utopian Socialists Reformers inspired by the Age of Enlightenment and the French Revolution who believed in progress and human perfectibility. Because these theorists wished to reform society by voluntary means, they earned the scorn of Karl Marx, who dismissed them as visionary idealists and labeled them "utopian socialists."