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The Spirit of Capitalism: the Quakers and the First Industrial Revolution

Posted on May 29, 2012 by David

The Quaker unit of organization was the egalitarian meeting. No distinction was made between religious and business activities.

Quaker Meeting House

The ecological model in The New Ecology of Leadership shows enterprises as being conceived in passion and born in communities of trust and practice. My insights into this dynamic were first guided by my discovery of the Society of Friends, or the Quakers, as they are better known and the role that they played in the First Industrial Revolution. In Crisis & Renewal, where I first wrote about them, I felt that they exemplified Max Weber’s “Spirit of Capitalism”. I called them “hunters of the spirit”.

The First Industrial Revolution in 18^th Century England came after a century of political, religious and social turmoil. The Civil War of the 1640s had culminated in the execution of Charles I and the establishment of a parliament that was no longer prepared to be ignored by the monarchy. In the religious sphere a number of sects felt that the Church of England had retained too much of the tradition and hierarchy of the Catholic Church that it had replaced. They dissented against it, embracing the ancient doctrine of the Christian calling with its direct relationship between man and God. Add to this scene a severe agricultural depression and the social consequences can be imagined. The society was in ferment and the times were full of portents; itinerant preachers delivered their apocalyptic visions to receptive audiences.

The Quakers

Among these wandering preachers was George Fox, a charismatic leader and a fiery preacher, with a new vision for society. From 1650 onward, he traveled round the north of England, gathering followers who were attracted everywhere to his simple message and its radical implications. With Robert Barclay and William Penn, Fox would become the spiritual leader of the Society of Friends.

Unlike the Catholics, who depended on the authority of the Church and the Protestants, who depended on the authority of the text (Old Testament), the Quakers relied on what they called the authority of the spirit, unmediated by priest or text. They rejected authority of all kinds and declined to pay tithes to the Established Church. They refused to swear oaths, opting instead to tell the truth all the time! They shunned the Old Testament and most of New, except for Matthew’s Sermon on the Mount and the Book of John. In their view only John wrote of an eternal Christ available to all here-and-now but always in a group context. Famously the Quaker units of organization, their “meetings”, were assertively egalitarian. They were “managed” without priests and without agendas; members sat in silence until moved by the spirit to speak about their true concerns.

Hounded and persecuted by the authorities for several years, the early Quakers spent much of their time in prison, which became fertile recruiting grounds for followers. Unable to farm because of their disrupted lives, they were driven into trade and began to mix their itinerant preaching with business dealings. Gradually they built a religious and commercial network with the Quaker meetings as its nodes. Business was seen as part of their religious calling and their reputation for honesty and plain dealing in all that they did attracted the players in the emerging markets to them. Some say that the Quakers pioneered the concept of a market price by refusing to sell similar goods to different people at different prices! It was the same reputation for honesty that allowed them to pioneer the fledgling banking industry – both Barclays and Lloyds, leading British banks, have Quaker foundations.

In Crisis & Renewal I tell the story of Coalbrookdale in Shropshire, where, in 1709 the Darby family pioneered the commercial production of iron using coke as a fuel. Until then the fuel of choice had been charcoal but the Royal Navy declared wood to be a strategic resource and Abraham Darby I (there were four generations of them in total), who was familiar with the brewers’ use of coke to malt grain to make beer, seized upon it to smelt iron. For the next century-and-a-half Coalbrookdale was in the thick of the development of iron products of all kinds, starting with pots and skillets but soon scaling up to pumps and engines, bridges and railways, boats and buildings. The Quakers and their Nonconformist brethren, who at one stage comprised nearly 50% of the entrepreneurs in the country, repeated the astonishing success of the Coalbrookdale enterprise all over England in other industries such as banking, chemicals, china, food and steel. They were also social activists and innovators, transforming hospitals, schools, prisons and asylums.

The Quaker accomplishments peaked in the middle of the 19^th Century and then their influence dwindled, a change catalyzed in part by their phenomenal success and wealth, which compromised their ability to live their simple values. But their legacy lingered on and Adam Smith captured a good deal of their spirit of capitalism in his Theory of Moral Sentiments (1759). Smith’s “principle of sympathy” (today we would call it empathy) was central to what has been called the “sociology of virtue” in the English and Scottish Enlightenments. It is a telling comment on the state of capitalism today that Adam Smith is known almost exclusively for The Wealth of Nations (1776) and the sociology of virtue has been replaced by the ideology of markets.

Most people's knowledge of the Quakers is restricted to their encounters with cereal made by the Quaker Oats Company, a subsidiary of Pepsico.

A box of Quaker granola

If we seek to recover the original spirit of capitalism we can do no better than return to study the views of its founders. The word “capitalism” did not come into general usage until the mid-19^th Century; deeds come first, words later. The Quakers saw their way of living as a social system for creating human capital. It was a way of nurturing and releasing the potential in every human, regardless of their religious beliefs, and for inculcating the necessary virtuous habits and values along the way. Economic concepts like markets and, as we have seen, even the concept of a market price, sprang from fundamentally ethical considerations. Good intentions and right action practiced in communities of trust were the roots of capitalism. The original purpose was to change the way people live together for the betterment of society as a whole. In our obsession with means at the expense of our ends, we forget this calling at our peril.