Socialist Entrepreneurs: The Founding Fathers of European Socialism Are Testimony That the Principles of Good Management Are Universal, No Matter What the Ideology

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That socialism and business do not mix is considered received wisdom in modern neoliberal economics. The issue is often portrayed in simple, black-and-white terms: socialism, with its emphasis on central planning and redistribution of wealth, is incompatible with entrepreneurial culture and free markets. In the modern literature on entrepreneurship and leadership, too, it is almost axiomatic that business leaders will be supporters of liberal capitalism and opposed to socialism.

How true is this? In fact, some of Europe's most famous business leaders have espoused socialism, and some of its greatest companies have roots in organisations which were founded on socialist principles. Two of the 'founding fathers' of European socialism, Robert Owen and Friedrich Engels, were also successful businessmen, while in Spain the Mondragon Cooperatives Corporation has risen to be one of Spain's largest companies while still retaining its original co-operative structure. It can be argued that these figures and companies are exceptional, and doubtless they are: but their existence, and their successes, shows that the relationship between socialism and business may not be quite so black and white as has been assumed.

The enlightened manager: Robert Owen

Robert Owen remains one of the great enigmatic figures of European business history. On the one hand he was a talented business leader who understood instinctively the principles of management; on the other, he was a humanitarian and socialist of high ideals, who supported co-operative ownership and encouraged trade unions. An entrepreneur first and a socialist only later in life, Owen's socialism was derived directly from his personal experiences as manager and business owner.

Born in Wales in 1771, the youngest of seven children of a saddle-maker, Owen was largely self-educated. He later said that two works that influenced him most were Defoe's novel Robinson Crusoe, which taught him self-reliance, and the Methodist tracts handed out by local ladies, which he said turned him into an atheist while still a child. At age ten he left home and moved to London to work with an older brother, and at fifteen went north to Manchester, then in the throes of the great economic boom we now know as the Industrial Revolution.

In Manchester, Owen quickly spotted where the opportunities lay. By the time he was seventeen he had established a business making and selling spinning mules, a new piece of technology which was in high demand in the factories of the day. His partner, a mechanic, designed the machines; Owen sold them, handled the finances and managed the firm's forty workmen. A year later he sold his share of the venture and bought three spinning mules, with which he set up a small workshop and began spinning and selling high-quality yarn to local weaving mills.

He was making comfortable profits but looking for a new challenge when a local mill-owner, Peter Drinkwater, advertised for a mill manager. Owen applied for the post, which involved managing a modern factory employing over five hundred people. When asked what salary he expected, he asked for [pounds sterling]300 per year. Drinkwater pointed out that this was double what any other candidate had asked, and Owen replied that he was already earning this much in his own business and would not be interested in working for less. When he showed Drinkwater his books and his workshop, the latter was so impressed that he offered Owen the job. Owen was then nineteen years old.

His appointment had been greeted with disbelief by the Manchester mill-owning community, who declared that Drinkwater had lost his senses. But Owen, although still short on technical experience, was emerging as a born manager of people. He introduced new working methods and within two years had improved quality and nearly trebled productivity. Drinkwater rewarded him with a partnership and a free hand in managing the business. …