Changing the world one step at a time by example: Building on the New Lanark Legacy

Abstract

A robust alternative “model” is presented that demonstrates how Owen’s vision of the New Lanark utopia was transformed into reality. New Lanark housed a profitable cotton mill owned by investor-owners led by Robert Owen. It was profitable whilst Owen treated employees and families with dignity in the context of his times in nineteenth century Scotland. Owen adhered to an ethical imperative that he understood would pay for itself through increasing labour productivity. I articulate the conditions under which utopia can be operationalised in the real world with privately owned business. This modelling contravenes the contemporary economic worldview where “utopia” is an impossibility since it invariably increases average cost. Employee co-operatives can have the same effect, but they remain few and far between. New Lanark exemplifies that dominant investor-owned firms can be both ethical and profitable. This can be achieved if investors who have a strong preference for being ethical understand that being ethical can be profitable. Hence, the importance of investors and potential co-operators understanding that being ethical, which is costly, is consistent with a competitive and profitable firm. Without this understanding building an ethical firm is an unrealisable utopia.