This year's New Year Honours List went down rather badly in Bournville, a village-like suburb of Birmingham originally established by the Quaker Cadbury brothers for the staff at their cocoa factory. A knighthood had been awarded to the businessman Roger Carr. As chairman of Cadbury in 2010, Carr signed the fateful deal to sell the company to the US-based multinational food giant Kraft.

“Kraft go to Hell” read placards held by Cadbury workers when the deal was signed. Other workers showed what they thought of Kraft and its products by burning a giant Toblerone.

The future for Bournville workers remains uncertain, but Kraft have already made 400 redundancies at Cadbury's Bristol plant. They have moved Cadbury's headquarters to Switzerland, saving themselves millions of pounds in tax - or depriving the British public of millions, depending on which way round you're looking at it.

Quaker control of Cadbury's had ended long before the Kraft takeover. The Woodbrooke Quaker Study Centre – housed in George Cadbury's former home on the edge of Bournville – had not sold Cadbury's chocolate for years, confining itself to Fairtrade varieties. Yet many British Quakers still felt an emotional attachment to Cadbury's. The Quaker-owned businesses of the nineteenth century play a central role in the denomination's' collective memory.

The banking crisis and recession has sparked renewed interest in the Quaker business practices of the past. Deborah Cadbury, a non-Quaker relative of the famous chocolate-makers, has argued that “Quaker capitalism” was far more ethical than the shareholder capitalism of today. The contempt with which the banking industry is now held has led to a search for economic alternatives, whether radical or mild. The trade minister Stephen Green, former chairman of HSBC and a Church of England priest, speaks enthusiastically about “ethical capitalism”.

Ethical business?

Quakers, also known as the Religious Society of Friends, first appeared in the mid-seventeenth century, developing out of radical groups during the aftermath of the English civil war. The starting-point of Quakerism is the conviction that everyone can experience God directly in his/her own heart.

George Fox, effectively the movement's first leader, visited a range of religious teachers before giving up on them all. He described how, when all hope was gone, “I heard a voice that said, 'There is one, even Christ Jesus, that can speak to thy condition,' and when I heard it, my heart did leap for joy.”

Despite its radical origins, the Society of Friends became increasingly inward-looking, before beginning to open up again in the nineteenth century. The second half of the century saw the growth of huge companies doing national or multinational business and Quaker businesspeople were disproportionately present among them. Firms started by Quakers include familiar names such as Rowntree's chocolate, Clarke's shoes and Barclay's bank.

Quaker business success is often attributed to the “work ethic”. Joseph Storrs Fry, who once presided over the largest cocoa works in Europe, credited his company's success to “patience, prudence, honesty and hard work”. But this does not explain those businesspeople who worked hard but did not succeed. Even today, the majority of people in the UK die in the social class they were born into. True, there are rich people who work hard. There are also poor people who work hard and rich people who don't. In neither Fry's Britain nor our own can we find a correlation between wealth and work.

A second common explanation is that Quakers were barred from university and professions such as medicine, so set up businesses instead. But other non-Anglicans faced similar exclusions. Most people in Victorian Britain were excluded from university not because they weren't Anglican but because they weren't rich. Professions such as medicine and law were the preserve of an elite.

This point leads to more realistic explanations for Quaker success. Many Victorian Quakers were relatively affluent, although more so in some parts of Britain than others. At Westminster Friends' Meeting in the early twentieth century, it was said that those who listened very carefully during the silence of Quaker worship could hear the sound of stocks and shares rising and falling.

The strength of Quaker structures was another factor. Young Quakers would often be sent to Quaker employers to learn a trade. John Cadbury was apprenticed to a Quaker tea-dealer in Leeds before he set up his family's cocoa works, when he sent his son George as an apprentice to Rowntree's in York. This goes some way to explaining why certain trades involved so many Quakers.

This system provided a support network that offered some form of economic security. From today's perspective, it looks like a stitch-up involving religious discrimination. But Quakers faced considerable prejudice. With some employers rejecting them, it is no surprise they turned to those who shared their faith. Whether these practices should have continued when the discrimination was fading is open to debate.

Mixed blessings

Deborah Cadbury's new book Chocolate Wars (Harper Press, 2010) presents Quaker capitalism as a widespread movement with enlightened values in the world of business. But there seems little evidence of such a clear and unified entity as “Quaker capitalism”. Quaker businesspeople often shared similar values did not have identical opinions or policies. The historian James Walvin suggests that the paternalism of Quaker industrialists “stood in contrast to the tougher regimes elsewhere”. But he adds that most Quakers employers ran a “tight commercial operation” and “were rarely able to forge a sense of fraternity with their workforce” (see The Quakers: Money and Morals, John Murray, 1997).

Quaker businesses could also be ruthless. Joseph Rowntree was not above bribing workers at his rivals' factories to give away recipes. But the Rowntrees were exceptional in their relatively positive attitude to trades unions. Walvin suggests that many Quaker employers were particularly hostile to themiv. Quakers were among the owners of the Bryant and May match factory who triggered the famous matchworkers' strike of 1888, leading to the formation of Britain's first women's trade union. This incident is prominent in histories of trade unionism - but rarely mentioned by Quakers.

The paternalistic attitudes of the more generous Victorian Quakers seem rather mild compared to the early Quaker values of the 1650s. George Fox slammed the “merchants, great men and rich men” who wore gold and silver while others begged in the streets. Gerard Winstanley, a few years before becoming one of the first Quakers, argued for a world in which “there shall be no buying nor selling, no fairs nor markets, but the whole earth shall be a common treasury”.

As Quaker businesses grew, more radical ideas were developing around them. The 1860s, a decade in which increased demand for cocoa boosted a number of Quaker companies, also saw the publication of Karl Marx's Capital and the development of Christian Socialism. The Socialist Quaker Society was launched in 1898. The Society's Alfred Tuke Priestman argued in 1901 that, “If the commercial spirit is right, he [Jesus ] most certainly was wrong”.

A small minority of Quaker businesspeople did attempt fundamental change. Bournville is the most famous result. The Cadbury brothers, George and Richard, had long dreamt of building a “factory in a garden”. William Higgins, a manual worker at Cadbury's, said that “hope sprang up in the hearts of everyone” when they heard that the brothers had bought the necessary land in 1878. Over the next few years, Cadbury's moved their factory to Bournville, fitted with the latest machinery, heated changing rooms and recreation areas. Despite the expenditure, the company's sales more than quadrupled over the following decade. The scoffers who said the Cadbury brothers' ethics would drive them to bankruptcy had to swallow their words.

Over time, homes with gardens were added, along with a cricket pavilion and swimming pool. A doctor and dentist were provided free of charge. Inspired by Bournville, Joseph Rowntree built the village of New Earswick along similar lines. In 1919, the infant mortality rate at Bournville was only half that in Birmingham, while children aged six to twelve were found to be a staggering two to three inches taller than those in one of Birmingham's poorest areas.

A missed opportunity

These villages were paternalistic rather than egalitarian. But near the end of his life, Joseph Rowntree started to explore profit-sharing. By 1918, he was attacking the division “between the holders of capital on one side and the workers on the other”. But when he died, the next generation did not take this approach forward.

George Cadbury also became more radical towards the end of his life. He condemned extremes of wealth and poverty in “so-called Christian lands” and said he wanted a hundred working class people elected to Parliament to effect changexi. His niece Beatrice Cadbury denounced “the capitalist order”, took Jesus' words at face value and literally gave all her wealth away.

Other Cadburys generously put their wealth into charitable trusts, but they did not question the ownership of business. Like the second-generation Rowntrees, they failed to take their parents' radicalism to its logical conclusion.

Tensions between moderate and radical tendencies continue to exist in Britain Yearly Meeting (BYM), the formal organisation of British Quakers. In the midst of last year's oil spill off the coast of America, I write a piece for the independent Quaker magazine The Friend pointing out that BYM's largest shareholding was in BP. The flurry of letters to the magazine indicated a divergence between supporters of immediate divestment and calls for caution and financial prudence.

While Karl Marx made a number of mistakes, at least one of his major predictions has come true: small and medium-sized businesses have declined to the point at which transnational corporations dominate the globe. Some have at least as much power as governments and turnovers larger than the budgets of small countries.

Shareholder capitalism puts considerable power into the hands of people with little interest in the long-term future of a company or its workforce. Decisions are swung by those who own large percentages of shares. “There are thousands of shareholders in Cadbury who probably did not want to sell their shares to Kraft,” insisted George Cadbury's grandson Dominic, “Sixty fund managers made the decision”.

There are people who buy shares because they want to support a particular company. Others find a lucrative source of unearned income in speculative share-trading. When the business jargon is stripped away, this is only a form of gambling. It is difficult to see how it is ethically different to putting the money on a horse.

The role of faith in twenty-first century capitalism should not be overlooked. The financial services industry is able to sell its “products” only because buyers believe they can make money out of them. Politicians avoid “upsetting the markets”, as if markets were supernatural entities that must be appeased. The financial system relies on our faith that a series of numbers on computers carry a higher meaning beyond themselves. Money, which began as a useful tool which people controlled, has morphed into a monster that controls people. More than at any time in history, we have made an idol out of money by attributing divine status to an entity which at a fundamental level is not even real.

It is small wonder that some look back with enthusiasm to Quaker capitalism. The danger is that this is a nostalgic longing for a world that only partially existed. Deborah Cadbury's fascinating book finishes by advocating reform and regulation, suggesting for example that longer-term shareholders should have greater voting rights than others.

If George Cadbury were to rise from his grave and walk around the Kraft-owned works that bear his family's name, I cannot imagine him suggesting that our problems could be solved by some light regulation and an appeal to the wealthy to show restraint. He would be furious. He would be desperate to revive the radical ideas to which he and Joseph Rowntree were turning in their later years. We will honour their legacy not with a romantic vision of an ill-defined ethical capitalism, but by taking their approach to its logical conclusion. We must reject capitalism itself.

Finding alternatives

The fate of Cadbury's and Rowntree's stands as a warning to the dangers of private ownership. George Cadbury transferred the housing he owned to the Bournville Village Trust. A similar decision was made by Joseph Rowntree. But the generation that followed was content with an increasingly weak paternalism. When Paul Cadbury floated the company on the stock market in 1962, he triggered a downward spiral that led to hedge funds owning nearly a third of Cadbury's and selling it to Kraft. Rowntree's had already been sold to Nestle in 1988.

However altruistic an owner, a privately owned business is likely at some point to pass into the hands of someone who does not share this altruism This is all the more so when hedge funds can become owners of a company about to be sold. Hedge funds “have no sense of obligation and no sense of responsibility for the company whatsoever,” said a frustrated Dominic Cadbury after the Kraft takeover. It was over a hundred years since his grandfather declared that “speculators, trust mongers and owners of enormous wealth are the great curse of this world and the cause of most of its poverty”.

Mainstream politicians refuse to challenge the logic of capitalism. This is despite an economic crisis coming on top of repeated ecological disasters. The writer and activist Derek Wall points out that capitalist economics depends on ever-expanding production and consumption, which is unsustainable. “If we consume and produce less, the economic system we currently have moves into crisis,” says Wall, “Which is the essential reason why we have ecological crisis”.

Wall backs a zero-growth economy, an idea that is attracting increasing support in the more innovative parts of the political left and the green movement. In 2009, a series of events exploring zero-growth economics was organised by Quaker Peace & Social Witness and the Woodbrooke Quaker Study Centre.

The idea is also associated with ecosocialism. This concept has been popular in Latin America and has influenced politicians such as Bolivian president Evo Morales. Ecosocialists seek forms of socialism built from the grassroots that are far more sustainable and democratic than the monolithic industrialism of the Soviet Union.

In the 1990s, it was popular to say that socialism was dead. When the Conservatives unexpectedly won the UK general election in 1992, a headline in the Sunday Times declared “Socialism RIP”. But those who danced on socialism's grave are now realising that the tomb was empty. The last decade has seen socialist electoral success across Latin America, as well as a diverse anti-capitalist movement as global as the system it seeks to resist.

We face two dangers in confronting such a powerful system as global capitalism. The first is that we give up and put up with its injustices. The other is that just sit back and wait for the revolution, with the same sort of smugness as the type of premilleniallists who assure us that we need not worry about the world because the second coming will be happening any day now.

In looking for a way forward, we can take inspiration from the more radical Victorian Quakers. They had faith and courage to attempt things which seemed either laughable or shocking. The Cadbury brothers' ambition of building a garden factory must have sounded as wildly optimistic to their workers as it did to the competitors who mocked them.

Scoffing has greeted nearly all attempts at economic alternatives The launch of the Fairtrade mark in 1994 was no exception. Fairtrade was initially available only in fairly obscure places such as church stalls, before campaigns by Christian Aid and others pushed it into supermarkets. Cadbury's came in on the act somewhat belatedly in 2009. By making Dairy Milk bars Fairtrade, they triggered considerable improvements for thousands of workers in Ghana.

Alternatives to the norm work best when they are not merely opt-outs from the system but signposts to a different way of living. George Cadbury saw Bournville as a demonstration that land is used best when it is in “the hands of the people themselves”. Fairtrade is more than just a tweak to the system. It is a challenge to the assumption that consumers are unconcerned about ethics. As such, it points away from greed towards different ways of doing economics.

Similarly, co-operatively owned companies must engage with the capitalist practices around them, but they challenge the very system in which they participate. Co-operatives are “about changing people's ideas of what is possible, thereby making broader change more likely,” says Richard Bickle, secretary of the UK Society for Co-operative Studies.

The same can be said of housing co-operatives and credit unions as well as newer ideas made possible by the internet. These include freecyle, by which people collect items for free form those who no longer need them, while giving away different items to others. For Bickle, co-operative initiatives involve “building a more just and equitable society here and now, rather than waiting for some unspecified point in the future”.

An adventurous belief in alternatives should be a central feature of Christians' approach to the world. Sadly, this is often not the case. Following Jesus implies an acceptance that his teachings are realistic. This is a staggering claim for ethics based on compassion, forgiveness, love of enemies and radical inclusivity. Jesus never said that these ethics should not apply to government, industry or economics. Cadbury and Rowntree remind us that Christians can model alternatives to the dominant values around us and point the way to a better world.

---------

(c) Symon Hill is associate director of Ekklesia and author of The No-Nonsense Guide to Religion (which can be ordered at http://www.newint.org/books/no-nonsense-guides/religion).

This article appeared originally, with some slight variations, in the March 2011 issue of Third Way, under the title 'Chewy with an ethical centre'. See http://www.thirdwaymagazine.co.uk.