Challenging injustice: social enterprise in the 1800s podcast

Transcript

Challenging injustice: social enterprise in the 1800s

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Francesca Lombardo: Hello, I'm Francesca Lombardo, Marketing Executive at Emerald publishing and co-host of the Emerald Publishing Podcast Series. In this episode, I'm joined by two of the authors of the article ‘Social enterprise in antebellum America the case of Nashoba’, Patrick Murphy and Jack smothers. We will talk about antebellum America and how the case of Nashoba intended to address the issue of slavery for entrepreneurial operations in the US in 1820s, in the years that lead to civil war. How does the example of Nashoba reflect on social enterprises today? Keep listening to find out.

Patrick Murphy: I'm Patrick Murphy, I’m the Goodrich endowed chair and Head of Entrepreneurship in the Collat School of Business at the University of Alabama at Birmingham, USA.

Jack Smothers: My name is Dr. Jack Smothers, I’m the MBA program director, Interim Assistant Dean and Associate Professor of Management at the University of Southern Indiana, in Evansville, Indiana. Thank you for having us today.

FL: Should we jump straight in? You want to tell me about how this idea for this article came to be? What was your reasoning? What did you think of that specific time period? Do you want to start Patrick?

PM: Yeah, and Jack will probably have to refresh my memory a little bit about this. But this was several years ago, and a group of us who are interested in history and also entrepreneurship, were talking about a range of different projects. And I think Frances Wright was actually a historical figure that was of interest to Jack and some of the other colleagues and I think I learned about her from from him. But I'm an entrepreneurship scholar, and I'm very interested in social enterprise. And so as I learned more about her in the venture, for me, I became very inspired to research what she was doing and learn about her entrepreneurial venture. And then Ipoured a lot of social enterprise research and theory and conceptual frameworks into this paper in order to describe what was going on. But I think actually, the historical interest and the focus on her came from some of the other co authors.

JS: Yeah, I was actually I got married in New Harmony, Indiana, to my wife, Mariah, and that was Frances Wright’s second social enterprise venture. So when we were researching the documents related to, to that venture in New Harmony, we discovered that she actually had done it before in Nashoba. And so that's why the genesis of this article was focused on Nashoba because that was the first venture that she made into the social enterprise in America.

FL: Wow, that is very fascinating. So how did you come to learn about her? Specifically, how did you come to know about Frances Wright?;

JS: So the history of New Harmony is very interesting. It was established as a utopian society, by the Owenites and the Rappites, and they had, it's very a wonderful place to visit. It's actually near Evansville, where I work now at the University of Southern Indiana. And in the historical research that we were examining about that utopian society, we came across Frances Wright in the letters and and documentation that were part of the historical archives there in the New Harmony library. And we discovered that she bought it from the, from the former owners the Owenites and the Rappites. 

FL: Okay, so just for the sake of, you know, bringing context into this conversation, how would you define a social enterprise, what is its main purpose?

PM: Social Enterprise is a very unique form of entrepreneurial venture. It's different from what we in the States call nonprofit organizations, and what are known, I think, more commonly as NGOs around the world. These types of organizations, nonprofits, and NGOs often cover their expenses through grants and support, and other types of revenue streams that are not directly tied to their core operations. So they're not fee based. They're not transactionally base--based on how the enterprise actually operates when it serves the community or the constituents that it that it engages it however, they're also different from ‘for profit’ ventures in a couple of different ways. So the, the problems that they solve fundamentally are not in necessarily market problems there in the more general environment, whether that's sociocultural or justice-related or demographic-related. They're there in civilized society as we know it, problems in that realm of the environment. And the idea is that they take an entrepreneurial approach to engaging and resolving those problems. Now, they still have to be amenable to market forces. But they go beyond what traditional entrepreneurial ventures are able to do. For example, they can operate in realms defined by a market failure. For instance, they can deal in non excludable public goods, they can work in monopolies situations, they can work in institutional environments and still function like an entrepreneurial venture. But they are yet amenable to market forces. So if you think about what nonprofits and NGOs do, and then you think about what for profit entrepreneurial ventures do, social enterprises borrow from both realms, and synthesize them into a third way. And it's very interesting. I, a lot of people think of them in terms of being a very progressive or new type of entrepreneurship. But as we're talking about here, what Frances Wright was doing with Nashoba had a lot of social enterprise aspects. And that was back in the 1830s. So I think is really interesting project for that reason.

FL: Yeah. I was wondering while you were talking, was Nashoba the first of its kind, was it how social enterprises started? Or did you choose it for other reasons concerning the very particular political period?

PM: I don't know that it was the first. But I would say probably no, I view social enterprise as a kind of entrepreneurial activity that emerges organically out of communities, rather than markets, we think in terms of communities in the social enterprise space. And back, then you had these communities around, especially the southern part of the United States. And this is, again, about 30 years before the Civil War. And there were a lot of these communities that were against the institution of slavery. So like I said earlier, social enterprises can operate in institutionally laden environments. And that's what we're talking about here. And so I think it emerged rather organically and very naturally incorporated and reflected some of the social enterprise tenants that I was talking about earlier. I think a lot of traditional entrepreneurship was influenced heavily by the Industrial Revolution, and then the Industrial Organizational paradigm. And this was back, you know, that that was a little bit less dominant over how we think of large companies and large organizations today, certainly, we still, we still had industrialization at that time. But when you look across a large country, like the United States, for instance, that, you know, it wasn't as developed back then as it is now, you had a lot of these communities that had a lot of social enterprise operations within them. So I can't say it was the first but it was certainly a very early example of what we call social enterprise.

FL: Jack I was wondering if you will like to tell us more how the case of Nashoba reflects on social enterprises today? And also, what was Nashoba about because we are talking about it, but we haven't mentioned it yet? That would probably be important. So Nashoba was established as a social enterprise to free slaves, people who were in forced labor at that point in time. And so Frances Wright’s model was influenced by the enlightenment and several, as Patrick has mentioned, several movements that a lot of which came from religious organizations that would be categorized more in the operational model of a philanthropy and, but they operated more of that they had the economic side in which they were actually producing a good or service and in the case of Nashoba, it was cotton. They were located in Tennessee, and the land that was purchased they thought they had hoped would be fertile ground for cotton development. And so they The plan was to purchase slaves and employ them within the operation of the of the cotton farm and let them buy back their freedom so that they were fighting against this institutional practice. And so what was interesting is you had a confluence of different factors, but Frances was really going up against a practice that was used to for profit for by local farmers by organizations for economic gain. And she had a different goal in mind, she was using economic means to accomplish the social good, rather than purely for the ends of a of an economic gain. So that's very, very interesting case

FL: The article struck me how revolutionary Nashoba was. Because it came at a time where, you know, the US was really divided. And, indeed, with the Civil War after that, in the years after that, do you think this was also part of your reasoning? You came to know about this Scottish woman who emigrated to the US and you thought ‘this is an extraordinary woman!’ and that the ideas that she had, that she put down, were incredible. But something went wrong when it came to the profitability, I think yeah, when I was reading the article, you mentioned that, after a certain point, it wasn't breaking even anymore. And that's where the social enterprise Nashoba came to an end.

PM: This is the challenge that faces any entrepreneurial venture, and we talk about it in terms of what gets you there won't keep you there. Francis Wright was probably the the best person to lead this venture, she, she had a really good sense of enlightenment philosophy. And she was from another culture, she was an immigrant, Scottish immigrant. And even today, we still see the effect in pretty much any country, immigrant populations tend to be more entrepreneurial, and it has a lot to do with, you know, they don't have the same types of baggage, they, they, they're able to focus on things. And they, they they're displaced in certain ways that forced them to, to build and create a new reality for themselves. So she, she had that going for her. And she certainly organized at the early nascent stages of this venture in an incredibly powerful way, which includes education, there were a lot of talks, for example, she would give in lectures to educate individuals and the community and the communities around where they were operating to make them aware that not only was the institution of slavery, evil and worth challenging, but she had a way of challenging it and doing something about it. And I mentioned communities earlier, and I just mentioned them there, it's really important to understand that social enterprise runs on communities and communities are defined by the the shared values of the members of those communities or the shared lived experiences. So she's dealing with one community, which is enslaved individuals. And then she's dealing with other communities, which are individuals that share the value in the south, that the institution of slavery is evil, they the the institution itself clashed with their value system, and that was the early stimulus, the catalyst to move forward and take positive entrepreneurial action to do something about it. And so if you think about the type of individual that performs well, in that early stage where you have to inspire and you have to assemble, and then you have to take risks and make bold claims publicly, that's a very particular type of leadership style, that may not be the best leadership style 5, 6, 7 or eight years down the road after you have some traction and you're growing, there comes a time when one needs to reorganize the team or perhaps take more advisory role in handed over to people who are better at running the routine day to day operations of a business in order to ensure that it remains profitable and self sustainable and that it's still making an impact.

FL: Yeah, so it's really about the community when it comes to social enterprises.

PM: Oh, it's everything. It's it's a huge part of it. In fact, we, we speak about communities more so than markets, and we talk about constituents, the ones are in constituencies, rather than customers. And then we use the logic of how a community operates and how its defined in order to talk about how the social enterprises perform and make an impact.

FL: Earlier you said that Nashoba came to be through moral conviction and the social disruption and enterprise design. Can you describe this operational model?

PM: moral conviction is related to those shared values that I talked about earlier. And when you have a moral drive to do something, it goes beyond the rational aspects of the world that you're thinking about with your mind, it gets down into your soul or your heart or your value system. And it's a deeper, more deeply seated form of motivation. And then when it comes to social disruption, we're talking about the need for change. If you have a status quo, or a social system that has inefficiencies or problems within it, that need to be addressed, you have to be disruptive as you address them, you have to disrupt the status quo as you take action to do something about resolving those problems. And so social disruption becomes almost a core to the definition of what social enterprise or really entrepreneurial action in general is. And then enterprise design is relevant here, because social enterprises are truly like we talked about earlier a third way. They're not like traditional nonprofits, or NGOs, but they're also not exactly like traditional for profits. Therefore, you see, really interesting enterprise designs and social enterprises. And here in this one, you had enslaved individuals, and there was a transaction involving the purchasing of the freedom. But then as they join the community and conduct work, the products of that work that they do, those generate revenue, because they're sold to the larger community. And here, we're talking about cotton and cotton based projects. However, that's not all. It's even, it's more complicated than that. So another transaction that occurred here in this Nashoba social enterprise was education. So there, there are transactions around that, and the building of families, the intended building of families, and then also the exit the exit of constituents from the social enterprise to go out and exit Nashoba and then build lives and careers of their own. So the the exit is another one, you have individuals getting to the point where they leave, and here we have another transaction, where they may take on a new career or move to another place or start a business. So you have many transactions in this overall operational model that makes for a really unique enterprise design.

FL: When it comes to these social enterprise and being born in that particular period of time. It was successful in so many ways, but also, what were the difficulties that the challenges the Nashoba faced?

JS: The difficulties that Frances Wright and the Nashoba initiative faced were? Well, there were multiple forces that fought against and I think it's important to take into account that social enterprises often emerge in difficult situations, because there is a gap or an inefficiency in the market, typically around a social good or social need, that that creates the opportunity for that social enterprise to exist, that social good or that social need may be in conflict, in some instances, with the with the for profit, you know, the the enterprise design of that market. So, you know, as Frances Wright was seeking to employ slaves and allow them to buy back their freedom, you know, the surrounding areas in which she operated, profited greatly from the institution of slavery. So I think that that was one challenge. Another challenge that she faced, of course, was as the price of cotton decreased, that was something that she did not predict. Typically, entrepreneurs are not always the best managers, as Patrick has alluded to, they, their skill sets align more with opportunity, identification and mobilization of resources. And, you know, when it comes to the actual execution of the operation, then that might be a different person that very rarely, is a great entrepreneur, also a very great manager, typically they hire very effective managers to do that. I think in the case of Frances Wright, her personal identity became intertwined with the institution itself, of Nashoba, to such an extent that when kind of the writing was on the wall when the the failure was somewhat obvious to someone from the outside because she'd lost the confidence of her constituents, you know, the, the political side, as well as some of the internal constituents at the plantation could see some of the, the cracks in the foundation. But Frances couldn't, and I think that was because she viewed that as an extension of herself. Her identity was wrapped up in the project itself. So having others on the team who can point those out and identify strategic moves to shore up those inefficiencies can be very important to the long term viability of these types of initiatives.

FL: When you mentioned the moral conviction and passion that can become debilitating for the business for the social enterprise, there will be an internal factor. What will be the external forces in terms you know, social forces, political forces that can threaten a social enterprises operational model?

PM: That's, that's another one of the unique threats that social enterprises tend to face to their operational models. They they do transcend commercial frontiers. So everything going on in the cotton industry at the time, rising prices, and so forth was certainly a threat to their operational model. But so was the what was going on in the political realm. For instance, whether or not the the political party who was in power locally or nationally, was for or against what was going on with it becomes a very real factor for social enterprises, because what they do is so values laden and a lot of political affiliation is also very values laden. And this is we're getting into the illustration of how they transcend traditional market environments. So certainly threats in the political realm became very salient and directly and immediately relevant to what this social enterprise was doing. Because during this antebellum period, which means pre war in the build up to the Civil War, which happened 25/30 years after what we're talking about, right here, the nation became polarized culturally, for and against the institution of slavery, for instance. And so if you're a social enterprise working on an institutionally laden problem, such as that the limitation of freedom, and it runs afoul of one of the domineering political parties, particularly in the geographic region of the country, where you're located, it can be a real and present threat. And she certainly had to navigate that. And it was probably a big part of the, the, the eventual failure of this enterprise. Now, as Jack was talking about earlier, the alliances and so forth with different politicians and different parties can be relevant to a social enterprise. But it just becomes such, you know, political dynamics can be tough and unpredictable, and very unreliable. And if you're trying to build a business, which is trying to generate revenue to sustain itself, it's not something that you can depend on. And this is why even today, when we talk about social enterprises, policy change is one way that they measure impact, many times they do set out to change a law, or to change an ordinance within a community or even at the state level, or even nationally, they tried to change policy, because that is one way to work on the problem that they wish to resolve, it can become very politically laden, in addition to all the economic concerns that social enterprises need to navigate.

FL: Yeah, you know, this, this social enterprise, it wasn't that many years after the independence. And so the formation of the the American Constitution, wouldn't you say that the institution of slavery was in direct breaching of the Constitution? Because seems that he came to a point with the economic values of having slaves and then get cheaper labor would actually mean all but it's actually better than the civil rights that the person has?

PM: Oh, absolutely, absolutely. It was. It ran afoul of what was expressed as the principles of in the founding documents of this country. And I think for immigrants who were familiar with Enlightenment principles coming over from Europe, they probably viewed what was happening here in America is a great true land of opportunity where we could achieve more perfect freedom for all of the people who live there. And I think that was a huge part of what drove her the moral conviction that drove her. But you're exactly right. It wasn't that many decades after the founding of the country. And it's a valid point to point out that, hey, this institution that emerged is in direct contradiction to the founding principles of this nation. And I think that's a powerful platform to stand on when launching and growing a social enterprise like this one.

JS: Another aspect to the difficulty that when it comes to politics and in law, is that sometimes the laws themselves conflict. So if you look at some of the regional, local and state level laws, they were in conflict with the US Constitution and federal regulations and typically your federal regulations are always going to supersede that your local, regional or state level laws but if you look at even today with marijuana, right? There are some states where marijuana is legal, but as at the federal level is still illegal. And so this is part of the conflict that a social enterprise venture has to deal with is there are conflicts even within what is allowed, depending on who is interpreting the law. ,

FL: Yeah, that's a very good point. Speaking of the American politics, and society, you mentioned that Frances Wright created this New Harmony enterprise, I wonder if both Nashoba and New Harmony came to be part of this utopian society. That was part of the time this idea of utopia.

JS: utopian societies were established in various parts of the country, the Quakers and the, the Harmonists, the Rappites, though, and there are several examples, throughout history of establishing these, these essentially communal organizations, communal ventures that sought to, to make life manageable for for its constituents. If you look at some of the affordable housing projects that are going on today, you could, you know, even classify some of those into the same approach. But a lot of the utopian societies that were established, like New Harmony before, Frances Wright was involved, also had a very strong religious component. And when Frances purchased the property, she was not focused on that. That component of it, she was purely focused on accomplishing a social good through economic means.

PM: The utopian dream is something that, well, I think it's probably part of human nature, right. But unfortunately, nobody's really done it yet. In fact, throughout history, and you can, you can look at many examples and go way back in time, most leaders who have tried to create heaven on earth have succeeded in creating hell. That's basically what they accomplished, it went completely the other way. And I think a lot of that has to do with, well, you, it's complex, right? You're talking about cultural, social, civilized, and demographic, and ethical, ethically laden concerns about how we spend our time and spend our lives and we want to maximize those and make them as positive and as pleasant as possible. And that's great, it's a noble aim. However, if you are going to go for that, you also have to go for the economic aspects of that, because all of those things cost money. If you want to eat really healthy food, if you want to build a really nice house, if you want to have great security around your community, there's an economic problem around all of those things. And so that's what social enterprise tries to do. It is one operational model that generates more than one form of value. So social, economic, ecological, a lot of those social socially laden outcomes. And the kind of impact that one wants to make is great. But it's not enough, you have to also deal in the economic factors. And many times those two realms are in conflict with one another. I think the trend in social enterprise, and I am a social enterprise scholar. With advances in technology, we're finding new and very novel, radically innovative ways to try to integrate the two realms. So you see it in the developments in web three, you see it with digital currencies, you see it in some of the very novel crowdfunding applications, if you think about those things, they tend to become socially purposeful very quickly. And so I see social enterprise and technological development is converging over time, slowly. And there may be a way to avoid creating hell, when you try to set out and create utopia or something like that. But I think technology is certainly going to be huge, a huge part of that. And we're not there yet. We haven't got it done yet. But it is a noble aim, because the pain and the injustice and things related like clean water and healthy food and food deserts and all of that these are worthy goals to strive for. And if you can use entrepreneurship, to do something about that, then it's probably the best use of entrepreneurial activity that I can think of. It's just that the problem is, so far, everybody who's really tried to create some sort of community on that level that you might even dare to call it utopian has failed miserably.

FL: That's very interesting. Like the the idea, the intent is very good. But then there's something there's all these factors that don't let that challenge social enterprise to let it become like the perfection that it could be, in a certain sense. Yeah. And I think it's a beautiful idea. And I must say when I was reading the article, it was just so easy to read, I thought it's such a great idea, again, and the way that that he was written as well is it just flowed. And honestly, I read it so fast. And usually when it comes to academic articles, don't get me wrong, but because they're academic, they're so comprehensive, and intense, especially for for students that read them and other scholars. But I found your, like, very wonderful to read.

PM: That's quite a compliment. I mean, we had a great team of co authors on this paper. And I think we all share the value that if it's not interesting to read, you're probably not doing it, right. You need people to read these things and be interested because not only are the are the goals worthwhile, but you can learn a lot. And if people aren't willing to read it, because it's so boring, then they're not going to learn they're not going to learn about what you think is important enough to put into this paper. So and that's a great compliment. So thank you.

FL: No, thank you, honestly, for being here. I just remembered that you Patrick have a cat named Nashoba. Like the social enterprise.

PM: It's true, yes. Nashoba is a Choctaw word that means Wolf. And so around that time, my wife and I got two Siamese cats. Nashoba is the name of one of them. He's a chocolate point, Siamese. And his cousin, who we also got is a lilac point Siamese, his name is Hashi, which is a Choctaw word that means moon. And so we thought Wolf and moon went together pretty nicely. But it was during the time that me and Jack and Milo rad and the others were working on this paper. And I as I said earlier, I got really into it, because I saw it as an early example of social enterprise. And I am a social enterprise scholar. And so it just seemed like a nice way to honor the legacy in the memory of this amazing social entrepreneur, Frances Wright, a Scottish female immigrant working in a in a foreign country to challenge a large scale injustice and the whole institution, and it's inspiring stuff. And so I wanted to use the language and I got a Choctaw English dictionary and worked through it and pulled the name Hashi out to go along with Nashoba.

FL: Wow, that is so beautiful. I wish I had that idea. That profound idea when I was naming my cat, but it's just named Felix.

PM: That's a great name.

FL: Do you want to add anything else?

PM: I would, I would point out that the the kind of entrepreneurship that we're talking about in this paper is growing in popularity amongst the new generation. And I'm talking about the younger generation that's entering and going through university. Right now. Here in the States, we call them Generation Z, I don't know exactly what they call them in other places around the world. But they don't distinguish as clearly between social purpose and economic purpose as earlier generations did. My generation, for example, if you were going to try to do something good for society, you were probably going to be working in a soup kitchen or hugging a tree or something like that. And if you were going to go and try to make money, you would be in a suit on Wall Street or a banker or something along those lines. But the young generation that we're teaching in universities right now, they don't have that sharp of a distinction between these two modes of value creation, they view them as very much intertwined, which harmonizes quite nicely with social enterprises. We're talking about it here, today. And so I see social enterprise as the future, in a big way of entrepreneurship. It doesn't mean that you can't make money. And just because you're making money doesn't mean that you can't do something good, you can do good and do well at the same time. And so a lot of university entrepreneurship programs, such as mine, for example, at the University of Alabama at Birmingham, we have a social and community enterprise course is part of the major, the entrepreneurship major. And it's very popular, the younger generation gravitates toward it, and quite naturally grasps the concept. So I think Frances Wright was is especially prescient when it comes to how to use entrepreneurial action to do something good for society, because we're seeing it today. And I think it bodes well for the future.

FL: Yeah, that's a beautiful message. To conclude, you know, that making profit but also making something good for the society, they're not mutually exclusive.

Thank you for listening to today's episode. You can find more information about our guests and a full transcription of the show on our website. I would like to thank Chloe Campbell for her help with today's episode and the studio this is distorted.