Welfare capitalism

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For the specific models in Western and Northern Europe commonly described as welfare capitalism, see
Rhine capitalism and Nordic model.

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Welfare capitalism is capitalism that includes social welfare policies.[1] Welfare capitalism is also the
practice of businesses providing welfare services to their employees. Welfare capitalism in this second
sense, or industrial paternalism, was centered on industries that employed skilled labor and peaked in
the mid-20th century.

Today, welfare capitalism is most often associated with the models of capitalism found in Central
Mainland and Northern Europe, such as the Nordic model, social market economy and Rhine capitalism.
In some cases welfare capitalism exists within a mixed economy, but welfare states can and do exist
independently of policies common to mixed economies such as state interventionism and extensive
regulation.[2]
Contents

1 Language

2 History

2.1 Cooperatives and model villages

2.2 Welfare as a business model

3 Modern welfare capitalism

3.1 In Europe

3.2 In the United States

4 Anti-unionism

5 Efficacy

6 See also

7 Notes

8 References

Language

"Welfare capitalism" or "welfare corporatism" is somewhat neutral language for what, in other contexts,
might be framed as "industrial paternalism", "industrial village", "company town", "representative plan",
"industrial betterment", or "company union".[3]

History

In the 19th century, some companies—mostly manufacturers—began offering new benefits for their
employees. This began in Britain in the early 19th century and also occurred in other European
countries, including France and Germany. These companies sponsored sports teams, established social
clubs, and provided educational and cultural activities for workers. Some offered housing as well.
Welfare corporatism in the United States developed during the intense industrial development of 1880
to 1900 which was marked by labor disputes and strikes, many violent.[4]

Cooperatives and model villages

Robert Owen was a utopian socialist of the early 19th century, who introduced one of the first private
systems of philanthropic welfare for his workers at the cotton mills of New Lanark. He embarked on a
scheme in New Harmony, Indiana to create a model cooperative, called the New Moral World,
(pictured). Owenites fired bricks to build it, but construction never took place.

One of the first attempts at offering philanthropic welfare to workers was made at the New Lanark mills
in Scotland by the social reformer Robert Owen. He became manager and part owner of the mills in
1810, and encouraged by his success in the management of cotton mills in Manchester (see also Quarry
Bank Mill), he hoped to conduct New Lanark on higher principles and focus less on commercial profit.
The general condition of the people was very unsatisfactory. Many of the workers were steeped in theft
and drunkenness, and other vices were common; education and sanitation were neglected and most
families lived in one room. The respectable country people refused to submit to the long hours and
demoralising drudgery of the mills. Many employers also operated the truck system, whereby payment
to the workers was made in part or totally by tokens. These tokens had no value outside the mill
owner's "truck shop". The owners were able to supply shoddy goods to the truck shop and charge top
prices. A series of "Truck Acts" (1831–1887) eventually stopped this abuse, by making it an offence not
to pay employees in common currency.[5]

Owen opened a store where the people could buy goods of sound quality at little more than wholesale
cost, and he placed the sale of alcohol under strict supervision. He sold quality goods and passed on the
savings from the bulk purchase of goods to the workers. These principles became the basis for the
cooperative stores in Britain that continue to operate today. Owen's schemes involved considerable
expense, which displeased his partners. Tired of the restrictions on his actions, Owen bought them out
in 1813. New Lanark soon became celebrated throughout Europe, with many leading royals, statesmen
and reformers visiting the mills. They were astonished to find a clean, healthy industrial environment
with a content, vibrant workforce and a prosperous, viable business venture all rolled into one. Owen’s
philosophy was contrary to contemporary thinking, but he was able to demonstrate that it was not
necessary for an industrial enterprise to treat its workers badly to be profitable. Owen was able to show
visitors the village’s excellent housing and amenities, and the accounts showing the profitability of the
mills.[6]

Owen and the French socialist Henri de Saint-Simon were the fathers of the utopian socialist movement;
they believed that the ills of industrial work relations could be removed by the establishment of small
cooperative communities. Boarding houses were built near the factories for the workers'
accommodation. These so-called model villages were envisioned as a self-contained community for the
factory workers. Although the villages were located close to industrial sites, they were generally
physically separated from them and generally consisted of relatively high quality housing, with
integrated community amenities and attractive physical environments.

The first such villages were built in the late 18th century, and they proliferated in England in the early
19th century with the establishment of Trowse, Norfolk in 1805 and Blaise Hamlet, Bristol in 1811. In
America, boarding houses were built for textile workers in Lowell, Massachusetts in the 1820s.[7] The
motive behind these offerings was paternalistic—owners were providing for workers in ways they felt
was good for them. These programs did not address the problems of long work hours, unsafe
conditions, and employment insecurity that plagued industrial workers during that period, however.
Indeed, employers who provided housing in company towns (communities established by employers
where stores and housing were run by companies) often faced resentment from workers who chafed at
the control owners had over their housing and commercial opportunities. A noted example was
Pullman, Illinois—a site of a strike that destroyed the town in 1894. During these years, disputes
between employers and workers often turned violent and led to government intervention.