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Welfare capitalism

Welfare capitalism is capitalism that includes social welfare policies[1] and/or 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.

For welfare state capitalism, the economic totalitarian private enterprise medical welfare state, see Economic interventionism § Market-driven medical welfare state. For the specific models in Western and Northern Europe commonly described as welfare capitalism, see Rhine capitalism and Nordic model.

Today, welfare capitalism is most often associated with the models of capitalism found in Central Mainland and Northern Europe, such as the Nordic model and social market economy (also known as Rhine capitalism and social 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]

Language[edit]

"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]

Anti-unionism[edit]

Welfare capitalism was also used as a way to resist government regulation of markets, independent labor union organizing, and the emergence of a welfare state. Welfare capitalists went to great lengths to quash independent trade union organizing, strikes, and other expressions of labor collectivism—through a combination of violent suppression, worker sanctions, and benefits in exchange for loyalty.[17] Also, employee stock-ownership programs meant to tie workers to the success of companies (and accordingly to management). Workers would then be actual partners with owners—and capitalists themselves. Owners intended these programs to ward off the threat of "Bolshevism" and undermine the appeal of unions.[21]


The least popular of the welfare capitalism programs were the company unions created to stave off labor activism. By offering employees a say in company policies and practices and a means for appealing disputes internally, employers hoped to reduce the lure of unions. They called these employee representation plans "industrial democracy."[22]

Efficacy[edit]

In the end, welfare capitalism programs benefited white-collar workers far more than those on the factory floor in the early 20th century. The average annual bonus payouts at U.S. Steel Corporation from 1929 to 1931 were approximately $2,500,000; however, in 1929, $1,623,753 of that went to the president of the company.[23][24] Real wages for unskilled and low-skilled workers grew little in the 1920s, while long hours in unsafe conditions continued to be the norm. Further, employment instability due to layoffs remained a reality of work life. Welfare capitalism programs rarely worked as intended, company unions only reinforced that authority of management over the terms of employment.[25]


Wage incentives (merit raises and bonuses) often led to a speed-up in production for factory lines.[26] As much as these programs meant to encourage loyalty to the company, this effort was often undermined by continued layoffs and frustrations with working conditions. Employees soured on employee representation plans and cultural activities, but they were eager for opportunities to improve their pay with good work and attendance and to gain benefits like medical care. These programs gave workers new expectations for their employers. They were often disappointed in the execution of them but supported their aims.[27] The post-World War II era saw an expansion of these programs for all workers, and today, these benefits remain part of employment relations in many countries. Recently, however, there has been a trend away from this form of welfare capitalism, as corporations have reduced the portion of compensation paid with health care, and shifted from defined benefit pensions to employee-funded defined contribution plans.

Binary economics

Community capitalism

Corporate social responsibility

Creating shared value

Criticisms of welfare

Humanistic capitalism

Inclusive capitalism

Inclusive growth

Involuntary unemployment

Neo-Capitalism

Redwashing

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Esping-Andersen, Gosta; Politics against markets, Princeton, NJ: Princeton University Press (1985).

Esping-Andersen, Gosta; "The Three Worlds of Welfare Capitalism", Princeton NJ: Princeton University Press (1990).

Ferragina, Emanuele and Seeleib-Kaiser, Martin; Welfare Regime Debate: Past, Present, Futures?; Policy & Politics, Vol. 39 (4), pp. 583–611 (2011).

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A Dividend to Labor: A Study of Employers' Welfare Institutions

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M. Ramesh; "Welfare Capitalism in East Asia: Social Policy in the Tiger Economies" in Journal of Contemporary Asia, Vol. 35, 2005

Stein Kuhnle, ed, Survival of the European Welfare State Routledge 2000.

Stephens, John D. "The Transition from Capitalism to Socialism"; Urbana, IL: University of Illinois Press (1979).

Tone, Andrea. The Business of Benevolence: Industrial Paternalism in Progressive America (1997)

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The End of Loyalty: The Rise and Fall of Good Jobs in America. PublicAffairs. 2017.  978-1586489144.

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