Welfare capitalism

Welfare capitalism is capitalism that includes social welfare policies. 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 Continental 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.

"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," or "company union."

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.

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, 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.

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