Noted anti-communist and pioneer of the welfare state, German chancellor Otto von Bismarck, once said about his project, “My idea was to bribe the working classes, or shall I say, to win them over, to regard the state as a social institution existing for their sake and interested in their welfare.”[1] Could it be possible that the laws that guaranteed every German pensions, a minimum wage, nationalised health insurance, workplace regulation, paid time off, and unemployment insurance all be part of an insidious plot to undermine the looming threat of Marxist revolution? Marx himself might have disagreed, having stated in Capital that “the creation of a normal working day is the product of a protracted civil war…between the capitalist class and the working-class.”[2]

The Western welfare state model, with its complex genealogy of political and economic influences, resists such broad categorisations. This article will therefore approach the subject of the welfare state from both perspectives – as a product of class struggle and Marxist political economic thought, and as a safety barrier against communist revolution. In doing so, it will seek to answer the following question: was the welfare economy built in the West a result of the fear of communism and with borrowings from Marxism?

The first part will trace the historical role of labour militancy in securing welfare provisions in Britain through a class struggle analysis to determine its borrowings from Marxism, while the second part will analyse the American welfare state and its economic basis, contextualising the historical and political developments that firmly established it in the mainstream at the peak of the Cold War.

The British welfare state as built by class struggle

Although Marx did not see the emergence of the welfare state within his lifetime, he did witness and provide commentary on the labour movement in the UK winning concessions such as the Ten Hours Bill through the 1847 Factory Act. Working class agitation played a prominent role in maintaining these concessions, engaging in a battle with capitalist forces that attempted to skirt the new regulations, demanding further reform. These victories were commemorated by Marx at his inaugural address at the First International in 1864, proclaiming it as “the first time in broad daylight the political economy of the middle class succumbed to the political economy of the working class.”[3] Ralph Miliband would develop on this line of argument, asserting ‘reformist’ methods consolidated through class struggle as a means of undermining the power of capital; essentially, establishing the foundations of socialism before the revolution.

From the mid-19^th century onwards, Britain saw the emergence of multiple waves of working-class movements. These movements also sought to integrate unskilled and semi-skilled workers into a growing coalition which would henceforth be termed as New Unionism (a strand of the movement notably endorsed by Engels). Collaboration with the newly established Social Democratic Federation and the Fabian Society would aid the diffusion of a burgeoning class consciousness alongside widespread approval for collectivist and welfare policies. This new political environment hinted at the threat of widespread social upheaval, which the state mechanism responded to with brutal crackdowns on strikes and demonstrations, but the fear of further unrest compelled the state to offer labour and welfare reforms as a means of appeasing the demands of the increasingly militant labour movement. As a result, the period between 1890 and 1914 saw the roll-back of laissez-faire political economy in favour of significant welfare measures; these included the “emergence of municipal housing, the introduction of free school meals, medical inspection of school children, old age pensions, and the foundations of both national health and unemployment insurance.”[4]

Historian John Saville would later trace the develop of the British welfare state, highlighting two fundamental factors in its construction that could already be seen at play in this era – “the struggle of the working class against their exploitation”[5] and “recognition by the property owners of the price that has to be paid for political security.”[6]Interestingly, Lenin took a similar stance on the role of class consciousness in securing welfare reforms, stating that the labour movement should seek to recast bourgeois law “into a means of developing its class-consciousness, strengthening its organization and intensifying its struggle for full political liberty and for socialism.”[7] These trajectories would coincide with the establishment of universal male suffrage in 1884, now making the state a mechanism through which labour militants could achieve their demands, and also laying the framework the electoral representation of labour. This militancy reached such a boiling point that in 1919, PM Lloyd George announced to the largest trade unions that the government “was at their mercy,”[8] and that if industrial disruptions continued, “you will defeat us.” [9]

The roots to the British welfare state were thus firmly established by the post-WW2 period, with multiple welfare concessions having been secured through labour activism. As the spectre of all-out insurrection became a looming threat, the years after 1945 saw the greatest expansion to the British welfare state, including the establishment of the NHS. Welfare scholar Richard Titmuss later proclaimed the values of collectivism and universalism to be embedded into the framework of these welfare services, as a further vindication of the working-class movement. Perhaps more significantly, however, is the comparison that can be made between programmes like the NHS and council housing, and the Soviet models of universal health care (Semashko) and public housing.

One would thus imagine every reason for the welfare state to be celebrated as an achievement of the working class. However, as many historians have pointed out, many of the reforms implemented overcame “the initial opposition of the ruling elite by being modified to simultaneously support the interests of capital and labor,” and the brutal repression faced by labour organisers represents the stringent opposition of the elite to such reforms. The resulting measures are what Asbjørn Wahl describes as an embodiment of class compromise, representing the “balance of power within the framework of this social pact between labor and capital.”[10] A further examination of the ruling class’s motivations and intentions with the welfare state is therefore necessitated.

The American welfare-warfare state as an answer to the spectre of communism

The evolution of the American model of the welfare state followed a distinctively different trajectory than in Western Europe and Britain. While there were certainly prominent militant labour movements, they had nowhere near the same level of representation in electorial politics. Labour reforms were largely incrementalistic, with state-sponsored welfare programmes lagging far behind those in Europe. As such, when the Great Depression hit the USA, the most socioeconomically vulnerable sections of society were left to largely fend for themselves with no institutional forms of social security.

Franklin D. Roosevelt’s New Deal (enacted between 1933-39) was a paradigm-shifting change, in this sense, being the most extensive expansion of federal involvement in the economic affairs of the nation, as well as its expansion into labour relations through the establishment of the National Labor Relations Board. Through these programmes that sought to restore socio-economic stability to the US, he seemed to have alienated those who stringently opposed state intervention in the economy. However, Roosevelt himself understood his reforms as “the best way of defending capitalism in a period of social upheaval.”[11] He viewed social unrest and unemployment as a threat to capitalist social and political recovery (given how the unemployed organisations were leading militant direct action and mass demonstrations), and sought to stabilise class relations through his labour reform.

Roosevelt’s views had been previously echoed by J.M. Keynes, whose economic thought arguably served as the most prominent influence in the establishment of the American welfare state. Indeed, The General Theory was a direct response to the Great Depression. Much like Marx, he had identified that the ‘invisible hand’ could not be universally relied upon to maintain supply and demand in equilibrium. Therefore, his proposed solution involved stimulating demand through fiscal spending in order to preserve the stability of the market. While this would create an economic framework for expansive state intervention in the economy, the ideological basis was clear; the overall capitalist political economy had to maintained, but had to be subject to modification if it was to survive.

An essay from 1925 by Keynes stated, “The class war will find me on the side of the educated bourgeoisie.”[12]He was a firm believer in the liberal economic tradition, and saw unemployment as matters of ineffiency, rather than injustice or exploitation (as Marxist economists may choose to define it). Having developed a paternalistic outlook towards the political economy, to “help those who could not help themselves,”[13] through his revision of standard laissez-faire theory, he ultimately sought to protect the capitalist framework from itself; but perhaps more importantly, from socialists, trade unionists, and revolutionaries who would take advantage of a crisis of capitalism.  This outlook would coalesce well with FDR’s vision for the New Deal following World War 2; “the New Deal would be ‘globalized’through the United Nations, and the USSR would be included among the poor nations of the world to be incorporated into the evolving Pax Americana, for the benefit and security of all.”[14]

Keynes played a prominent role in the construction of the Bretton-Woods system, creating the basis for imagined economic stability in international trade that could not give way to any crises (and hence, the possibility of communist revolution), similar to Roosevelt’s vision of the Marshall Plan as a protective measure against the spread of socialism in Western Europe. With Truman’s maintenance of the welfare state under a further expansion of American global hegemony, the American welfare state would transform into what James O’Connor refers to as the ‘welfare-warfare state’; maintaining that capitalism could assure a better standard of life than Soviet communism, while dedicating public expenditure towards the American military-industrial complex. Such a model thus reveals what Ian Gough refers to as the fundamental contradiction of the welfare state – its “simultaneous tendency for welfare provision to be both progressive and coercive.”[15] 

Conclusion

With two perspectives having been explored that examine the historical and economic trajectories along which distinct models of the welfare state developed, it is clear that the welfare state is rife with contradictions. However, ultimately, its stripping back in the era of neoliberalism does correspond with the degradation of the labour movement in the West. This serves as a reminder that the welfare state did empower the working class to some degree, even if limited by its inherent contradictions.

Works Cited

[1] Ebeling, Richard M. “Marching to Bismarck’s Drummer: The Origins of the Modern Welfare State.” Fee.org, 1 Dec. 2007, fee.org/articles/marching-to-bismarcks-drummer-the-origins-of-the-modern-welfare-state/.

[2] Marx, Karl. Capital: A Critique of Political Economy. Penguin In Association With New Left Review, 1990, p. 283.

[3] Marx, Karl. “Inaugural Address of the International Working Men’s Association.” Marxists.org, 27 Oct. 1864,www.marxists.org/archive/marx/works/1864/10/27.htm.

[4] Matthews, David. “The Working-Class Struggle for Welfare in Britain.” Monthly Review, 1 Feb. 2018, monthlyreview.org/2018/02/01/the-working-class-struggle-for-welfare-in-britain/.

[5] Saville, John. “John Saville: The Welfare State - a Historical Approach.” Marxists.org, 1 Dec. 1957, www.marxists.org/archive/saville/1957/xx/welfare.htm.

[6] Ibid.

[7] Lenin, Vladimir. “The Sixth (Prague) All-Russia Conference of the R.S.D.L.P.” Marxists.org, 12 Jan. 1912, www.marxists.org/archive/lenin/works/1912/6thconf/index.htm.

[8] Sherry, Julie. “1919—Britain in Revolt.” Socialist Worker, 31 Dec. 2018, socialistworker.co.uk/features/1919-britain-in-revolt/.

[9] Ibid.

[10] Wahl, Asbjørn. “Class Struggle Built the Welfare State.” Jacobin, 2 May 2021, www.jacobinmag.com/2021/05/welfare-state-class-struggle-confrontation-compromise-labor-union-movement.

[11] Post, Charles. “The New Deal and the Popular Front.” International Socialist Review, 1 Mar. 2018, isreview.org/issue/108/new-deal-and-popular-front/index.html.

[12] “Was John Maynard Keynes a Liberal?” The Economist, 18 Aug. 2018, www.economist.com/schools-brief/2018/08/18/was-john-maynard-keynes-a-liberal.

[13] Ibid.

[14] Arrighi, Giovanni. “The World Economy and the Cold War, 1970-1990.” The Cambridge History of the Cold War, edited by Melvyn P. Leffler and Odd Arne Westad, Cambridge University Press, 2010, p. 24.

[15] Wilson, Elizabeth. “Marxism and the ‘Welfare State’ – Review.” New Left Review, 1 Aug. 1980, newleftreview.org/issues/i122/articles/elizabeth-wilson-marxism-and-the-welfare-state.