Welfare capitalism is capitalism that includes varying degrees of social welfare policies 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. 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.
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".
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 Revolution development of 1880 to 1900 which was marked by labor disputes and strikes, many violent.
Cooperatives and model villages
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. 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. 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. 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.
Welfare as a business model
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