Marching to Bismarck's Drum

“Soviet-style” socialism may have faded into oblivion, but another form of statism—the “welfare state”—still rules the roost around the world. The modern “welfare state” was born at the end of the 19th century in the German Empire - with the light hand of Chancellor Otto von Bismarck. In the 1870s, the Social Democratic Party received more and more votes in elections to the Reichstag. Fearing that the Socialists might gain a majority of seats in parliament, Kaiser Wilhelm and the leaders of the conservative parties decided to neutralize this dangerous challenge to their power and the existing order. An article by Richard Ebeling is devoted to the historical context of the emergence of the “welfare state.”

“Soviet-style” socialism may have faded into oblivion, but another form of statism still rules the world, including in the United States: the modern “welfare state.” It has covered literally all spheres of public and personal life with the tentacles of paternalistic control. It has turned us all into “children of the state,” weakening people’s desire for self-reliance and society’s respect for independence.

Of course, this was not always the case. Therefore, it is worth remembering how this phenomenon arose. The modern “welfare state” was born at the end of the 19th century in the German Empire - with the light hand of Chancellor Otto von Bismarck. In the 1870s, the Social Democratic Party received more and more votes in elections to the Reichstag. Fearing that the Socialists might gain a majority of seats in parliament, Kaiser Wilhelm and the leaders of the conservative parties decided to neutralize this dangerous challenge to their power and the existing order.

In the early 1880s, the Kaiser agreed to approve the first "package" of social security laws initiated by Bismarck. Ten years later, the “Iron Chancellor” explained to one American admirer the purpose of the adoption of these laws, which guaranteed all subjects of the German Empire health insurance, pensions, a minimum wage, certain working conditions, vacation and unemployment benefits. “My idea was to bribe the working class, or, more precisely, to win its support, to make it perceive the state as a social institution that exists for the sake of the workers and is interested in their welfare,” he said.

It would be a mistake, however, to view the emergence of the modern welfare state as merely the result of a cynical political calculation designed to seize the initiative from the socialists and win over the workers. Its necessity was also justified by arguments about the highest “social good”, the concept that democracy is not limited to the “mere” protection of people’s lives, personal freedom and property.

In 1915, the American Frederick Howe, who admired the German welfare state, described the system in his book Socialized Germany: “The state keeps its finger on the pulse of the worker from cradle to death. His education, his health, his ability to work become the subject of constant concern for the authorities. Factory laws and regulations carefully protect it from accidents. His hands and mind are helped to acquire the necessary skills to become a good worker, and he receives insurance against accidents, illnesses and an old-age pension. In case of forced “idleness”, he is often helped to find a job. If a worker does not have housing, he is provided with a roof over his head so that he does not join the ranks of vagabonds.”

Howe recognized that, as a result of the comprehensive control and regulation inherent in the German system, “the individual exists for the state, and not the state for the individual.” However, he insisted, this did not mean a loss of individual freedom. “Such paternalism does not mean that the individual in Germany has less freedom than in America or England,” Howe argued. - On the contrary, the Germans enjoy much more freedom than the Americans and the British. This freedom is of an economic nature... It protects the defenseless classes from exploitation and abuse. She protects the weak."

But if the state is to take on these responsibilities, how far should its new powers extend? The answer to this question was: ad infinitum. The only criterion that should have been followed in this case was political expediency. Howe explains this too: “According to the Germans, the functions of the state should not be determined by some abstract, a priori considerations. Each proposal is evaluated for timeliness and appropriateness. If it is considered desirable for the state to own any branch of industry, it happens so; if it is necessary to curb the aspirations of any class or group, this task is accomplished. Politics is determined by expediency or conjuncture, and not by abstract reasoning about the philosophical nature of the state.”

In this new world there was no place for comprehensive and eternal principles related to the individual rights to life, liberty and property, or a constitution that prevents the state from encroaching on the freedom of citizens. The solution to all political issues had to be based on the pragmatic needs of the moment.

Slowly but surely, the German concept of governance and the "welfare state" was established on the other side of the Atlantic - in America. At the end of the 19th century, only a few American universities could offer graduate studies and dissertations. Therefore, Americans who wanted to crown their education with a doctorate often had to go to Europe. They were especially attracted to the universities of Germany - the country of great poets, composers and modern progressive philosophy. Hundreds of young American economists, political scientists, historians, philosophers and sociologists made pilgrimages to the banks of the Rhine, and many of them studied with the leading representatives of the German historical school - adherents of “state socialism”. These Americans brought home ideas about the paternalistic role of the state; It was they who became the leaders of the movement for “social reform” in the so-called Progressive era of the early 20th century.

These "converts" Americans, who believed in Bismarck's concept of the "welfare state," saw themselves as members of an elite entrusted by God with a special mission. One such influential figure was Richard Ely, a professor of economics at the University of Wisconsin who studied in Germany and, in 1885, became one of the founders of the American Economic Association, whose purpose was to promote the ideas of the welfare state. In 1895, he set out his views in a book on socialism: “As we think about the future, we can imagine a society in which there reigns real and not merely nominal freedom, a society striving for the best, a society in which men will cooperate for common purposes, and this cooperation will be carried out mainly through the agency of the State... There is reason to believe that we will yet see great national initiatives undertaken with the help of the property of the State and under the direction of the State, carried out by people who realize the greatness of true service to society, and understanding that they are doing something pleasing to God, for the church and the state are one.” The state had to provide from birth to death of a person not only his material, but also his spiritual and intellectual needs - in education, literature, art. This was the essence of this statist alternative to both Marxist socialism and classical liberalism.

Criticism from the perspective of classical liberalism

In the 19th century, classical liberals and free market economists were highly critical of government intervention in socioeconomic issues. They doubted that the political authorities had both the knowledge and wisdom to manage the complex and changing processes of social and economic life. They were also suspicious of the idea of ​​delegating powers to the state to regulate people's lives, realizing that even if these powers were exercised under the slogan of serving the "interest of society", their true motivation was related to serving group interests to the detriment of society as a whole.

The damage caused by the welfare state to our political, economic and cultural life may not be as visible as the effects of socialism in Eastern Europe, but it is no less destructive. This system is destroying our society from the inside. And in many ways, the dominance of the “welfare state” is due to the fact that today, after several generations, people no longer know what its true essence is. For many, it has become synonymous with a “fair” and “caring” society, synonymous with the “American way of life.”

For the first time: Ebeling RM Marching to Bismarcks Drummer: The Origins of the Modern Welfare State // The Freeman: Ideas on Liberty. Vol. 57. No. 10 (December 2007).