Welfare Capitalism is initiatives by industrialists to provide workers with non-monetary rewards to head off the growing demand for labour unions; also refers to government programs that would provide social safety nets for workers.[8]

Purpose of the Welfare Capitalism

Using benefits to create a “safety net” for the workers in order to earn their loyalty to the industry[8], benefits can include:

  • medical insurances
  • health care benefits
  • improved environment of the workplace
  • education benefits

Other reason for practicing welfare capitalism can also include reducing employee's complaints, and to prevent extreme actions from labour unions which will maximize the benefits for industries.

Early motives

In the 19th century, some industries began to offer new benefits to the workers. However, these benefits were not improving the worker rights for example, less hours or increased payments. Instead, the industries sponsored sports teams, established social clubs, and provided educational and social activities for workers. These benefits were created to make workers feel better about their workplace. This shows the existence of capitalism in 19th century industries. They state the welfare of workplaces instead the welfare of the employees.[8]

Example of Classic Welfare Capitalism

George Pullman, inventor of sleeping cars on trains

George Pullman (1831-1897)

George Pullman invented the sleeping cars on trains. His purpose was to prevent any actions from labour unions by satisfying some of workers' complaints.
This sleeping car may allow workers to rest when they are tired, however it does not aim to improve the workers' rights at workplaces.[8]
Sleeping Cars on Trains

Workers' Rights may include the following:
- Hours of work and overtime rules
- Minimum Wage
- Regular paycheque

Modern example of welfare capitalism

26th President of the United States

Theodore Roosevelt (1858-1919)

1. Government action using welfare capitalism that helped workers
A union of 50,000 United Mine Workers had a strike. They demanded 10-20 per cent raise, recognition of their union, an 8-hour workday, and fringe benefits. The mine owners kept rejecting the union's offers. Later, when the mine owners requested army support to fight off those rebellious workers, Rossevelt, as a response to lassiez-faire, answered back with a threat to owners to accede the workers' demands.[8]

New York Herald; Roosevelt's Biggest Game

Presidency and the Coal Strike

The political cartoon on the right shows one of the challenges that Roosevelt had to face during his presidency (1901-1909)
The Coal Strike occured in 1902 when the United Mine Workers called out the strike for improved worker rights. In this case, Roosevelt favoured the workers' hands by threatening the owners to improve the rights of the workers. [5]
After this incident, Roosevelt thought that a society where the government can protect and ensure the well-being of all citizens. [8]
Later in his presidency, Roosevelt proposed the idea of progressivism, which aimed to ensure rights of the workers in industries. He proposed a policy so called "Square Deal" between business and labour. [5][8]

The cartoons shows the facade of welfare capitalism; although it seems to benefit workers and reduce live expenses, it was primarily created to maintain industries' productivity

Problem with early welfare capitalism

Legislations based on welfare capitalism were mostly applied to

workplaces, not workers. Early legislations did not focus on some circumstances wehre individuals desperately needed government aid. This problem of welfare capitalism lead governments to develop the new idea, welfare state, which promises citizens of their well-being and protection.

Effects of The Great Depression on Welfare Capitalism

The Great Depression restricted the act of welfare capitalism but did not completely vanish; stock purchases and profit sharing declined, and therefore recreational and educational social programs also followed. However, after the depression many industries (Sears, Robucks.Co) lead the way to re-emerge the act of welfare capitalism.[1]


[1] Stuart Brandes, S. Welfare capitalism. March 6th, 2012. Retrieved from http://encyclopedia.chicagohistory.org/pages/1332.html

[2] Greyzed. Born in the usa. March 6th, 2012. Retrieved from http://anticap.wordpress.com/2010/11/07/born-in-the-usa/

[3] Wikipedia: The Free Encyclopedia. Sleeping car. March 6th, 2012. Retrieved from http://en.wikipedia.org/wiki/Sleeping_car

[4] Wikipedia: The Free Encyclopedia. Welfare capitalism. March 6th, 2012. In Wikimedia Foundation, Inc. Retrieved from http://en.wikipedia.org/wiki/Welfare_capitalism

[5] Wikipedia: The Free Encyclopedia. Coal strike. In Wikimedia Foundation, Inc. March 6th, 2012. Retrieved from http://en.wikipedia.org/wiki/Coal_Strike

[6] The White House. Theodore roosevelt. In The White House. March 6th, 2012. Retrieved from http://www.whitehouse.gov/about/presidents/theodoreroosevelt

[7] Business Insider. 10 real life horrible bosses that make jennifer aniston look like a pushover. In Business Insider. March 6th, 2012. Retrieved from http://www.businessinsider.com/worldsworst-bosses-2011-7?op=1

[8] Fielding, J. (2009). Chapter 4: Responding to classical liberalism. In L. M. Linton & M. Schwalbe (Eds.), Perspectives on Ideology (pp. 140-141). Ontario, Canada: Oxford University Press