Welfare State
Definitions, Key Terms, and Concepts

  • Welfare state: A state with a capitalist economy, but government intervenes directly or indirectly to influence market forces to ensure economic stability and a basic standard of living of its citizens.

  • The Great Depression: An economic crisis in the 1930’s that resulted from the stock market crash in late 1929. It resulted in unemployment, declined international trade, and widespread bankruptcy.

  • Modern Liberalism: differs from classical liberalism in that it includes social justice, increasing the role of the state in resolving economic and social issues.[4]

The cartoon despises laissez-faire economy. By depicting the aliens as economic "refugees", it's emphasizing the yearn for security of the welfare state.

The free-market economy directly caused the Great Depression. In the early 1920s, there were numerous economic and scientific progresses. America was the breadbasket for Europe during WWI, replacing France’s position in the food market. Even after the end of the war, the American fields continued to produce grains. However, France began to produce grains again and the world market for grain was flooded, causing price of grain to crash. After a series of events that resulted from the stock market crash, Great Depression took place. [3]

Canada was also affected during the period of the Great Depression. In the 1930s, the Conservative government was elected. The Prime Minister, RB Bennett, enacted the Dominion Unemployment Relief to cope with and assist in provision of relief. [6]

Capitalism is a faulty system in that it neglects the need of people and creates an economic gap that cannot be reconciled. This highlights the need of government intervention to protect those in need.

Other social programs, such as pensions, universal health care, affordable housing, redistributive income tax policies, public education, promoted social citizenship and social reforms, establishing the foundation of the creation of welfare state in Canada. The Canadian government actively intervened in the economy to better the economic situation in Canada. [7]

Important Figures

John Maynard Keynes (1883-1946)
Keynes, here shown addressing the Bretton Wood Conference.

Spurred by the deepening Great Depression, John Maynard Keynes introduced the theory called demand-side economies. Although Keynes’ theory focuses on the importance of governmental interventions in regulating demand and manipulating supply to safeguard the citizens from economic instability, this theory can be implemented in establishing a welfare state. [3]

Franklin D. Roosevelt (1882-1945)

He was the president of the United States from 1933 to 1945. Roosevelt was the first to adopted Keynes’ theory to the state. He sparked the beginning of government’s role in the economy and invigorated the necessity of some government intervention in looking after all citizens. With the trigger of the Second World War, welfare states are established as legislations were passed to solidify government responsibilities in the state. [3]

William Beveridge (1879 – 1963)
“Ignorance is an evil weed, which dictators may cultivate among their dupes, but which no democracy can afford among its citizens.”
Beveridge was responsible for the "Beveridge report", which sets a foundation for other social legislation.

As a British economist and social reformer, William Beveridge made significant contributions to the
development of the welfae state. To rebuild Britain after World War Two, Beveridge published a report in 1942 emphasizing the government’s responsibility in fighting the five 'Giant Evils' of 'Want, Disease, Ignorance, Squalor and Idleness'.
In 1945, Prime Minister, Clement Attlee, implemented the welfare state outlined in the 1942 Beveridge Report into practice, which included the establishment of a National Health Service in 1948 providing free medical treatment for all. [2]

Aneurin Bevan (1897 – 1960)

“The National Health service and the Welfare State have come to be used as interchangeable terms, and in
A picture showing Aneurin Bevan on BBC.

the mouths of some
people as terms of reproach. Why this is so it is not difficult to understand, if you view everything from the angle of a strictly individualistic competitive society. A free health service is pure Socialism and as such it is opposed to the hedonism of capitalist society.”
After World War Two, Aneurin Bevan took a crucial step into building the foundation of a welfare state. Bevan was appointed minister of health and successfully established the National Health Service. On July 5 1948, the government provided free medical services and diagnosis and treatment became for all. Later, he resigned from the government in protest of the attempt to charge dental care and spectacles. [1]

William Forster (1818-1886)

William Forster, a Liberal MP, introduced the Forster’s Education Act that provided free education for all children between ages 5 and 12 in England. Approximately 2500 school districts were created, in which school boards were elected by the ratepayers. Forster’s Education Act also allowed women to vote for as well as serve on the School Boards, which is another good example of welfare government’s responsibility in protecting people’s rights while granting freedom. [7]

Relation to Classical Liberalism

After the Great Depression, people became skeptical of the laissez-faire capitalism because it seems to have caused poverty as well as other problems. Then, the movement from welfare capitalism to the welfare state began. In effect, modern liberalism emerged, replacing the pre-existent classical liberalism. [3]

Indeed, welfare state opposes classical liberalism in certain aspects – it allows government to intervene in the economy in order to protect the consumers and avoid economic crises. This goes against one principle of classical liberalism – constitutionalism. Nevertheless, a welfare state does support some other principles of classical liberalism. For example, there is still a large degree of economic freedom, and people are still allowed to possess private property. Considering all these effects, welfare state is a liberal response.


1. BBC history. (n.d.). Aneurin Bevan. Retrieved March 6, 2012, from http://www.bbc.co.uk/history/historic_figures/bevan_aneurin.shtml
2. BBC history. (n.d.). William Beveridge. Retrieved March 6, 2012, from www.bbc.co.uk/history/historic_figures/beveridge_william.shtml
3. Fielding, J. (2009). Chapter 4: Response to Classical Liberalism. Perspectives on ideology (pp. 144-145, 147-149). Don Mills, Ont.: Oxford University Press.
4. Goenaga, L. (n.d.). A comparison between modern liberalism: Is modern liberalism truly liberal? Leonard wordpress. Retrieved March 6, 2012, from http://leonardooh.wordpress.com/2009/04/02/a-comparison-between-modern-and-classical-liberalism-is-modern-liberalism-truly-liberal/
5. Miller, G. (n.d.). Failure of the welfare state. The school of cooperative individualism. Retrieved March 7, 2012, from http://www.cooperativeindividualism.org/miller-george_failure-of-the-welfare-state.html
6. Richard Bedford, Viscount Bennett - The Canadian Encyclopedia. (n.d.). The Canadian encyclopedia. Retrieved March 6, 2012, from http://www.thecanadianencyclopedia.com/articles/richard-bedford-viscount-bennett
7. Welfare state in Canada: past, present, and future. (n.d.). The conference. Retrieved March 6, 2012, from http://theconference.ca/the-welfare-state-in-canada-past-present-and-future