In September of 2003 President Bush said, “We have a responsibility that when somebody hurts, government has got to move.”
Government must intervene in the lives of private citizens in order to ensure their wellbeing: President Bush’s sentiment is a commonplace one, and is notable only for being uttered by a conservative Republican president. Why is this concept unexceptional?
The virus of socialism has infected Western thought for at least a century and a half. The ideas of Marx and Engels, of the anarchists, communists, and social revolutionaries, have floated though our cultural air for so long that we hardly even notice them. But the left-wing revolutionaries were not the ones who ushered in the welfare state; that job was left to a reactionary Prussian aristocrat who believed in the divine right of kings.
Prince Otto von Bismarck was the greatest political genius of modern times. As Minister-President and Foreign Minister of Prussia in the 1860s, he successfully steered Prussia through two major wars, enlarging its power and humbling its Austrian and French rivals. When he engineered the unification of Germany and created the German Empire in 1871, he became its first Chancellor under Kaiser Wilhelm I. Facing a collection of fractious and hitherto independent principalities, he managed to consolidate and strengthen the new empire. By the time he was forced into retirement by Kaiser Wilhelm II in 1890, he had wielded political power for thirty years and experienced unparalleled success, transforming Germany from a semi-feudal federation of states into one of the world’s pre-eminent cultural, political, and military powers.
One of the reasons for Bismarck’s success was a shrewd understanding of the socialist movement. As an aristocratic Junker landowner, his natural tendency was to suppress the socialist nuisance — which he did, banning socialist organizations and arresting their leaders all through the 1870s — but he realized the appeal of the socialist ideas, and co-opted them with his own programs.
The Revolutions of 1848 had concentrated the minds of the European elites. Liberalism as a revolutionary force gradually gave way to socialism, and the Paris Commune in 1871 was a wake-up call for the hereditary aristocracy and governing classes all across the continent.
In the 1880s Bismarck responded by instituting mandatory health insurance for workers, followed by accident insurance, old-age pensions, and disability insurance. His early version of the welfare state was modest by today’s standards, taking at most 6% of a worker’s wages. But it was enough to sap the power of the socialist impulse in Germany until after the Great War.
In the early 20th century the other European powers looked to Germany as a model, and gradually adopted variations of the same ideas. As Communism emerged as the dominant rival ideology to democratic capitalism, the West was compelled by political necessity to expand the welfare state. Communism is dead and gone, but the ideas of socialism remain, and the welfare state continues to expand.
As long as it is grafted to a strong and expanding capitalist economy, it poses no problem. However, when the demands of an ever-increasing welfare state exceed the productive capacity necessary to meet them, an unavoidable crisis ensues. Given the demographic crisis in the West, existing trends cannot be maintained much longer. As Anthony Mueller points out in “Bye-bye Bismarck“,
|With the promotion of “social progress”, the modern welfare state has dissolved all limits to government. Together with the traditional goals of protection and social justice, the extension to social progress has opened the way to all kinds of absurdities, abuses and interventions.|
|With social policy becoming ever more comprehensive, it has turned into a severe and suffocating burden for the economy. The boon — however great or small it may have been in its early stages for a specific group — has turned into a massive plague. Now, the dismantling of the welfare state emerges as the major policy challenge of the 21st century.|
Bismarck would be dismayed by his legacy.
The modern welfare state was a reactionary creation, adopted by Western governments to forestall revolutionary socialism. True socialism, in its Communist manifestations, was politically and economically unsustainable, and has taken its well-earned place on history’s ash heap. But the welfare state, as a parasite of prosperous capitalist economies, has proven more robust.
How long it can be sustained? This an open question.