Matthias Zeylmans:

The historical development of welfare capitalism in the U.S.A.

The U.S. American welfare system is often labeled welfare capitalism because it is tied more closely to the international market economy then most of the european social systems. In the normative discussions of the globalisation process and the need to reform the german social system, the american "liberal welfare state" (Esping-Andersen) is often discussed in a very controversial way: Some want to see the german "conservative" or "corporatist" model (Esping-Andersen) moving towards the american liberal one. Others consider such a development to be the beginning of the decline of the german social system. Looking at american welfare from a historical point of view can help us to understand the differences and to compare the systems. The following questions might be useful for analysis and discussions. In this paper they can only partly be answered:

- Can welfare capitalism be understood and judged when looking only at the federal policies? Is that a "Eurocentric view", as Murswieck (1998) claims it?

- What are the basic characteristics which determine the polity dimension of welfare capitalism? What is the framework in which the development of social policies took place?

- who were the main actors in the politics process ? Which pressure groups shaped the inputs and outcomes of social policies?

Before looking at the historical development of politics and policies I want to name a few characteristics of the polity:

- federalism: each state has the basic authority to decide welfare politics. The different social policies are a good indicator of the low degree of national unity

- federal interventionism: as shown in american old-age policies

- ideology: which has always determined the politics of unemployment and welfare. (see Murswieck 1988)

Since the 1930s the public discussion about welfare politics has been divided into two major topics: social security and welfare. The existence of social securities has since been quite well accepted in american society, welfare programs on the other hand, have always been objects of ideological controversy.

1. Welfare before 1935: Private Organisations and Regional Policies

During the 19th and the first decades of the 20th century welfare was dominated by private and religious organisations. Originally their social concepts were based on protestant ethics and liberal values: from their ideological and moral point of view only people with a weak character could suffer of poverty and social problems; the american ideal was to be a "self made man", who always tried to live independently. These fundamental values can still be found in current debates about welfare.

At the end of the 19th century new types of welfare organisations emerged with a more scientific and complex way of seeing poverty and its causes. Their work was based on the idea of neighbourhood-assistance rather than moral concepts and they can be seen as the first american institutions of modern social welfare.

Most of these organisations tended to fight against state run welfare programs. They claimed individual help with goods to be much more effective than financial help from the government. Moreover the political culture of the USA was shaped by an enormous distrust in the governmental bureaucracy because of corruption and patronage. During the progressive movement before the first world war the states could gain better positions in social politics. A few political voluntary organisations (the American Association for Social Security beeing the most important one) called for more state intervention in social politics. As a longterm consequence state and local support for education, family assistance and improved working conditions increased.

Business investment in welfare became popular during the 1920s due to economic prosperity and current economical production methods. People believed that within the system of welfare capitalism social problems could be solved by the economy and society itself. The Great Depression starting at the end of the 1920s proved this to be wrong and paved the way for state intervention and social reforms.

2. Establishment and Expansion of Social Policies (1935-1970s)

The Social Security Act of 1935 was part of the New Deal politics of F.D. Roosevelt: What began as an emergency-program for the victims of the Great Depression, became the basis of the federal welfare state. It established nation-spanning social insurance and public assistance programs, creating a basic framework for U.S. public social provision that has remained in place to the present. Apart from the federal old-age program for Civil War veterans which had existed since the 19th century, it was the first social policy of the federal goverment. It included three major kinds of social provision: a national contributory old-age insurance; federally required, state-run unemployment insurance and federally subsidized public assistance.

The old-age insurance (OASI) was the most successful federal program which has become the centerpiece of U.S. public social provision. It is based on equaly paid contributions from workers and employers and it expanded in the following decades, covering 90% of the working population in the 1960s. It was completed by additional programs in 1939 (for surviving dependents), 1956 (for disabled workers) and 1965 (medical care; see below).

Though the unemployment insurance was based on federal law (it is payed only by the employers), each state was free to decide terms of eligibility and benefits for unemployed workers. The conditions became quite uneven across the states and despite efforts in the 1930s and 1940s to nationalize the different policies no explicit coordination was achieved. In 1948 state run accident insurances were added, paid by the fees of employers.

Public assistance programs already existed in certain states in the early 1930s. Assistance for the elderly poor and for dependent children were the most important of these programs. Aid to Families with Dependent Children (AFDC) became the most important program, It was organised and financed by the states and communities and supported by federal grants. Coverage and benefits vary considerably across the states, generally providing the least to the poorest people in the poorest states and leaving many impoverished men and husband-wife families without any coverage at all.

The most important pressure groups for the outcome and shape of the Social Security Act was not a labor union but the small "American Association for Social Security" with academic reformers as was mentioned above. Other major syndicates such as the "Chamber of Comerce of the U.S" (employers) and the two major labor unions ("American Federation of Labor" and "Congress of Industrial Organisations") had no clear opinion and policies. The "American Federation of Labor" together with the "Comittee on Economic Security" of the goverment played an important role for expansion and reforms of the welfare state. (see Wieland 1995).

During the Second World War and the beginning of the Cold War all american efforts concentrated on national self protection rather then social security . Welfare almost became a historical topic (Wieland 1995,p.3).

It was during President Johnsons period of "Great society" and the Civil Rights movement in the 1960s that welfare was reformed and expanded. Major new programs were established in the form of in-kind aid through Food-Stamps and Medicaid. The food stamps program is federally financed and administrated and provides additional food for non-working people who live below the poverty line. The costs of Medicaid are shared by the federal government and the states. It covers emergency health care for children, women and seniors with little or no income.

The old-age security was completed by a new obligatory national health-care system called Medicare which was mostly paid by federal grants.

In 1972 moreover, other old-age and disability programs (SSI) were nationalized, insuring more standardized benefits.

3. Deconstructing the Welfare State (1974-1998)

Starting with the global Oil-Crisis (1974/75) and continuing with the neo-liberal politics of President Reagan the U.S. policies moved towards a reduction of the welfare state. State expenditures on welfare were considered to be to high and the involvement of the federal government to strong. But the commitment of society towards established social securities proved to be quite strong; the Reagan administration could only cut back on certain benefits. Welfare programs were substantially reduced, although they only made up about one tenth of national social expenditures.

The Bush and Clinton administrations didn’t bring much change. The health-care reform of the Clinton administration 1997 only brought tiny improvements within the existing system. The original plan to integrate uninsured Americans with a low income into medicare and medicaid, failed.

With the welfare reform of the existing AFDC program (1996 it was renamed into "Temporary Assistance for Needy Families" (TANF)) Clinton has continued the cut-back politics of President Reagan. Ideologically the reform reactivated conservative values from the 19th century by using welfare as an instrument of social control and education (see Murswieck 1998,p.41).

Finally it should be pointed out that welfare capitalism also has another dimension: the commitment of the american society for welfare is still very strong:

- about one million non-governmental, non-profit organisations are dedicated to welfare

- more than 80% of all american citizens claim to be part of at least one such organisation

- about 60% of all american citizens do voluntary work in such organisations

The majority of Americans are against an expansion of the welfare state, but they want increasing efforts to fight poverty on a private level (Murswieck 1998,p.42-45).

Literature:

Esping-Andersen,Gosta:The Three Worlds of Welfare Capitalism, Cambridge 1990

Holtfrerich, Carl-Ludwig: Wirtschaft USA; Strukturen, Institutionen und Prozesse; Oldenbourg 1991,part 3

Murswieck,Axel: Sozialpolitik in den USA; Eine Einführung, Opladen 1988

Murswieck,Axel: Die Sozialpolitik der USA: Ein Weg für die Zukunft? in: APuZ B19/98

Weir,Margaret: The Politics of Social Policy in the USA, Princeton 1988

Wieland,Walter: Zwischen Freiheit und Sicherheit; Amerikanische Sozialpolitik im Widerstreit der Interessensgruppen (1935-54); Hamburg 1995