Why Did Early Industrial Capitalists Suggest Minimum Wages and Social Insurance?

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    Abstract

    Today the European welfare states are strongly challenged and it is heavily debated how much social security a society should provide and how much private insurance is possible. This article goes back to the origins of the German welfare state. In the 1830s, industrialists from the district of Aachen (Prussian Rhineprovince) suggested to implement collective labour rules regulating working hours and wages. In the 1860s – 20 years before Bismarck – they proposed a mandatory pension system with equal contributions of employers and employees; they suggested labour conflict resolution by joint arbitration panels of employers and labour representatives. The proposals did not gain support from the Prussian ministries arguing collective agreements would violate freedom of contracting.
    Entrepreneurs demanding social welfare and the Prussian state defending economic liberalism – this challenges the perception of the Bismarckian welfare state as a means to reconcile labour with the German state. Yet, in the early 19th century the district of Aachen was the most advanced economic region in Prussia in regard with industrial employment and modern industrial organisation. Producing quality goods for the world markets, the industrialists aimed at stabilizing the social environment and reconciling labour with the capitalist society. Their motivation, however, was not based on philanthropy; it was guided by economic aims and collective selfinterest. Analysing ‘social policy’ as a capitalist aim, the paper puts the German welfare state in a new perspective. By doing this it also wants to contribute to the discussion on the future of the modern welfare states, because if the argument presented here holds it might have implications for the possibility of privately solving social problems.
    Original languageEnglish
    Publication date2013
    Number of pages27
    Publication statusPublished - 2013
    EventThe 17th Annual European Business History Association (EBHA) Conference - Uppsala University, Uppsala, Sweden
    Duration: 22 Aug 201324 Aug 2013
    Conference number: 17
    http://www.ucbh.uu.se/ebha2013/

    Conference

    ConferenceThe 17th Annual European Business History Association (EBHA) Conference
    Number17
    LocationUppsala University
    Country/TerritorySweden
    CityUppsala
    Period22/08/201324/08/2013
    Internet address

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