CHAPTER 5

THE EMERGENCE
OF THE WESTERN
WELFARE STATE

STEIN KUHNLE
ANNE SANDER

INTRODUCTION

Tms chapter seeks to provide a perspective on the early origins of the welfare state by
focusing on the emergence of the institutions of social insurance in the countries of
the European cultural complex including the European (British) settler nations.
This take on the welfare state is a relatively narrow one in that it neglects other
areas of emerging governmental responsibility for societal well-being such as health
and education and pays only passing attention to non-state and sub-state welfare
arrangements or to the complex public-private mixed responsibilities which have
developed in all countries. Such a narrow perspective is necessitated by considera-
tions of space, but is also historically justifiable. The last two decades of the
nineteenth century mark the 'take-off of the modern welfare state' (Flora and
Alber 1981). These founding years and the decades thereafter are very much asso-
ciated with the emergence and growth of social insurance-like policies.
In what follows, we look at the early period of social insurance and protection
developments until the end of World War II, and point to variations in timing, risk
perceptions, and principles of social security across Western states. Industrial, urban,
and capitalist developments, with their inherent, unprecedented social problems,
62 STEIN KUHNLE & ANNE SANDER

spurred political demands for change of regimes and of social rights. Changes in 'unc
social structure, population movements, growth of wage labour, and new kinds of hun
social insecurity were clearly conducive to a 'new thinking' about the social role of the
the state. The key question was whether the state should take a more active social beg,
role and, if so, in what way? On entering the twentieth century, social policy and Act
welfare emerged to become a crucial issue on the political agenda and while some tere
commonalities can be observed in the emergence of Western welfare states, there une
were also significant variations. The foundations for a divide between a social clea
insurance model premised on an application of relatively pure insurance principles niti,
(continental Europe) and a social citizenship model premised on universal tax-based, reli(
provision (Scandinavia, Britain, Canada, New Zealand) was, although not necessarily be I
intentionally, established in this early period. 1971
We start with an overall picture of early collective solutions to social problems. l
We then look at the political innovation of social insurance in the 1880s. Why was nati
imperial, authoritarian Germany a social insurance front-runner rather than the nati
more democratic United States and both more democratic and earlier and more be r
industrialized England? And to what extent-or for how long-was it a forerunner? nin,
What social insurance risks had priority for policy making and legislation, and plm
should insurance be voluntary or compulsory? Which groups should be covered ute<
and what should be the basis for entitlement to benefits-labour market status two
(workers, employees), industry or occupation, citizenship, or need- to be decided law:
by an income and/or means test? Why did the authorities in different countries react (M,
differently to the new challenge of social policy once the idea of social insurance had half
been emphatically put on the political agenda towards the end of the nineteenth per:
century? The first part of the chapter covers the period until about the end of stat
World War I. The second major section covers the phase of consolidation, expansion, Ind
and geographical diffusion of social insurance and protection legislation after World rigt
War I. We end with a brief look at the World War II experience. (Ri1

soc:
per,
hm
EARLY COLLECTIVE SOLUTIONS TO bus
wit
SOCIAL PROBLEMS AND CHANGING defi
IDEAS OF PUBLIC INTERVENTION aco
the
anc
Poverty has existed in some form or other since time immemorial, but has not always qu(
or everywhere been perceived as a 'social' problem. The relief of poverty has always mo
been considered a Christian duty, but social aspects of poverty were not emphasized inc
until the sixteenth century (Marsh 1980). The British Act Concerning Punishment of der
Beggars and Vagabonds from 1531 tried to differentiate between the 'deserving' and for
 THE EMERGENCE OF THE WELFARE STATE 63

'undeserving' poor, a distinction which was dominant in many national laws for
hundreds of years, and is still not everywhere completely obsolete in practice. Until
the end of the Middle Ages, poverty had been a matter of only local concern. This
began to change with the development of nation states. The famous Elizabethan
Act for the Relief of the Poor of 1601 established a national system-to be adminis-
tered by parishes-for the relief of destitute children, the disabled and infirm, the
unemployed and the work-shy. The Prussian Landrecht of 1794 gave the state a
clear patriarchal responsibility for the poor, but it was delegated to local commu-
nities to provide social care (Dorwart 1971). France never created a legal right to poor
relief: 'In France, the feeling was still [mid-nineteenth century] that the poor had to
De tfireatenect' witn tile po5S1tYi1'fty· <Jf ~"t"cit'v'atkm to be kept ,i,"}[)J}Jt.r)DJ.15' [JiimJi.og.er
1971: 46).
As modern nation states began to develop, the problem of the poor became one of
national significance, but, generally, it was still left to local authorities to implement
national laws on poor relief, vagrancy, and begging (Rimlinger 1971). And, it should
be noted, this was a relief of the poor within a framework of repression. During the
nineteenth century, persistent problems of poverty and problems related to poverty,
plus population growth, urbanization, and spread of industrialization, all contrib-
uted to the increasing salience of social problems in many European countries. The
two traditional methods of dealing with social problems, philanthropy and poor
laws, were increasingly seen by authorities and people alike as being inadequate
(Marsh 1980: 5) . Poor laws were reformed in many countries, and during the second
half of the nineteenth century two sets of forces were set in motion which slowly, but
persistently and radically, came to change the role and responsibility of the national
state for the welfare of its citizens. One derived from the changes attendant on the
Industrial Revolution, the other revolved around the radical new conception of
rights of the individual emanating from the American and French Revolutions
(Rimlinger 1971: 2-3).
The experience of industrialization sustainably altered the debate on the nature of
social contingency and perceptions of poverty. Old age or sickness had of course been
perceived as a threat to the well-being of individuals from time immemorial. Now,
however, a new-found understanding of unemployment and of the operation of the
business cycle made for a rethinking of the whole notion of welfare (Briggs 1961),
with the focus changing to provisions that addressed the most significant social
deficits with the most evident social consequences. The evolving 'social question'
accompanying industrialization served as an important spur for the crystallization of
the notion of social rights, as workers started to perceive themselves as one class
and as the labour movement gained increasing importance. Focusing on the
question of how economic progress could be secured in face of the political and
moral threat imposed by the condition of the working class, the solution was
increasingly seen as some kind of state action. Prior decades had seen the spread of
democracy and political rights. Directly or indirectly, these now smoothed the way
for social rights.
64 STEIN KUHNLE & ANNE SANDER

THE BREAKTHROUGH OF SOCIAL INSURANCE

The take-off period of the modern welfare state followed what Rimlinger (1971)
labelled 'the liberal break', a break between the old, pre-industrial concept of depen-
dence and protection and the emerging modern concept of social protection induced
by industrialization and democratization. From the end of the eighteenth to the end
of the nineteenth century, ideals of liberalism, of principles of individual freedom,
equality, and self-help, dominated social policy thinking. The erosion of liberal
principles was prompted by rapid social transformation and growing political
mobilization of workers and demands for democratization.
Surprisingly, one might claim, a radical new social policy solution, the idea and
principle of social insurance, was first legislated on a grand scale in authoritarian,
imperial Germany, not in the more industrial and democratic, but liberal, England.
The idea of social insurance built on Prussian experience in the period from the 1840s
onwards (Hennock 2007). At the time of the legislation, Germany was neither the
most industrialized nor-by far-the most democratized European country. But it
was rapidly industrializing towards the end of the nineteenth century. Announced in
the Imperial Decree of 1881, Bismarck's programme for sickness (1883), accident
(1884), old age and invalidity insurance (1889) was implemented in the course of
only six years. The new policy was radical in several senses, but most importantly in
the way that individual citizens (initially, largely industrial workers) were to be
compulsorily insured and become entitled to social benefits as a matter of right
rather than provided with poor relief benefits on the basis of discretionary needs and
means tests. Thus, the new policy also reached beyond the very poorest strata of
society and can, at least in hindsight, be seen as the 'natural' beginning of an
institutional framework which gradually came to expand and to incorporate all or
nearly all citizens-or residents-of nation states into national 'welfare regimes',
which again could-and came to-be differentially constituted in developed nation
states in terms of principles of coverage, organization, financing, and redistribution.
Social insurance and 'social security' came to embody an entirely new conception
of social protection in the history of nation states. Prior to this time, central
governments had two main functions. Primarily, they were still concerned with
protecting their populations from foreign intrusion and violence as well as from
domestic criminality. Secondarily, and already with a more modernizing focus, state
capacity was used to invest in and build infrastructure for transport and com-
munications to promote economic development-public goods provision which,
according to the theory of Adam Smith a hundred years earlier, could not be expected
or induced from private interests. Now, with the development of social insurance, the
state became involved in social protection on an unprecedented scale, dealing with
various categories of economic insecurity and providing services and income on the
basis of individual rights (Marshall 1964a).
Social insurance was the core element of an emerging new role of the state, but
governments also increasingly began to take an interest in many other social issues,
 THE EMERGENCE OF THE WELFARE STATE 65

such as public education; public health; health and hygiene conditions at the
workplace; worker protection; factory inspection and protection against child
labour; length of working hours; and relations between employers and workers.
State responsibility for the well-being of citizens other than through cash benefits
had started to develop already before major social insurance initiatives, as exempli-
fied for instance by the first national Factory Act in England (1802) and by the
Prussian law (1839) restricting child and juvenile employment. Statistical offices
developed and expanded all over Europe during the latter half of the nineteenth
century, thus strengthening state capacity to collect information on and monitor
developments in many sectors of society, and thus improving the basis for public
policy making (Landes 1972). Which, if any, social policy issues could be acted upon
by governments depended quite largely on these and other kinds of 'state capacity'
(Rueschemeyer and Skocpol 1996; Kuhnle 1996).
This was also a period in which new economic theories were developed and a new
knowledge-based discourse on the possible social policy role of the state was
emerging. Sociologists and social scientists-although few in numbers-were at
the end of the nineteenth and the beginning of the twentieth centuries seriously
concerned with the 'social question' and influential in public debates (Rueschemeyer
and Skocpol 1996). Social policy knowledge began to be circulated internationally not
only through governments and professional bureaucracies, but also through civil
society associations such as Verein for Socialpolitik (established in 1873). Associations
with similar aims for informed discourse were established in many countries in the
1880s, e.g. the Fabian Society in Great Britain and associations for national econo-
mists in Scandinavian countries.

But Was the Innovation German?

Although the German social insurance programme of the 1880s stands out as a path-
breaking event and as an example of a critical juncture in terms of national social
policy development, Germany was not the first country to embrace the idea of social
insurance. Many smaller, limited insurance schemes had been established prior to the
1880s (Alber 1982; Perrin 1969).
Bismarck's social insurance legislation was a top-down decision, generally under-
stood as an attempt to build worker loyalty towards the imperial regime after having
repressed the freedom of organization, assembly, and expression of a growing, radical
socialist movement and party (Rirnlinger 1971; Wehler 1985). The idea of social
protection to secure the loyalty of the workers to the state was supposedly one
Bismarck picked up from Napoleon III when he was Prussian ambassador to Paris
in the early 1860s, although France itself later lagged behind other industrial
countries in the development of social rights (Rimlinger 1971: 61 and Taqle 5.1
below). However Bismarckian social policy was not only about pacifying working
class protest, but also a contribution to state and nation-building (Manow 2005). The
German legislation was a radical break with liberalism also in the sense that it
66 STEIN KUHNLE & ANNE SANDER

instituted the principle of state-controlled, contributory, and compulsory insurance,

ideas still too radical in other national political contexts, where the principles of r
liberalism had a stronger foothold . But that the precedent for a new role of the nation i
state had now been established soon became obvious, and a new social policy
discourse on the welfare responsibility of the state spread across European countries
and even across the Atlantic and to the Antipodes. International congresses on issues
of accident and social insurance were held and national governments in many
countries instigated research, studies, and reports. In the period from 1884 to 1888,
for example, and with clear references to German social insurance legislation,
the governments of Denmark, Sweden, Norway, and Finland all established public
commissions to investigate what could be done on the 'social question' in their
own countries and what lessons could be drawn from the German example
(Kuhnle 1981).
Yet working-class mobilization was not the only direct or indirect factor that
played a crucial role and had a significant impact on social policy development.
As Manow and van Kersbergen (2006, 2009) emphasize, the impact of religious ideas
is often unjustifiably underestimated in welfare state research. With the German
Kulturkampf (1871-8), the struggle for power between the Roman Catholic Church
and the Prussian state escalated. This struggle took place in other countries also,
leading to the emergence or strengthening of Christian Democratic parties and trade
unions throughout Western Europe. This conflict contributed to a greater state
intrusion into social policy and education in an attempt to lessen the temporal
power of the Church and its frequently dominant role in welfare provision. Con-
trasting church-state conflicts and constellations have 'led to different coalitions
between lower and middle classes [and] [t]his, in turn, led to distinct institutional
paths of welfare state development in the West' (Manow and van Kersbergen 2006: 1).

Why Germany, not England or the United States?

Flora and Alber (1981) note that the propensity to introduce social insurance early
was considerably greater in the constitutional-dualistic monarchies (Austria,
Denmark, Germany, Sweden) than in parliamentary democracies and that this is
even more remarkable given differences in socio-economic development. England
was both more democratic and industrialized than Germany at the time. The 'social
lead' taken by non-parliamentary regimes is hypothesized to be partly an effect of a
greater need for such regimes to pacify a growing and hostile labour movement,
partly an effect of stronger state bureaucracies and partly of the domination of landed
interests that could shift the costs of social expenditures to the urban upper and
middle classes. Parliamentary democracies generally adopted social security some-
what later, often as a consequence of the extension of suffrage, but with higher levels
of population coverage and adequacy of protection. These findings demonstrate that
the emergence of welfare states is not just a matter of progressive development:
neither the logic of industrialism nor the strength of the working class are by
 THE EMERGENCE OF THE WELFARE STATE 67

themselves sufficient explanations. Social policies were introduced with different

motivations in different places and the various factors have carried different weight
in different periods.
In an alternative comparative (and temporal) perspective, Britain is hailed as a
pioneer in launching a 'modern welfare state' (Orloff and Skocpol 1984), since Britain
had before World War I already instituted workers' compensation (1897), old age
pensions (1908), health insurance (1911), and the world's first compulsory unemploy-
ment insurance (1911)-in sharp contrast to the United States, which by that
time had quite extensive Civil War pensions covering a large proportion of elderly
Americans, but which failed to institute modern pensions and social insurance
during the Progressive &a. A'nct,' 1n r!it( a1teaaj,· Jr 1y:ll' ,Rrit.'liP ,h;ul ~mpl<!SS.W
Germany as a welfare state leader with more risks and larger parts of the population
covered (Flora and Alber 1981: 55) . The contrast between Britain and the United
States is explained by the existence of a strong civil service and competing, program-
matically oriented political parties in Britain.
It is less easy to explain why Britain lagged German developments by twenty to
thirty years, since both a strong state administration and party competition were well
established in Britain by the 1880s, although the Labour Party was founded as late as
1900, thirty-one years after Bebe! and Liebknecht founded the Social Democratic
Workers' Party of Germany. However, British local government structures, necessary
for implementation of public policies, were not very comprehensive by the early
1880s. Differences in timing, principles, and scope of early state social insurance or
security legislation must, among other factors, be sought in the experience of
different institutions, e.g. the Prussian health funds (Krankenkassen) vs. the friendly
societies (Hennock 2007), that were active in the United Kingdom, New Zealand, and
Australia. Friendly societies were successful voluntary working-class associations
with a huge membership. Their growth can be regarded as an outcome of early
and gradual industrialization (or efficient capitalist agriculture in the cases of
Australia and New Zealand). The prevalence of alternative welfare providers at the
time of the birth of national social insurance helps to explain the paradox of the
relative lateness of welfare state development in more affluent and more democratic
nations.
When Bismarck's idea of compulsory social insurance came on the political
agenda, Britain and its settler nations had a fairly well-functioning, non-state alter-
native in place, thus the governmental urge to legislate and the 'objective' problem
pressure were less than in Germany. In fact, the largest organized opposition to the
British Old Age Pension Act in 1908, introducing non-contributory pensions, came
from the friendly societies (Rimlinger 1971: 59) . In Prussia, the history of compulsory
insurance followed both logically and chronologically from the decline of the guild
(Hennock, 2007: 331) . That Britain, as other parliamentary democracies, did later
develop comprehensive and even compulsory social insurance is due to other factors,
including the parties' need to appeal to new groups of voters in combination with the
increasing financial feasibility of state social initiatives. It was a Liberal government
which, after the landslide electoral victory of 1906, introduced in 1908 a means-tested
68 STEIN KUHNLE & ANNE SANDER

old age pension scheme payable from general taxation. This was followed by the
National Insurance Act of 1911, which, in introducing compulsory sickness and
unemployment insurance, in a matter of few years brought Britain to a par with
Denmark at the top of the league of embryonic welfare states. The 1908 law was an
attempt to provide a basic income to 'deserving' old people free from the taint of the
Poor Law. This is analogous to the idea behind the old age assistance laws introduced
in Denmark (1891) and New Zealand (1898). The motivation for the National
Insurance Act of 1911 was different in that its purpose was to provide health and
unemployment insurance mainly to those active in the workforce with the aim of
improving national efficiency and economic strength (Rimlinger 1971: 59-60) . The
British pension law was amended as a Widows, Orphans, and Old Age Contributory
Pensions Act in 1925.

Small, Pioneering Nations in the Shadow of Big Nations

Comparative political research in the early post-World War II period was dominated
by large nation comparisons, reflecting the largely unwarranted assumption that big
nations make innovations which are then taken up by (diffused to) their smaller
brothers. Comparative studies of historical (and current) developments in the
welfare state offer a correction to this view.
Briggs (1961: 147) has argued that 'German social insurance stimulated foreign
imitation. Denmark, for example, copied all three German pension schemes between
1891 and 1898'. Again, it is a question of (time) perspective, tracing of policy ideas,
and level of analysis. The Danish government and parliament had been concerned
with various social policy options since the 186os-the legislation that occurred in
the 1890s rested on pre-Bismarckian initiatives and studies (Kuhnle 1996). Briggs's
assertion also must be contested on the grounds that none of the three laws
introduced in Denmark in the 1890s built on German principles of social insurance.
The Danish old age pension law of 1891 was a non-contributory scheme which
instituted (local) means-tested pensions to 'deserving' people over 60 years of age
who had not received poor relief in the previous ten years. The Danish law bore no
resemblance to the German contributory income-maintenance scheme of 1889, but
the timing of social legislation in Denmark, as in the other Nordic countries in the
1890s, may be said to have been influenced by the German legislation. The Danish old
age pension law was not the first of its kind, Iceland-part of Denmark until full
independence in 1944-introduced a similar law in 1890. And, on the other side of
the globe, another small nation, New Zealand, introduced a means-tested old age
assistance law in 1898. Australia, small in terms of population, passed a non-contributory
national pension scheme in 1908, superseding earlier (but quite similar) colonial
schemes that had been introduced in New South Wales (1900), Victoria (1901), and
Queensland (1908). Thus, a number of small Western nations were pioneering quite
extensive means-tested old age assistance schemes from earlier on along principles
other than those in the German legislation.
 THE EMERGENCE OF THE WELFARE STATE 69

Denmark-before the Social Democratic Party had come close to governmental

power-already had the world's most extensive coverage of social risks by 1907-with,
in addition to the old age assistance law, legislation covering workmen's compensa-
tion (1898), subsidized voluntary sickness insurance (1892), and subsidized voluntary
unemployment insurance (1907) . The first universal contributory old age pension
scheme, combined with old age assistance, such that all citizens above pension-age
could claim a pension (Palme 1990 )-anticipating a universal citizenship-based
pension scheme (introduced in 1946)-was introduced by a Liberal government in
Sweden in 1913, putting Sweden on a par with the United Kingdom in terms of the
proportion of the population covered by social security schemes in the period before
the outbreak of World War I (Flora and Alber 1981). Although all Nordic govern-
ments in the 1880s were positively inspired by German social insurance legislation to
act politically, to do something, on the social question, only Norway is an example of
imitation of German legislation. The explanation of both the contents and sequence
of the early legislation (189os-1910s) in the Nordic countries must rather be sought
in 'path dependency' and-to some extent-in sheer coincidental, unplanned se-
quential tabling of legislative proposals (Kuhnle 1996). The text of the Norwegian
industrial accident insurance law of 1894 closely followed the German text of 1884,
and Norway was, with a Conservative government and Liberal parliamentary votes,
the only Nordic country in the 1890s to introduce a fully compulsory law.
Opting also for compulsory sickness insurance in 1909, Norway was, in general,
more prone than her neighbours to endorse the 'German' principle of compulsory
insurance. Denmark and Sweden opted for subsidized voluntary insurance in their
first laws. This can, at least partly, be explained by the fact that the relative share of
workers covered by voluntary insurance was much lower in Norway than in Den-
mark and Sweden, so there was a more acute need to enact a programme that would
quickly provide coverage for a relatively broad sector of the population (Kuhnle
1981). Here again, we see that the pre-existence and relative importance of alternative
welfare providers played a role in shaping the emerging welfare states. France
pioneered the introduction of subsidized voluntary unemployment insurance at a
national level in 1905, with Norway following suit in 1906.

What Risks Were Given Political Priority?

Flora and Alber (1981) found in their historical comparison of twelve European
countries that social insurance for industrial accidents tended to be introduced
first, unemployment insurance last, and the other two systems in between. This
trend is also evident on the global scale, as Table 5.1 indicates. Altogether thirty-two
countries in the world had introduced some kind of legislation on insurance or
compensation for industrial accidents or occupational hazards by the end of World
War I, eighteen countries had introduced some kind of sickness insurance or benefit
scheme, with Germany (1883), Norway (1909), the United Kingdom (1911), and the
Netherlands (1913) as the pioneers of compulsory schemes. Some kind of old age,
70 STEIN KUHNLE & ANNE SANDER

disability, or survivors' insurance or assistance scheme was in place in thirteen

countries, and only seven countries had introduced unemployment benefit schemes.
But the sequence of introduction of legislation differed both in Europe and in the
broader comparison, as also exemplified by the only two countries which had passed
laws on all four risks by 1918. The United Kingdom (including Ireland) manifested
the sequence Accidents I Old age I Sickness I Unemployment, while the Danish
sequence was Old age I Sickness I Accidents I Unemployment. No country intro-
duced a scheme for unemployment insurance as its first social insurance law, but
Finland and Norway exceptionally introduced measures of unemployment protec-
tion as their second laws. Not counting the limited (seafarer's) old age pension
scheme of 1885, France is also a member of this group. Germany lagged behind
many countries with its first law on unemployment in 1927.

CONSOLIDATION, EXPANSION,
DIFFUSION, AND WAR

As has been shown above, the factors explaining the timing of policy innovation
prior to World War I have different explanatory weights across countries and time,
depending upon, among other things, social cleavages, the history and characteristics
of the state, the prevalence of non-state welfare provision, and political party and
government constellations. Obviously, parties also at times change political prefer-
ences and strategies. Table 5.1 shows that around fifty social insurance laws had been
passed before any labour or social democratic party for the first time formed a
majority national government (Australia in 1910). Suffrage was radically extended
throughout Western nations during the early decades of the twentieth century, such
that universal manhood suffrage was generally in place by 1920 and in many
countries also full or near universal woman suffrage. The party-political basis for
voter mobilization and participation had significantly changed since the early phase
of social insurance evolution, when governments and parliaments were dominated
by conservative and, gradually, liberal political forces. World War I had a radicalizing
effect on post-war (social) politics making for a generally much stronger role of
government in social matters. During the interwar period, the rising impact oflabour
and social democratic parties and their participation and leading positions in
governments were conducive to more active expansion of social security coverage
in the Scandinavian countries (partly 1920s, particularly 1930s) and in New Zealand
(after 1935).
In the interwar period, state social insurance and protection was extended in three
ways: in terms of the scope of risks, in terms of the coverage of population, and
through an increase in compulsory provision (Flora and Alber 1981; Table 5.1).
Table 5.1 Overview: Establishment of first statutory social security schemes in selected ILO member countries (down to 1945)3

Member State Sickness or Maternity Old age, Invalidity, and Accident Insurance; Unemployment Family Allowance
Benefit Scheme Survivors' Pension Occupational Hazards Benefit Scheme Scheme

Argentina 1934 (maternity 1919 (railway workers' 1915 (flat-rate invalidity

insurance) scheme) and survivors' benefit)
Australiab 1912 (cash maternity 1908 (non-contributory 1900 (Southern 1944 1941
benefit) invalidity and old age Australia)
benefit)
Austria 1854 (miners' scheme) 1854 (miners' scheme) 1888 1920 1948
Belgium 1844 (seafarers' scheme) 1884 (seafarers' scheme) 1903 1920 (subsidized, 1930
voluntary)
Brazil 1931 (limited to particular 1923 (railway workers' 1919 (flat-rate invalidity - 1941
groups of workers) scheme) and survivors' benefit)
Bulgaria 1924 1924 (invalidity and 1924 1925 1942
old age)
Canada 1935 (medical care; 1927 (non-contributory 1902 (British Columbia 1940 1944
Alberta only) old age) only)
Chile 1924 1924 (invalidity and 1916 1937 (salaried 1937
old age) employees' scheme)
Costa Rica 1941 1941 1925
Cuba 1934 (maternity 1923 (employees in land 1916
insurance) transport undertakings)
Czechoslovakia c 1888 (Bohemia, Moravia, 1889 (miners' scheme) 1888 1921 (subsidized, 1945
Silesia only) voluntary)

(continued)
Table 5.1 Continued

Member State Sickness or Maternity Old age, Invalidity, and Accident Insurance; Unemployment Family Allowance
Benefit Scheme Survivors' Pension Occupational Hazards Benefit Scheme Scheme

Denmark 1892 (subsidized, 1891 (non-contributory 1898 1907 (subsidized,

voluntary) old age) voluntary)
Ecuador 1935 1928 (bank employees; 1921
invalidity and old age)
Finlandd - 1937 1895 1917 (subsidized, 1943
voluntary)
France 1928 1885 (seafarers' scheme) 1898 1905 1932
1910
Germany 1883 1889 (invalidity and old 1884 1927
age)
Greece 1926 1922 (seafarers' scheme) 1914 1945
Hungary 1907 1925 (miners' scheme) 1900 (agricultural - 1938
scheme)
Iceland' 1936 1890 (non-contributory 1903 (fishermen on 1936
old age) decked vessels)
lrelandf 1911 (cash benefit Et 1908 (non-contributory 1897 1911 1944
medical ass.) old age)
Italy 1910 (maternity 1861 (seafarers' scheme) 1898 1919 1936
insurance)
Japan 1922 1941 1905 (miners' scheme)
Luxembourg 1901 1911 (wage-earners' 1902 1921
scheme) (non-contributory)
Mexico 1942 1942 1931

Mrmhl'l '-,1111
Member State Sickness or Maternity Old age, Invalidity, and Accident Insurance ; Unemployment Family Allowance
Benefit Scheme Survivors' Pension Occupational Hazards Benefit Scheme Scheme

Netherlands 1913 (cash benefit & 1913 1901 1916 (subsidized, 1939
med ical ass.) voluntary)
New Zealand 1938 1898 (non - contributory 1900 1930 1926
old age)
Norway9 1909 1936 1894 1906 (subsidized, 1946
voluntary)
Panama 1941 1941 1916
Paraguay 1943 1924 (railway workers' 1927
scheme)
Peru 1936 (wage-earners' 1936 (wage-earners' 1911
scheme) scheme)
Polandh 1889 (West and Upper 1889 (invalidity and 1883 1924
Silesia only) old age)
Portugal 1919 1919 1913 - 1942
Roman ia 1912 1912 1912 - 1944
Republic of - 1928 (non-contributory 1914 1937 1947
South Africa old age)
Spain 1929 (maternity 1919 (old age benefit) 1922 1919 (subsidized, 1938
insu rance) voluntary)
Sweden 1891 (cash benefit & 1913 (invalidity and 1901 1934 (subsid ized, 1947
medical ass.) old age) voluntary)
Switzerland 1911 (Federal Act) 1916 (i nvalidity and old 1911 1924 (subsidized,
age; Glaris only) voluntary)
USSR 1922 1922 1922 1922 1944
United 1911 1908 (non-contributory 1897 191 1 1945
Kingdom old age)

(con tinued )
 Table 5.1 Continued

Member State Sickness or Matern ity Old age, Invalidity, and Accident Insurance; Unemployment Family Allowance
Benefit Scheme Survivors' Pension Occupational Hazards Benefit Scheme Scheme
United States - 1935i (old age benefit) 1908 1935
Uruguay - 1919 (limited to 1920 1944 (meat canning 1943
particular groups of industry)
workers)
Vietnam 1944 (cash benefit Et - 1943 (flat- rate invalidity - 1944
medical ass.) and survivors' benefit)
Yugoslaviai 1888 (Dalmatia, Sloven ia 1889 (Dalmatia, Slovenia 1887 1927
only) only; miners' scheme)

Notes:• Member countries that had introduced at least three out of five pillars by 1945.
bCommonwealth of Austral ia (federal stat e) after 1901, separate (Brit ish) colonies before t hat.
c Part of Aust ria/Austro- Hungarian Empi re until 1918. Inherited Austrian law.
d Part of Ru ssian Emp ire unt il 1919.
< Under Act of Union w ith Denmark from 1918 t o 1943. Dan ish dependency before that.
r Under Brit ish ru le until 1921 .
9 Part of Kingdom of Sweden-Norway until 1905.

h Part of Austro-Hungarian Empire until 1918. Inherited Austrian law.

i Civil War Pensions for veterans were implemented as early as 1862, including add it ional provisions for w idows and dependants as of 1873.
i Kingdom of Yugoslavia as of 1929. Before that Kingdom of Serbs, Croats, and Slovenes, estab lished in 1918 by t he union of the State of Slovenes, Croats, and Serbs and the
Kingdom of Serbia. Partly under ru le of Austro-Hungarian Empire.
Source: Authors' own based on Perri n 1969: 285-7 .

. . . .. - ----~---~-----~
. .....
 THE EMERGENCE OF THE WELFARE STATE 75

For example, industrial accident/occupational injury insurance as well as pension

insurance were gradually expanded to cover more groups of workers and employees
and also to cover family dependants. Germany was first to introduce survivors'
pension benefits in 1911 and most Western countries followed suit in the 1930s.
Norway pioneered the provision of medical benefits for family members in its first
sickness insurance law of 1909 and most countries extended their laws to include
family members after 1930. New Zealand became the first country to develop a
scheme for family allowances-in the mid-192os, thus extending the concept of
social risks to be dealt with by the state. Such laws were passed in many countries
during the 1930s, in World War II, and immediately thereafter.
While before World War I social security was almost entirely a concern of
governments of European and European settler nations, the idea and practice of
social security spread during the interwar period to other regions of the world,
most visibly to North, Central, and Latin America. This was often with the help
of the International Labour Organization (ILO), established in 1919 (see further
below).

Social Security Principles Gaining Ground

The spread of social insurance and welfare statism both in terms of countries covered
and concerning the scope of provisions and its beneficiaries increasingly became part
of social and economic policy in the aftermath of World War L While previous
decades had seen rather cautious experimentation with various schemes of social
insurance, social security principles were now gaining ground, developing rapidly in
most European countries and European settler nations and also spreading to the
European periphery and beyond Europe (see Table 5.1).
The function originally assigned to welfare was that of offering relief to the poorest
which was then integrated into the insurance principle whose 'essential advantage . . .
lay in its affirmation of the right of insured persons to protection against specified
risks' (Perrin 1969: 253). This focus on the integration of the proletariat and the
notion of social security as a solution to class antagonism was prominent in debates
about citizens' social rights which became the key rationale for the growing labour
movement. The welfare state as a state particularly for the working class, and closely
linked to a demand for social rights as inherent aspects of democracy, was increas-
ingly associated with 'social democracy' (Briggs 1961: 222). The changing notions of
welfare and social security had already become evident before World War I. Social
policy considerations shaped election campaigns in some countries and played a part
in the election of the world's first Labour Government in Australia in the first decade
of the twentieth century. The role of the state as a provider and protector of social
rights became evident in the legislation of many Western European countries before
and increasingly after World War I (Briggs 1961). But, as Baldwin (1990) has shown,
the 'laborist social interpretation' of social and welfare reforms required support from
other quarters. Both in Britain and Scandinavia, solidaristic risk-sharing measures
76 STEIN KUHNLE & ANNE SANDER

also strongly reflected the interests of the middle classes and, in Scandinavia in
particular, the interests of the politically emerging agrarian middle classes (see also
Kangas 1991) .
But not all countries that had started out as pioneers of welfare state development
continued on this path-Germany and Australia being the most prominent examples
of erstwhile leaders whose later performance faltered in various ways. Nor did the
implementation of social security principles always take the social insurance form.
Most notably, the United States-widely labelled as a laggard in welfare state devel-
opment and politically criticized for not having (even until today) introduced
comprehensive health insurance-did not adopt policies along European lines
(Skocpol 1995). The focus in the United States rather was on separating welfare
and social security, with an early introduction of provision for children, widows, and
War Veterans, but lagging behind in implementing a national social insurance
scheme. It was not until the Great Depression that President Roosevelt and reformers
tried to implement more comprehensive measures in the New Deal. The 1935 Social
Security Act, introducing contributory old age insurance on a national basis and
compulsory unemployment insurance, was, of course, the centrepiece of these
struggles.
The reasons for the unequal rise of social security principles are numerous and
have initiated broad scholarly discussion. Historical comparative analyses over the
years offer different theoretical explanations. Particular significance has been attrib-
uted to the social democratic hypothesis which has repeatedly been amended and
transformed to focus not only on left-wing parties in power but also on the impact of
farmer-labour coalitions (as in the case of Sweden and Finland) or Christian
Democratic rule (Amenta 2003; van Kersbergen 1995). While in Europe, trade unions
had been able to or had strived to transform their claims into policy through their
respective parties, which in turn led to a continuous expansion of welfare as these
parties gained power (Korpi 1983; Esping-Andersen 1985a), in other countries, such
as the United States, welfare was rather considered as the 'operational expression of
social citizenship' (Mead 1997b: 249) .

Expansion of Risks and Population Groups Covered

Before the outbreak of World War I, most countries in Europe had introduced at least
two of the four pillars in the core fields of insurance; beyond Europe at this time, only
Australia had three schemes, and New Zealand two schemes.
In the interwar period, a fifth type of core social security scheme came on the
political agenda, namely family allowances, with New Zealand, Belgium, and France
taking the lead. Among the lead countries, social security was extended to cover new
risks, unemployment in particular, and larger population groups, although once
again expansion did not conform to a uniform pattern. Denmark and the United
Kingdom were most expansive as to population coverage. Expansion was most visible
in countries where socialist or social democratic parties had the greatest electoral
 THE EMERGENCE OF THE WELFARE STATE 77

support and governmental authority. The weakest expansion occurred under fascist
auspices in Italy, Austria, and Germany (Alber 1979).
For Western democratic states, the era beginning with the Great Depression until
the aftermath of World War II was characterized by reforms and policy developments
which pointed in the direction of universalistic welfare states. More and more
population groups, including family dependants, were (compulsorily) covered.
Also, governments dealt with a broader scope of social risks. However, the depression
years also posed a major challenge to governments with unemployment and social
hardships on the rise. It is therefore not surprising that the 1930s saw the greatest
variation and heterogeneity of social insurance schemes. While some countries
witnessed the first retrenchment of provision, others (such as Norway) joined the
league of pioneering welfare states (Alber 1982: 153).
Alber finds particularly strong expansion in countries with strong leftist parties
and in periods following times of hardship (World War I, the Great Depression).
Even countries with similar backgrounds and prior welfare state development took
divergent paths. While the difficulties in coping with unemployment and poverty led
to stagnation in welfare expansion in Australia (Castles and Uhr 2005), the post-1920
years in New Zealand were characterized by a number of major welfare innovations
such as the introduction of the world's first family allowance scheme. Following a
halt in policy innovation during the economic crisis, New Zealand Labour gained a
landslide electoral success in 1935 based on their plans for social reform leaving the
new government to be judged by some as 'the strongest that has ever existed in the
English speaking world' (Castles 1985: 26). The 1938 Social Security Act implemented
a comprehensive and unified welfare scheme which the ILO judged as having had an
important influence on legislation in other countries. Yet, when the Australian
government attempted to reform its own (largely individualistic) health scheme in
the early 1940s modelling its plans on those in New Zealand, it met with strong
opposition and defeat at the hands of the Constitutional Court.
Even countries with rather different concepts of equality and welfare from those in
Europe and in the Antipodean settler states shifted towards a more social democratic
philosophy of insuring social risks under the pressure of economic crisis. In the
United States and Canada, reformist forces tried to introduce comprehensive social
security schemes and moved towards greater state intervention in their New Deal
policies, which, in Canada, resulted in a strengthened role for the federal government
and the introduction of federal unemployment insurance in 1940.

The Idea of Social Citizenship

In most Western countries, in the period after World War I, social security principles
had become an integral part of party politics and government policies. Welfare was
increasingly regarded as guaranteeing more than just a minimum of economic
security, perhaps offering some sort of protection 'from cradle to grave'. But allocat-
ing costs and reallocating risks, along with the distributional implications of both,
78 STEIN KUHNLE & ANNE SANDER

remained fiercely contested terrain. There was still a battle over society's capacity and
willingness to treat all of its citizens equally. As Baldwin puts it: 'the battles behind
the welfare state lay bare the structure and conflicts of modern society ... As eco-
nomic producers or as members of different classes, individuals were still treated
unalike by the market and by inherited hierarchies. But as creatures subject to
risk, they could stand equal' (Baldwin 1990: 1-2). Pioneering welfare schemes like
Bismarck's were a long way from realizing such equality. Beveridgean ideas may have
come somewhat closer. But much of the case for social insurance remained economic.
Social insurance could be employed to maintain social stability and thereby secure
economic outputs.
The shift in focus from social welfare to social justice is seen by many scholars as a
logical consequence of democratization and the emergence of social rights from the
prior institutionalization of political rights (Flora and Alber 1981). Famously, T. H.
Marshall (1963) saw this process in terms of the development of social citizenship: as
progress in the assignment of rights to citizens, from civil to political to social rights
(for a discussion of social rights of citizenship, see Chapter 35) . But the degree to
which citizenship is intrinsic to the welfare state has always been contested. In
practice, the degree of equality aimed at and achieved through social security
schemes differs significantly across nations and through time.

The Internationalization of Social Security and ing

Diffusion beyond Europe and the New World: whi
me,
The Role of the ILO
ther
The dawning of a 'new age' of social security was also marked by the establishment of 1
the International Labour Organization (ILO) in 1919 and thus the spread of the idea the
of minimum social standards on an international scale. Created as part of the Treaty free
of Versailles, the organization reflected the belief that through social justice universal poli,
peace could be accomplished. The most important rationale behind the ILO was the nut!
experience of World War I, promoting from the very beginning the diffusion, was ;
expansion, and consolidation of social insurance schemes. Much of the spread of (wid
welfare provision beyond the West during this time period has to be ascribed to the justil
!LO and the legislative examples it gave (Perrin 1969). w
The interwar period was one in which social insurance and social security not only <level
expanded to cover all major risks and more population groups in European countries Insur
but also became a worldwide phenomenon. The ILO came to play not only an of wl
important role as catalyser for social insurance and as promoter of international dispu
best practice, but also as a storehouse for statistics, documentation, and national fight
social and labour legislation. It passed a large number of norm-setting conventions peace
and recommendations in all fields of social insurance, and undoubtedly had an Titmi
impact upon the growth of social security at a time when its expansion was poten- natio1
tially threatened by world economic developments. social
 THE EMERGENCE OF THE WELFARE STATE 79

Table 5.1 demonstrates that by the end of World War II social insurance had
developed well beyond the borders of Western Europe and the European settler
nations. Some Eastern European countries had inherited Austrian law as part of
the Austro-Hungarian Empire before 1918. In Latin America, social insurance also
took off, starting initially with limited provision covering specific groups, e.g. bank-
ers in Ecuador, railway workers in Argentina, with Chile being among the few
countries worldwide which had introduced all five pillars by 1937. In Asia, Japan
was the forerunner in the field of social security.

THE WARTIME IMPACT

Following the Great Depression and its significant impact on social policy in a
number of countries, the preparations for and the eventual outbreak of World War
II marked a further stage in the development of what then came to be modern welfare
states after 1945. In fact, the question of what impact warfare has had on welfare and
whether war initiated a break in ongoing developments or rather represented conti-
nuity has provoked a number of debates. Goodin and Dryzek (1995) have argued that
wartime experiences shaped the post-war trajectory of social development by creat-
ing a sense of solidarity manifested in subsequent (post-war) generosity of spending,
while Peacock and Wiseman (1961) have suggested that wartime increases in govern-
ment expenditure increase the threshold of 'tolerable taxation' for welfare purposes
thereafter.
The wartime experience also illustrates more malign impacts on the ideology of
the welfare state. Social policy, as Titmuss (1974b) emphasized, is neither ideology
free and nor does it always imply welfare for all. The development of German social
policy in the Nazi years is a case in point. The Weimar years in Germany had seen the
further expansion and elaboration of ideas of social citizenship, but this conception
was now replaced by that of a citizen defined in racial terms, with eugenic principles
(widely current at the time in European thinking) and later euthanasia enlisted as a
justification for and a means of shaping the Nazi-type Aryan family.
World War II also significantly shaped visions and plans for post-war welfare state
development, although the extent to which Beveridge's famous 1942 Report on Social
Insurance and Allied Services was actually responsible for the establishment in Britain
of what, by 1950, could be seen as the world's most comprehensive welfare state is
disputed. With his recommendations, Beveridge explicitly urged the government to
fight the five 'Giant Evils of Want, Disease, Ignorance, Squalor and Idleness' to secure
peace by providing 'security from cradle to grave'. Both Marshall (1964a) and
Titmuss (1950, 1976a) point to the wartime experience as a basis for a spirit of
national solidarity and increased social policy efforts in the direction of universal
social provision irrespective of class and status. This perspective is contested.
80 STEIN KUHNLE & ANNE SANDER

Revisionist historians have argued that there is little evidence that the war induced
heightened government awareness of social welfare as a tool of national efficiency or
of enhanced social solidarity and it is argued that Titmuss exaggerated the impact of
the war on subsequent policy development (Harris 1981; Mommsen 1981; Welshman
1998). Less disputable is the Norwegian case. All Norwegian political parties from the
Communists to the Conservatives came out of five years' of German occupation with
a commitment to a unique joint political programme before the parliamentary
elections of 1945. Inspired by the Beveridge Report and the platform and record of
the Social Democrats and the trade union federation (LO) in neutral Sweden, they
promised to build a universal national 'people's social security system'. Thus, the
impact of wartime experience is likely to have varied not only according to pre-war
social policy history, but also on the basis of whether countries were active partici-
pants in the war, subject to foreign occupation, materially and physically devastated,
and/or carried huge human losses. The United States was the only big industrial
economy of the world that had not been debilitated by the war. Arguably because its
economy was so strong, the urge to nurture and expand ideas of a welfare state was
not as prevalent there as in Europe (Brinkley 1996).
The concept of the welfare state itself came into common usage-and, with the
exception of the United States, mostly in a positive sense in Britain and subsequently
across Europe-from the late 1940s onwards. A new chapter in Western social policy
had begun.