Introduction
Welfare capitalism, often called laissez-faire capitalism, refers to privately owned businesses dictating the welfare services employees receive. People interchange its meaning with socialism, but the two differ in that while welfare capitalism limits government involvement in trade and industry, socialism allows the government control over most business activities. Some of the activities in welfare capitalism involve businesses offering incentives such as child support for employees’ children or retirement benefits, usually to care about employees’ welfare and motivate them towards better performance. However, some philosophers and economists argue that welfare capitalism was introduced for employers’ self-benefits rather than employees’ benefits. Canada was one of the countries that transitioned to capitalism, such a significant economic and political change that its impacts are still felt today. This adoption was influenced mostly by working-class activism. This essay explores welfare capitalism in depth while focusing on its history, economic change, how working-class activism influenced its adoption, and impact on their working life. The essay will also determine if welfare capitalism successfully provided the working class with better working conditions or if it compromised their working demands. Therefore, the paper aims to assess the evolution of welfare capitalism, its influence on the economy, especially during the Great Depression, and its impact on the Canadian working class.
Thesis statement
The welfare capitalism in 20th-century Canada, characterized by government social programs and employee benefits, greatly improved the lives of working class Canadians. However, the skepticism was positively embraced as a means of challenging economic hard times and social safety net, thus leaving a legacy on contemporary social policies.
Historical Context
Welfare capitalism in Canada is traced back to the early 20th century when Canada, which had initially participated in cross-border trade with other countries such as Britain and France by giving them raw materials and getting finished products, among others, such as fish and clothes, abandoned the Seigneurial system and started producing its products. Among the figures greatly remembered for their contribution is John Molson, who introduced transportation systems such as railways and steamships. With such good infrastructure, Canada became more industrialized by creating many manufacturing factories. As such, the private sector realized growth that limited government involvement, thus causing the birth of capitalism in the country. It could not regulate these personal business activities or their social welfare. It even became hard for unions like the Trade and Labour Congress to negotiate better employee working conditions. This is demonstrated by the lack of employment policies, such as minimum wage in the country (Garton & McCallum, 1996)
Still, workers organized to seek the government’s intervention in achieving better working conditions. This is demonstrated by the 1919 Winnipeg General Strike, the largest strike in Canadian history, which took place from 15th May to 25th June, led by the Central Strike Committee and One Big Union, as Camfield (2020)reflects on having challenged the ruling class. Even at that, the government failed to intervene. Instead, led by two cabinet ministers, Senator Gideon Robertson and Arthur Meighen, supported employers by demanding that federal workers resume work or else they would be fired and even adjusted the Immigration Act to deport immigrants back to their country, especially the British workers that had found their way into the country earlier when Canada relied on Britain for goods and services (Garton & McCallum, 1996). Some workers were injured and arrested, and even two of them died.
However, towards the 1920s and 1930s, two important things changed the course of capitalism. These are technological advancement and the Great Depression. As Wiseman & Isitt (2007) provide, with technological advancements, businesses need a robust workforce that can understand and work with the new technologies. Also, the Great Depression caused an economic downturn that upset businesses, especially privately owned businesses, and getting back on their foot necessitated that they treat the workforce better. Moreover, the depression caused many unemployed Canadians as businesses closed. As a result, they protested, demanding that the government be involved in economic recovery, including their employment. Some unions that participated in the protests include the Congress of Industrial Organizations, CIO, Cooperative Commonwealth Federation, and CCF. The massiveness of the protests forced the government to intervene, pushing businesses to create welfare programs for their employees, such as pensions for the elderly and unemployment insurance in the 1940s, as discussed by Fudge & Tucker). Such reforms introduced welfare capitalistic policies. They were further enhanced through politicians perceiving the threat of socialism and organizing for better reforms such as minimum wages, collective bargaining rights, and consumer protection. Businesses also realized that it was better to have a healthy workforce as it promotes productivity and better performance.
These reforms were even reinforced by the Keynesian model that advocated for increased state expenditure. Still, in the 1970s, the model was under attack because of the OPEC oil crisis that introduced other economic issues such as inflation and globalization that threatened businesses’ profitability and, in response, minimized social benefits and attacked unions. The government had to introduce stricter measures, such as limiting the public sector wages in 1975, thus straining welfare capitalism. The strain was further modified by the neoliberal policies that revoked the Canada Assistance Plan and increased income inequality rates (Garton & McCallum, 1996)
The Impact of Welfare Capitalism on the Working Class Canadians
Welfare capitalism had both positive and negative influences on working class Canadians in the 20th century. As part of the positives, it led to better living standards, increased education quality and access, better housing, increased employment, and strengthened the power of labor unions. Smith (2000) groups them into bargaining rights, pension insurance, family allowances, minimum wages, public housing, and unemployment insurance. Regarding better living standards, social policies such as minimum wages and extra pay for extra hours worked ensured that employees were paid well enough to afford their basic needs and could balance work and life. Concerning education, these welfare capitalistic reforms limited child labor, which enabled parents to take their children to school, and given better wages, they could give their children quality education.
The government introduction of affordable public housing projects enabled working class Canadians to save on housing costs, thus providing them with financial stability and the ability to use the saved expenses to better other areas of their lives. The unemployment insurance introduced in 1940 as part of welfare capitalistic policies provided financial and social security to working-class Canadians who lost their jobs and eased the hardships that followed such predicaments. Union’s power was also strengthened through policies introduced due to welfare capitalism. They include the Industrial Relations and Dispute Investigation Act of 1948 and the 1994 PC 1003. They were able to bargain for better working conditions for the working class Canadians so that while employers benefit from employees’ performance and productivity, employees also benefit from their work. Labor unions contributed significantly to this success in various ways, including organizing general strikes, cross-sector strikes, and continent-wide strikes. General strikes include the Winnipeg Strike of 1919, which had the participation of labor unions such as the Central Strike Committee and One Big Union. Cross-sector strikes were organized by unions such as the Canada Labour Congress, and continent-wide strikes were organized by unions such as the Congress of Industrial Organizations.
Despite these benefits, it was also associated with challenges such as systematic inequalities (Smith, 2000) that it perpetuated. For instance, only male breadwinners were allowed to work in large corporations and manufacturing firms, thus denying women such opportunities because they were deemed incapable. As such, they had limited access to welfare benefits. This is gender discrimination that reinforces traditional family structures. Moreover, Canadian workers were prioritized over immigrants such as the British, which perpetuated racial discrimination. When it comes to education, middle and high-wage workers got their children prioritized for education opportunities.
Case Studies of Imperial Oil and Ford’s Adoption of Welfare Capitalism
Grant (1998) explores the challenges and benefits of Imperial Oil adjusting to welfare capitalism as a case study. This adoption was influenced by the largest strike, the Winnipeg General Strike, just after World War I, as employees stressed the need for higher wages and safe working conditions, among other benefits. Through Hughes Reynold, the company created a Service Department that constructed policies to promote welfare capitalism. Such policies include an investment plan, standard wages, an employee-only pension, and an employee management council. While these benefits were better than nothing, Grant provides that the provisions only prevented employees from unionizing further and could not match raising wages, benefiting the company more. This case study demonstrates that despite companies adopting welfare capitalism meant to improve the lives of working class Canadians, its broadness created room for employers to manipulate it for their benefits rather than the employees’ benefits. For instance, Imperial Oil structured some benefits to be given to only whites, thus promoting racial disparities.
Ford is another company that implemented welfare capitalism, as discussed by Chomsky (2020) but intended to prevent employees from striking as they perceived the new policies to cater to their working needs. However, upon realizing this intention, they sought to challenge it through the Windsor Ford Strike of 1945.
The Effect of Welfare Capitalism on Contemporary Canadian Society
Welfare capitalism in Canada in the 20th century has left a legacy on contemporary society based on some of the practices it promoted, which are still ongoing. First is the systematic inequality that it created; for instance, only male breadwinners are granted employment opportunities in large corporations, thus disregarding women and non-immigrants and non-white workers being the least prioritized. These issues are still present in Canada’s society. A study depicted that only 54% of women were employed in 2020 compared to 62% of men. In addition to these figures, while 87.7% of men were employed full-time with stable jobs, only 75.6% of women were full-time workers and made $0.71 for every dollar a male worker made (Statistics-Canada). Also, a 2016 census indicated that for every four working-class individuals in Canada, only 1, equivalent to 26%, was non-Canadian. Such figures are examples of systematic inequalities, a legacy of the welfare capitalism introduced in Canada in the 20th century.
Another legacy left by welfare capitalism is the privatization of social welfare. In the 20th century, workers’ social welfare was left in the hands of employers with limited government involvement. This is still a major issue in contemporary Canadian society because of initiatives such as private-public partnerships whereby the government reduces its public funding and contacts private companies to provide social services (Dunlop). Thus, these private entities can control social welfare.
Another legacy left by welfare capitalism is the universal public health insurance in 1966, which still influences healthcare policies today. Today, Canada has universal health coverage funded by Medicare and meets five pillars: universality, portable across provinces, public, comprehensive coverage, and accessibility to the population (Martin, 2018). Not only is it cost-effective, but it also is equally accessible and enhances the health of working-class Canadians, thus improving productivity and performance.
Moreover, other welfare capitalistic policies, such as the pension insurance system introduced in the 1920s, are still persistent. Today, Canada has the Canada Pension Plan, CPP, a monthly taxable retirement benefit based on qualifications such as having lived in Canada for more than a year and aged 65 years and above (Government of Canada, 2024). This pension plan provides financial security to workers after retirement, enabling them to maintain their living standards and increase their independence after retirement instead of relying on government-provided social services.
Critiques
Despite the benefits that welfare capitalism is associated with, it faced some criticism in the following areas. Some socialists, such as Tommy Douglas, believed that welfare capitalism was a tool that was created as a means of exploiting workers, and given that still social welfare was entrusted to private entities, they could drop or manipulate it when it no longer benefited them (Wiseman & Isitt, 2007) Another critique that welfare capitalism faced was its male breadwinner model whereby male employees were prioritized for full-time and higher payment employment opportunities compared to women in the name of reinforcing traditional family structures. It promoted the idea that women should stay home and care for families. At the same time, men worked to provide, totally disregarding that women, despite differences in physical strength, could be as intelligent as men. This model was criticized because it perpetuated systematic inequalities, such as gender disparities. Also, the criticism was how it favored Canadians and white workers, discriminating against non-whites, indigenous, and immigrant workers such that they were only qualified for lower-paying jobs with no working benefits. Lastly, these welfare policies promoted class bribery whereby private owners, in conjunction with the government, used public funds to impress and sway their decisions so that their selfish deeds, including monopoly, would go unnoticed or unquestioned.
Some critics also argue that welfare capitalism, marked by increased government intervention, reduced performance, productivity, and creativity. This is because it created a dependence on benefits whereby workers were more interested in what they gained from working, ignoring how they could contribute to their work’s success. The government was to support their desires. Also, the policy led to high tax impositions in the name of the government being expected to meet the social needs of workers (Tillotson, 2009). However, such high taxes impaired the economy because of reduced expenditure and investments among the workers. However, this critique ignores that when employees are provided for their needs by catering to their social welfare, they are motivated, which drives them towards better performance and productivity.
Conclusion
Welfare capitalism has a long history in Canada. It is traced back to the early 20th century as a product of capitalism. It was heavily influenced by activism and unions such as the Canada Labour Congress, which organized to seek government intervention in social welfare. Some remarkable events during the historical context of welfare capitalism include the Winnipeg General Strike of 1919, the largest strike Canada has ever experienced, and the Great Depression, which pushed unemployed Canadians to protest for equal employment opportunities. At first, the government reacted negatively by silencing these activism and protests, but they became so massive, involving many Canadian workers, that it necessitated their involvement in reformation. They introduced better working conditions such as minimum wage policy, pension insurance policy, and universal health. This impacted working class Canadians through better housing plans, high wages that improved their living standards, better education among their children, and their bargaining power. However, this capitalism was criticized for promoting systematic inequalities through its male breadwinner model and offering few and lower-paying jobs to non-whites, indigenous, and immigrant workers compared to their white and Canadian counterparts. A good example of a case study that well depicts the impact of welfare capitalism on working class Canadians in the 20th century is the Imperial Oil crisis, adopting such a policy in the name of promoting employee social welfare through benefits such as joint employee committee but the truth behind it was to manipulate it for its benefit. This welfare capitalism has created a legacy in Canada in many areas, including the health sector, through a universal healthcare system, systematic inequalities that are still practiced at work, and a pension insurance policy. Some of its discourse has been criticized by philosophers and economists such as Tommy Douglas, who describes the social policy as a manipulative tool created to entrust private entities with more power so that they could drop it if it no longer profited them.
References
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