Rise and Decline of the Welfare State in America

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by Prof. James Petras, Global Research:

The American welfare state was created in 1935 and continued to develop through 1973.  Since then, over a prolonged period, the capitalist class has been steadily dismantling the entire welfare state.

Between the mid 1970’s to the present (2017) labor laws, welfare rights and benefits and the construction of and subsidies for affordable housing have been gutted.  ‘Workfare’  (under President ‘Bill’ Clinton) ended welfare for the poor and displaced workers.  Meanwhile the shift to regressive taxation and the steadily declining real wages have increased corporate profits to an astronomical degree.

What started as incremental reversals during the 1990’s under Clinton has snowballed over the last two decades decimating welfare legislation and institutions.

 The earlier welfare ‘reforms’ and the current anti-welfare legislation and austerity practices have been accompanied by a series of endless imperial wars, especially in the Middle East.

In the 1940’s through the 1960’s, world and regional wars (Korea and Indo-China) were combined with significant welfare program – a form of ‘social imperialism’, which ‘buy off’ the working class while expanding the empire.  However, recent decades are characterized by multiple regional wars and the reduction or elimination of welfare programs – and a massive growth in poverty, domestic insecurity and poor health.

New Deals and Big Wars

The 1930’s witnessed the advent of social legislation and action, which laid the foundations of what is called the ‘modern welfare state’.

Labor unions were organized as working class strikes and progressive legislation facilitated trade union organization, elections, collective bargaining rights and a steady increase in union membership.  Improved work conditions, rising wages, pension plans and benefits, employer or union-provided health care and protective legislation improved the standard of living for the working class and provided for 2 generations of upward mobility.

Author Prof. James Petras (right)

Social Security legislation was approved along with workers’ compensation and the forty-hour workweek.  Jobs were created through federal programs (WPA, CCC, etc.).  Protectionist legislation facilitated the growth of domestic markets for US manufacturers.  Workplace shop steward councils organized ‘on the spot’ job action to protect safe working conditions.

World War II led to full employment and increases in union membership, as well as legislation restricting workers’ collective bargaining rights and enforcing wage freezes.  Hundreds of thousands of Americans found jobs in the war economy but a huge number were also killed or wounded in the war.

The post-war period witnessed a contradictory process:  wages and salaries increased while legislation curtailed union rights via the Taft Hartley Act and the McCarthyist purge of leftwing trade union activists.  So-called ‘right to work’ laws effectively outlawed unionization mostly in southern states, which drove industries to relocate to the anti-union states.

Welfare reforms, in the form of the GI bill, provided educational opportunities for working class and rural veterans, while federal-subsidized low interest mortgages encourage home-ownership, especially for veterans.

The New Deal created concrete improvements but did not consolidate labor influence at any level.  Capitalists and management still retained control over capital, the workplace and plant location of production.

Trade union officials signed pacts with capital:  higher pay for the workers and greater control of the workplace for the bosses.  Trade union officials joined management in repressing rank and file movements seeking to control technological changes by reducing hours (“thirty hours work for forty hours pay”).  Dissident local unions were seized and gutted by the trade union bosses – sometimes through violence.

Trade union activists, community organizers for rent control and other grassroots movements lost both the capacity and the will to advance toward large-scale structural changes of US capitalism.  Living standards improved for a few decades but the capitalist class consolidated strategic control over labor relations.  While unionized workers’ incomes, increased, inequalities, especially in the non-union sectors began to grow.  With the end of the GI bill, veterans’ access to high-quality subsidized education declined.

 While a new wave of social welfare legislation and programs began in the 1960’s and early 1970’s it was no longer a result of a mass trade union or workers’ “class struggle”.  Moreover, trade union collaboration with the capitalist regional war policies led to the killing and maiming of hundreds of thousands of workers in two wars – the Korean and Vietnamese wars.

Much of social legislation resulted from the civil and welfare rights movements.  While specific programs were helpful, none of them addressed structural racism and poverty.

The Last Wave of Social Welfarism

The 1960’a witnessed the greatest racial war in modern US history:  Mass movements in the South and North rocked state and federal governments, while advancing the cause of civil, social and political rights.  Millions of black citizens, joined by white activists and, in many cases, led by African American Viet Nam War veterans, confronted the state.  At the same time, millions of students and young workers, threatened by military conscription, challenged the military and social order.

Energized by mass movements, a new wave of social welfare legislation was launched by the federal government to pacify mass opposition among blacks, students, community organizers and middle class Americans.  Despite this mass popular movement, the union bosses at the AFL-CIO openly supported the war, police repression and the military, or at best, were passive impotent spectators of the drama unfolding in the nation’s streets.  Dissident union members and activists were the exception, as many had multiple identities to represent: African American, Hispanic, draft resisters, etc.

Under Presidents Lyndon Johnson and Richard Nixon, Medicare, Medicaid, OSHA, the EPA and multiple poverty programs were implemented.  A national health program, expanding Medicare for all Americans, was introduced by President Nixon and sabotaged by the Kennedy Democrats and the AFL-CIO.   Overall, social and economic inequalities diminished during this period.

The Vietnam War ended in defeat for the American militarist empire.  This coincided with the beginning of the end of social welfare as we knew it – as the bill for militarism placed even greater demands on the public treasury.

With the election of President Carter, social welfare in the US began its long decline.  The next series of regional wars were accompanied by even greater attacks on welfare via the “Volker Plan” – freezing workers’ wages as a means to combat inflation.

Guns without butter’ became the legislative policy of the Carter and Reagan Administrations.  The welfare programs were based on politically fragile foundations.

The Debacle of Welfarism

Private sector trade union membership declined from a post-world war peak of 30% falling to 12% in the 1990’s.   Today it has sunk to 7%.  Capitalists embarked on a massive program of closing thousands of factories in the unionized North which were then relocated to the non-unionized low wage southern states and t
hen overseas to Mexico and Asia.  Millions of stable jobs disappeared.

Following the election of ‘Jimmy Carter’, neither Democratic nor Republican Presidents felt any need to support labor organizations.   On the contrary, they facilitated contracts dictated by management, which reduced wages, job security, benefits and social welfare.

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