How Capitalism Creates The Welfare State


The two concepts are usually seen in complete opposition in our political discourse. The more capitalism and wealth, the familiar argument goes, the better able we are to do without a safety net for the poor, elderly, sick and young. And that’s true so far as it goes. What it doesn’t get at is that the forces that free market capitalism unleashes are precisely the forces that undermine traditional forms of community and family that once served as a traditional safety net, free from government control. In the West, it happened slowly – with the welfare state emerging in 19th century Germany and spreading elsewhere, as individuals uprooted themselves from their home towns and forged new careers, lives and families in the big cities, with all the broken homes, deserted villages, and bewildered families they left behind. But in South Korea, the shift has been so sudden and so incomplete that you see just how powerfully anti-family capitalism can be:

[The] nation’s runaway economic success … has worn away at the Confucian social contract that formed the bedrock of Korean culture for centuries. That contract was built on the premise that parents would do almost anything to care for their children — in recent times, depleting their life savings to pay for a good education — and then would end their lives in their children’s care. No Social Security system was needed. Nursing homes were rare.

But as South Korea’s hard-charging younger generations joined an exodus from farms to cities in recent decades, or simply found themselves working harder in the hypercompetitive environment that helped drive the nation’s economic miracle, their parents were often left behind. Many elderly people now live out their final years poor, in rural areas with the melancholy feel of ghost towns.

The result is a generation of the elderly committing suicide at historic rates: from 1,161 in 2000 to 4,378 in 2010. The Korean government requires the elderly to ask their families for resources if they can pay for retirement funding – forcing parents to beg children to pay for their living alone – a fate they never anticipated and that violates their sense of dignity. Hence the suicides.

We can forget this but the cultural contradictions of capitalism, brilliantly explained in Daniel Bell’s classic volume, are indeed contradictions. The turbulence of a growing wealth-creating free market disrupts traditional ways of life like no other. Even in a culture like ours used to relying from its very origins on entrepreneurial spirit, the dislocations are manifold. People have to move; their choices of partners for love and sex multiply; families disaggregate on their own virtual devices; grandparents are assigned to assisted living; second marriages are as familiar as first ones; and whole industries – and all the learned skills that went with them – can just disappear overnight (I think of my own profession as a journalist, but it is one of countless).

Capitalism is in this sense anti-conservative. It is a disruptive, culturally revolutionary force through human society. It has changed the world in three centuries more than at any time in the two hundred millennia that humans have lived on the earth. This must leave – and has surely left – victims behind. Which is why the welfare state emerged. The sheer cruelty of the market, the way it dispenses brutally with inefficiency (i.e. human beings and their jobs), the manner in which it encourages constant travel and communication: these, as Bell noted, are not ways to strengthen existing social norms, buttress the family, allow the civil society to do what it once did: take care of people within smaller familial units according to generational justice and respect. That kind of social order – the ultimate conservative utopia – is inimical to the capitalist enterprise.

Which is why many leaders in the nineteenth and twentieth centuries, conservatives as well as liberals, attached a safety net to such an unsafe, bewildering, constantly shifting web of human demand and supply. They did so in part for humane reasons – but also because they realized that unless capitalism red in tooth and claw were complemented by some collective cushioning, it would soon fall prey to more revolutionary movements. The safety net was created to save capitalism from itself, not to attack capitalism.

This is not to argue against the conservative notion that it is precisely because of capitalism that we have to foster greater family bonds, keep marriage alive, communities together. It is simply to argue that to argue for this and the kind of capitalism that Paul Ryan favors is a tall order. And it isn’t working. The forces of global capitalism – now unleashed on an unprecedented global scale with China, Russia, Brazil and India – are destroying the kind of society which allows and encourages stability, traditional families, and self-sufficient community.

One reason, I think, that Obama’s move toward a slightly more effective welfare state has not met strong resistance – and is clearly winning the American argument – is that the sheer force of this global capitalism is coming to bear down on America more fiercely than ever before. People know this and they look for some kind of security. In other words, it is precisely capitalism’s post-1980s triumph that has helped create the social dependency so many conservatives bemoan today. And this time, there is even a sense that whole industries are disappearing faster than ever before – not simply because of outsourcing but because of technology itself, tearing through old ways of life like acid through iron.

It is unstoppable. I fear its power – given that it relies on emitting carbon in vast quantities – will soon make the world less habitable for large numbers of people. I fear it may kill so many species we will have become God on our own earth. And I think an understanding that the state will have to step in to blunt the sharper edges of this newly creative extra-destruction is emerging slowly in the public at large.

Bell was right. Capitalism destroys the very structure of the societies it enriches. But I doubt even he would have anticipated the sheer speed at which this is now happening. It makes the conservative project all but impossible, if still necessary. It does require a defense of the family, of marriage, of personal responsibility. But it also demands a compassion toward the victims of this economic and social change, an understanding of their bewilderment – which can often express itself neurotically in fundamentalist forms of religion or culture.

All I know is that it is a core conservative idea that revolutions can end in nightmares. But we conservatives also long supported and indeed recently breathed new life into the industrial and post-industrial revolution. We see the consequences far beyond the suicides of elderly Koreans. And in my bleaker moments, I wonder whether humankind will come to see this great capitalist leap forward as a huge error in human history – the moment we undid ourselves and our very environment, reaching untold material wealth as well as building societies in which loneliness, dislocation, displacement and radical insecurity cannot but increase. It seems to me this is not the moment for Randian purism.

Do we not as conservatives have a duty to tend to the world we helped make?

(Photo: This photo taken on January 11, 2013 shows an anti-suicide monitoring device (L) installed by the government at Mapo Bridge -a common site for suicides- over Seoul’s Han river. The South Korean capital has installed anti-suicide monitoring devices on bridges over the city after 196 people jumped to their deaths on 2012 according to South Korean officials. The new initiative — in a country with the highest suicide rate among leading developed nations — incorporates closed-circuit television cameras programmed to recognize motions that suggest somebody might be preparing to jump from a bridge. By Pedro Ugarte/AFP PHOTO/Getty Images.)