Otto Eduard Leopold von Bismarck was a Prussian statesman and diplomat of the late 19th century who played an important role in world affairs.  He became Chancellor of the North German Confederation in 1967 and the first Chancellor of the German Empire in 1871. Bismarck is also the creator of the first modern welfare state.  Ironically, Bismarck created his welfare system to prevent a radical socialist take over.

 Although idealism and compassion are offered by politicians to justify every government take-over, it is shrewd politics and tactical opportunism what often drives them to act. As Germany rapidly industrialized, it experienced what has happened elsewhere: massive migration from the countryside into the centers of industry. Its population rapidly expanded from 41 million in 1871 to 50 million in 1891. By the 1880s a majority of Germans were living in towns rather than in the rural areas. Masses of people moved quickly only to find themselves momentarily impoverished and isolated. Under such conditions many were easily lured by Socialist propagandists. As the Socialists grew in numbers, and after Bismarck failed to suppress them, he cleverly found an answer: beat them at their own game!

The socialist’s loyalties to an international movement made Bismarck distrust them as they posed a threat to a strong national identity pursued after the German reunification under the Second Reich. Using attacks against the life of the Kaiser in 1878, Bismarck introduced laws banning most socialist newspapers, trade unions associated with the socialist movement, and depriving them of a right to assemble. In 1880 the Social Democratic Party, which gathered most socialist groups and now de facto underground, met in Switzerland to plan a resistance movement against Bismarck.  Knowing that the socialists could not be tamed simply by force, Bismarck enacted socialist laws against the socialists.

Prussian nationalism was the reason for Bismarck’s injection of socialist ideas into the body politic. The radical socialists were opposed not for their specific economic policies but for being “un-German.” In a sense, the Bismarckian experiment was a precursor of Hitler’s National Socialism. In effect, the Nazis claimed to follow Bismarck’s attempts to unify the nation and enact policies enhancing the collective national organism in need of consolidation. Hitler considered himself “a second Bismarck.”[1]  The workers were cogs in the machine of the nation, centrally directed by the state.  In both instances a managed economy was promoted to defeat parasitical radical movements attaching themselves to the nation but with intolerable foreign allegiances. As is often the case, socialism hides behind other ideas. Ho Chi Minh said it much later, “We have a secret weapon…it is called Nationalism.”


Bismarck stunned Germany in 1881 by introducing in the Reichstag a legislative program that ended with the creation of a series of welfare reforms such as a national health and accident insurance, as well as retirement pensions for German workers. In doing so, Bismarck planted the seed of doubt in the capacity of the market to provide jobs and security for all and thus initiated the slippery slope of government interventionism that will eventually confirm the socialist analysis of capitalism.  Let’s listen to him:

“The real grievance of the worker is the insecurity of his existence; he is not sure that he will always have work, he is not sure that he will always be healthy, and he foresees that he will one day be old and unfit to work. If he falls into poverty, even if only through a prolonged illness, he is then completely helpless, left to his own devices, and society does not currently recognize any real obligation towards him beyond the usual help for the poor, even if he has been working all the time ever so faithfully and diligently. The usual help for the poor, however, leaves a lot to be desired, especially in large cities, where it is very much worse than in the country.”

The insecurity that drives individuals to action was seen as a hindrance and a threat to human dignity. Insecurity creates a sense of helplessness, said Bismarck. Entitlement was then proposed as the solution for the illness of insecurity. Bismarck affirmed that the state should offer the poor “a helping hand in distress…. Not as alms, but as a right.” The individual has a claim against the state and the state has an obligation toward the individual. The statesman called his system Staatssozialismus or “state socialism.”

In capitalism, to the contrary, security is not granted as a right to anyone. In effect, insecurity becomes the great engine of invention motivating men to thrust forward and recreate their environment. Instead of a social illness, insecurity is a healthy heart, the heart that pumps life into the social arrangement.  It is insecurity what allows men to first create a universe of plenty in their minds and then move to actualize it.  If you take away insecurity, you destroy the system piece by piece and rights-giving program by rights-giving program.

Conceived in Germany, the idea rapidly spread throughout industrialized Europe under the same rubrics of protecting workers from the socialists and shielding families from the perceived hazards of industrial society. Little by little, the capitalist system was assaulted in the name of saving it. Socialists all over denounced it as a new capitalist tool of oppression. It was simply another facet of the capitalist system intent on moderating the tensions of class conflict by pacifying the workers and controlling the conditions under which capital is organized.[2]  In effect, however, the policies helped the socialists destroy capitalism without the need for total war.

Destroying it has become the hallmark of American statists who have looked to Bismarck for inspiration. For example, as Professor Anthony Bradley of The King’s College tells us, Bismarck is praised as a visionary on the official U.S. Social Security Administration’s website.[3] The site says the following about Bismarck:

“Despite his impeccable right-wing credentials, Bismarck would be called a socialist for introducing these programs, as would President Roosevelt 70 years later. In his own speech to the Reichstag during the 1881 debates, Bismarck would reply: ‘Call it socialism or whatever you like. It is the same to me.’”[4]

Bismarck has become a species of patron saint for the intellectual left, almost as much a saint as Roosevelt. The very same kind of failed policies that were tried by Bismarck first and by Roosevelt later are being enacted now.  And the same rhetoric about security and want remains untouched. Whole generations of Americans have been indoctrinated into the idea that Roosevelt, modeling his welfare system on Bismarck’s, saved our country from economic doom and that now Barack Obama is saving us again.

We must be reminded, however, that the contemporary welfare state is not Barack Obama’s doing. Much of what has expanded its reach has occurred under Republican and supposedly conservative administrations. The prosaic idea that the government has an expansive responsibility for social protection and a sort of cosmic justice-enacting power to protect individuals from their own bad decisions, from bad luck and from all sorts of personal misfortunes remains entrenched in the minds of all sorts of politicians.  The self-preservation instinct of political aspirants responds to the voter’s demand for welfare, even as voters often do not call it that way. Income transfers, coated with the rhetoric of fair shares, are always popular with those who are at the receiving end. The more people at the receiving end, the more votes they get. It is a simple cost analysis.

T.H. Marshall’s evolutionary theory for the development of the nanny state tells of the change in the meaning of citizenship in a rapidly evolving industrialized culture. Such change in the meaning of social allegiance may serve to explain the steady growth of the welfare state and how politicians can justify it without recurring to explicit Marxist analysis.[5] Social mobility broke the bonds of solidarity existing in local communities and shifted such solidarity toward larger social structures. The state then came to embody the whole of society, a given “community” I could embrace wherever I go.  The different basic communities that used to provide the greatest unifying bonds eventually collapsed under the institutions of the state.  Instead of the intimate bonds of family, friends, and neighbors, we now had an overarching reality of a larger community and the bonds were now more detached and less comprehensive. Civil rights, under such construct, would give way to political rights which in turn would lay the ground for the social rights of the welfare state.  All of it happened as the inevitable evolutionary development of the industrialized world. Accept it, live it, get over it.

What is most destructive to the fabric of a free nation in this evolutionary analysis of the welfare state is that it destroys the place of basic communities and the comprehensive place they had in molding the lives and values of individuals. It detaches the person from the intimate social group, giving way to economic independence from the clan via dependency on the amoral and detached system of the state. Herein lies what is most appealing and at once devastating in the analysis―it confers on the state and its welfare institutions the legitimacy and place of a basic community that promotes the creation of true human capital. The “Bismarckian” trade-off of freedom for security eventually destroys the whole of the social fabric of a nation.

[1] See Robert Gerwarth, The Bismarck myth: Weimar Germany and the legacy of the Iron Chancellor. (Oxford, England, UK: Oxford University Press.) Pp. 131.

[2] For a Marxist analysis of the welfare state in capitalism see Regulating the Poor by Richard Cloward and Frances Piven and The Fiscal Crisis of the State by James O’Connor.

[5] See T.H. Marshall, Sociology at the Crossroads and Other Essays (London: Heineman, 1963).