by Melchior Palyi
hat tip: Mises Daily
Wednesday, March 31, 2010
[Excerpted from chapter 2 of Compulsory Medical Care and the Welfare State (1950)]
Obligatory health insurance started moderately enough — in Prussia. Compulsion under a law of 1845 was left in the hands of municipal administrations, with no government subsidy involved and no contributions from employers. The antisocialist law of 1878 suppressed many of labor’s voluntary associations for sickness benefits. The next step was the governmentalization of the associations’ functions.
It was no mere accident that the ideological forefathers of Nazism, Adolf Wagner and Eugen Dühring, happened to be the “brain trusters” behind Bismarck’s “nationalistic socialism to end international socialism,” using his own terms. When, on January 1, 1884, his compulsory sickness scheme went into operation it literally started a new era — a new age in the history of welfarism.
Bismarck’s role in modern history is rarely spoken of nowadays. Undoubtedly, his political and administrative “genius” has shaped history down to our times. His revolutionary innovation in welfare policy was preceded five years before, in 1879, by the imposition of a protective tariff that started Europe’s internecine commercial warfare which endures to this day. And it was followed by the introduction in 1889 of universal military service covering even the middle-aged manhood. This started a rearmament race leading into total wars with the objective of annihilating entire nations.
The shrewd Iron Chancellor — the dictator in constitutional disguise, quoting M.J. Bonn’s epigram — meant to kill several birds with one stone when he embarked on his program of appeasing labor. The reason, announced in the November 17, 1881, message of Kaiser Wilhelm I, to offer something positive to labor, not merely the repression of socialists by police force, may have been born of genuine worry over the unrest of the working classes due to the long depression that had engulfed Europe since 1875. But the true motive has been pointed out in the penetrating Bismarck biography (Vol. III, pp. 370–71) of Erich Eyck:
To his mind the State, by aiding the workers, should not only fulfill the duty ordered by religion, but it should obtain in particular a claim on their thankfulness, a gratitude that was to be shown by loyalty to the government and by loyal progovernment votes in elections.
In other words, it was the old-fashioned attempt of the monarchy to ally itself with the plebs against the “aristocracy” in between the two. However, the social-insurance legislation did not stop the Marxists from returning in increasing parliamentary strength. The attempt to subdue the socialist movement by appeasement ended in a political fiasco.