Welfare Capitalism and the Social Security Act of 1935

Abstract

A central concern of political theorists has been the relationship between the state and the economy, or more specifically, how political power gets translated into economic power. Recent debates have been shaped around critiques of the corporate liberal thesis, which contends that class-conscious capitalists manipulate the polity so that government comes to pursue policies favorable to capitalism. Alternative theories suggest that the state is capable of transcending the demands or interests of any particular social group or class. The Social Security Act of 1935, which represented the beginning of the welfare state in the United States, was a conservative measure that tied social insurance benefits to labor force participation and left administration of its public assistance programs to the states. In this paper the Social Security Act is used as a case study to adjudicate between several competing theories of the state. The analysis demonstrates that the state functions as a mediating body, weighing the priorities of various interest groups with unequal access to power, negotiating compromises between class factions, and incorporating working-class demands into legislation on capitalist terms. A central concern of political theorists has been the relationship between the state and the economy, or more specifically, how economic power gets translated into political power. Recent debates have been shaped around critiques of the corporate liberal thesis, which stresses the strategies of class-conscious capitalists to manipulate the polity. Alternative theories suggest that the state is capable of transcending the demands or interests of any particular social group or class. The core agenda of those espousing some variant of corporate liberalism has been to explain how major economic interests manipulated the polity in the twentieth century, so that government came to pursue policies favorable to capitalism (Domhoff, 1979; Kolko, 1963; O'Connor, 1973; Useem, 1983). According to this perspective, capitalists rationally pursued a series of policies designed to allow them control of the political process, resulting in a synthesis of politics and economics. For example, Kolko (1963) has argued that the regulatory reforms of the Progressive Era, traditionally explained as a respose to muckraker's criticism, were actually desired by large industry as a way, not only of controlling