How 'Welfare Capitalism' Can Save Our Country
By Frank Koller Posted 3:00PM 09/19/11 Economy, General Electric , Procter & Gamble
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[pic]Bleak. Desperate. Urgent. The words leap from almost every headline about the state of the American economy these days. Official unemployment is stuck north of 9%, while the effective rate is likely above 16%. Millions of people are suffering.

Meanwhile, businesses of all sizes are sitting on mountains of cash, reluctant to hire workers -- even those laid off in the past three years -- because they expect things are going to get worse. Corporate leaders say they want to protect employees, but it's hard for most Americans to believe a CEO who argues that "we're all in this together."

There was a time in American history when a few firms -- some, very big -- tried, and often succeeded, in living by the creed that it is possible to protect people as well as profits.

The Rise of Welfare Capitalism

From the last two decades of the 19th century to the start of World War II, "welfare capitalism" was part of this country's economic landscape. There was never a precise definition of what welfare capitalism comprised. But starting around 1880, some business leaders came to the conclusion that the incredible level of strife inside their companies -- perpetual, sometimes violent, war between workers and management -- was just too inefficient to continue. Endless strikes, employee turnover rates of 200% to 300% a year -- neither side was coming out a winner.

Gradually, a few companies began to reshape day-to-day operations to improve both working conditions and the size of weekly pay packets in the hope that employees might see it in their interest to reciprocate by working more productively.

It's also