State Socialism () was a set of social programs implemented in the German Empire that were initiated by Otto von Bismarck in 1883 as remedial measures to appease the working class and detract support for socialism and the Social Democratic Party of Germany following earlier attempts to achieve the same objective through Bismarck's Anti-Socialist Laws.Bismarck, Otto (15 March 1884). "Bismarck's Reichstag Speech on the Law for Workers' Compensation". German History in Documents and Images. Retrieved 27 December 2019.Gregory, Paul R.; Stuart, Robert C. (2003). Comparing Economic Systems in the Twenty-First Century. Nashville: Southwestern Publishing House. p. 207. . "Chancellor Otto von Bismarck introduced social welfare legislation in Germany between 1883 and 1888, despite violent political opposition, as a direct attempt to stave off Marx's (prediction of a) socialist revolution". As a term, it was coined by Bismarck's liberal opposition to these social welfare policies, but it was later accepted by Bismarck.Feuchtwanger, Edgar (2002) . Bismarck. London: Routledge. p. 221. . This did not prevent the Social Democrats from becoming the biggest party in the Reichstag by 1912. According to historian Jonathan Steinberg, "[a]ll told, Bismarck's system was a massive success—except in one respect. His goal to keep the Social Democratic Party out of power utterly failed. The vote for the Social Democratic Party went up and by 1912 they were the biggest party in the Reichstag".Boissoneault, Lorraine (14 July 2017). "Bismarck Tried to End Socialism's Grip—By Offering Government Healthcare". Smithsonian. Retrieved 30 January 2020.
In spite of its name, State Socialism was a conservative ideology which supported the aristocracy, the church and the monarchy while maintaining harmony with capitalists and workers, in opposition to both liberalism and socialism. Hence, its supporters called themselves the German Conservative Party while its opponents called themselves the National Liberal Party, Free Conservative Party and the Socialist Workers' Party. Historian Alexander Nove argued that social ownership through government can only occur if the government is socially controlled which was not the case where an emperor rules by the will of God as in Germany since the Emperor was not the public. Nove's definition of social ownership, a common characteristic that accomunates types of socialism,O'Hara, Phillip (2003). Encyclopedia of Political Economy. 2. London: Routledge. p. 71. . "In order of increasing decentralization (at least) three forms of socialized ownership can be distinguished: state-owned firms, employee-owned (or socially) owned firms, and citizen ownership of equity." refers to "the major part of means of production",Nove, Alexander (2008). "Socialism". New Palgrave Dictionary of Economics (2nd ed.). London: Palgrave Macmillan UK. . but this remained in private hands under State Socialism. In "Why I Am Not a Conservative", Friedrich Hayek explained that "[t]here are, however, two economic and philosophical estimates of society with which State Socialism may be brought into broad contrast", namely liberalism and socialism.Hayek, Friedrich; Hamowy, Ronald, ed. (2011) . "Why I am Not a Conservative". The Constitution of Liberty: The Definitive Edition. Chicago: Chicago University Press. pp. 1–2. . According to journalist William Harbutt Dawson, an acknowledged expert on German politics and society, "[t]he great disagreement between Socialism and State Socialism is that the former would entirely subvert the State, while the latter accepts its political form as it is. Socialism would abolish the existing order altogether, while State Socialism would use the State for the accomplishment of great economic and social purposes, especially restoring to it the function, which Frederick the Great held to be the principal business of the State, of 'holding the balance [...] between classes and parties".
Bismarck's biographer A. J. P. Taylor wrote that "[i]t would be unfair to say that Bismarck took up social welfare solely to weaken the Social Democrats; he had had it in mind for a long time, and believed in it deeply. But as usual he acted on his beliefs at the exact moment when they served a practical need".Taylor, A. J. P. (1955). Bismarck. The Man and the Statesman. London: Hamish Hamilton. p. 202. "Since he could not shake the Centre, he would win over the Social Democrats—not certainly by appealing to their leaders, whom he was persecuting and sending to prison, but by a constructive social programme, which he hoped would detach the working-class voters from the Social Democratic party. It would be unfair to say that Bismarck took up social welfare solely to weaken the Social Democrats; he had had it in mind for a long time, and believed in it deeply. But as usual he acted on his beliefs at the exact moment when they served a practical need. challenge drove him forward. He first avowed his social programme when Bebel taunted him with his old friendship with Lassalle. He answered by calling himself a Socialist, indeed a more practical Socialist than the Social Democrats; and he provocatively rejoiced in echoing Frederick the Great's wish to be le roi des guex, king of the poor. Richter, the Progressive leader, called Bismarck's proposals 'not Socialistic, but Communistic'. The proposal was merely that part of the cost of Socials Insurance should be borne by the state; and nowadays Bismarck seems the progressive, Richter the unenlightened reactionary". When a reference was made to his friendship with Ferdinand Lassalle, a democratic and state-oriented reformist socialist, Bismarck stated that he was a more practical socialist than the Social Democrats. Bismarck justified his social welfare programs by stating that "[w]hoever has pensions for his old age is far more easy to handle than one who has no such prospect. Look at the difference between a private servant in the chancellery or at court; the latter will put up with much more, because he has a pension to look forward to".Taylor, A. J. P. (1955). Bismarck. The Man and the Statesman. London: Hamish Hamilton. p. 203.
Background
During the industrial revolution in Germany more and more people became workers in the factories. They moved to the big industrial centers providing workforce in industrialisations key branches such as fuel generating coal mines, the textile industry as well as steel and railway factories. The changes can be characterised by a transition from small-scale production in manufactures to a lots of goods providing large-scale industry.
Many workers were previously subsistence farmers. Working in factories made them dependent on their salaries and goods they could get in shops instead of producing them on their own. Fast growing cities such as Berlin, Vienna, London, Paris, could not provide healthy housing for the workers, as described by Friedrich Engels in "the housing question". Families living in a single room and cellar apartments causing health issues due to a lack of rest can be seen as a cause of growing poverty. To describe worsening conditions the German term of "schlafgänger" became common, describing workers renting a shared bed for a few hours of the day. Poor housing conditions remained commonplace by the early Twentieth Century, with one observer in July 1918 describing “Families and six and seven herding in one apartment and a hall bathroom doing service for half a dozen such families.”Flushing Daily Times 8 Jul 1918
Child labour was common since there were no schools, but a lot of children and poverty. Families did not know about contraception, and children's rights were unprotected. The working class was suffering from alcoholism.
Reacting to these conditions, parties, unions and communities like the ADAV General German Workers' Association were founded. The workers started strikes and formed parties such as the Social Democratic Party of Germany. Riots and demonstrations occurred.
Overview According to William Harbutt Dawson, despite being labeled socialist by his opponents, Bismarck's social legislation sought to preserve the existing economic order and state in Germany. This was in stark contrast to socialists, who sought to subvert the power of the existing state and eventually replace the capitalist order with a socialist economy.Dawson, William Harbutt (1891). Bismarck and State Socialism: An Exposition of the Social and Economic Legislation of Germany Since 1870. London: S. Sonnenschein. p. 2.
The Prussian welfare state was developed by the German academic Sozialpolitiker (Social Policy Supporter) group, intellectually associated with the historical school of economics. At the time, the historical school of economics influenced social democracy in the United Kingdom and progressivism in the United States as well as the current post-World War II German economy (the social market economy) which is a continuation of similar policies.
Social legislation The 1880s were a period when Germany started on its long road towards the welfare state as it is today. The Centre, National Liberal and Social Democratic political parties were all involved in the beginnings of social legislation, but it was Bismarck who established the first practical aspects of this program. The program of the Social Democrats included all of the programs that Bismarck eventually implemented, but it also included programs designed to preempt the programs championed by radicals. Bismarck's idea was to implement the minimum aspects of these programs that were acceptable to the German government without any of the overtly socialistic aspects.
Bismarck opened debate on the subject on 17 November 1881 in the Imperial Message to the Reichstag, using the term practical Christianity to describe his program.Busch, Moritz (1898). Bismarck: Some Secret Pages of His History. II. New York: Macmillan. II, p. 282. In 1881, Bismarck had also referred to this program as Staatssozialismus ("State Socialism") when he made the following accurate prediction to a colleague: It is possible that all our politics will come to nothing when I am dead but state socialism will drub itself in (Der Staatssozialismus paukt sich durch).Richter, Werner (1965). Bismarck. New York: G. P. Putnam's Sons. p. 275.
Bismarck's program centered squarely on insurance programs designed to increase productivity and focus the political attentions of German workers on supporting the Junker's government. The program included health insurance, accident insurance (workman's compensation), disability insurance and an old-age retirement pension, none of which then in existence to any great degree. After Bismarck left office in 1890, further social legislation regulated working time and conditions and sought to protect more vulnerable workers (women and children) and establish a system to allow redress for employer abuse.
Based on Bismarck's message, the Reichstag filed three bills designed to deal with the concept of accident insurance and one for health insurance, although other bills were passed after Bismarck left office. Retirement pensions and disability insurance were placed on the back burner for the time being.Holborn, Hajo (1969). A History of Modern Germany: 1840–1945. Princeton: Princeton University Press. pp. 291–293.
In a speech on 20 March 1884,Bismarck, Otto (20 March 1884). "Reichstagsprotokolle, 1884,1". Verhandlungen des Deutschen Reichstags (in German). Retrieved 9 September 2020. Otto von Bismarck stated: