After World War II, nations on the continent of Europe continued or extended their social programs as did Britain. For citizenry who had not done as well as others in the competition for wealth, the government provided income supplements or services or both. This was welfare within what was basically a capitalist system – different from the command economies in the Soviet Union and its bloc nations, called socialist by Marxists. Marxists criticized welfare-state programs as concessions made by the capitalist class in order to divert the working class and middle class away from pursuing revolutionary social change, namely overthrowing the capitalist system.
Into the 1960s and 1970s, conventional wisdom in the US held that welfarism was a drag on the future of European states. But the economies of the welfare states in Sweden, Germany and France, for example, were humming along. A visitor to West Germany as early as 1960, when I was there, did not see the homeless on the streets.
The last year that the US led the world in per capita Gross Domestic Product (GDP) was 1972 – per person a better indication of economic success than sheer size. According to NationMaster.com, in 1972, Sweden's per capital GDP was 95 percent that of the United States. By 1988 – President Reagan's last year in office – Switzerland led the world in per capita GDP. Sweden was 7th, passed by Iceland, Japan and Norway, and the US was 10th, passed not only by Sweden but also Denmark and Finland. The US in 1988 had only 91 percent of Sweden's per capital GDP. By 1997, however, the US would again lead Sweden. The welfare states were not the wrecks that some Americans imagined. Minimal welfare was working well to regarding per capita wealth – with wealth distribution ignored – as seen in the success of Singapore.
Germany was doing better economically than Britain. Germany had a more cooperative labor force and was advanced in engineering and more successful in exporting its manufactured products. Britain had 68% of Germany's per capita GDP in 1979, the year that Margaret Thatcher became Britain's prime minister. Germany acquired a conservative chancellor, Helmut Kohl in 1982, and he accepted the programs of his Social Democratic predecessors more than Thatcher did those of Britain's Labour Party. By 1988, Britain had 84% of Germany's per capita GDP.
Sweden's economy into the 1970's remained strong, but like other economies it was not immune from problems that came with the 1973 oil crisis. In the wake of that crisis the Swedes voted their Social Democrats out of office and replaced them with a center-right coalition – known by them as the "Bourgeois coalition." The center-right coalition continued to suffer from the same ill effects that were appearing in the US and elsewhere in the late seventies, and the Social Democrats were returned to power in 1982. Sweden's unemployment had been 1.6% in 1975 – compared to 8.5% for the United States. Under the center-right coalition it rose to 3.1% by 1982, while unemployment in the US rose to 9.7 percent. In 1988 under the Social Democrats unemployment was back down to 1.6 percent, at 5.5 percent in the United States, 6.3 percent in Germany and 8.6 percent under Thatcher. note53
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