Burwell vs. Hobby Lobby and the Decay of Welfare Capitalism: Wednesday Focus for July 2, 2014

Back in the 1920s the Progressive-Republican founder of The 20th Century Fund–now The Century Foundation—-Edward Filene argued that America did not need any flavor of “socialism”. What it needed instead, he argued, was “welfare capitalism”.

Socialism imposed heavy taxes and used the resulting revenue to provide for social welfare. In so doing it incurred all the efficiency losses of bureaucracy. It added to those the losses from coalition-building political logrolling. It added on to those the efficiency losses that ensued from decisions made by politicians responsible to voters who were by and large not the entrepreneurial job creators. More important, in his view, the redistributive part of the social insurance state was simply not necessary. The efficiencies of scale of modern mass production would guarantee that even an unequal society would be a society of general abundance and prosperity.

And most important, in Edward Filene’s view, the “state” part of the social insurance state was unnecessary. The large corporations that employed the industrial working class and that were the future of America could do all the risk-pooling that was desirable and all the purchase-pooling that was necessary. Businesses could act as risk-spreading and purchasing agents for their workers and their social insurance benefits. In so doing, Edward Filene thought, they would avoid the efficiency losses from excessive bureaucracy, from logrolling and coalition-building, and from putting politicians rather than managers in charge. And they would harness the benefits of competition as well. “Welfare capitalism” would thus be more efficient and effective than “socialism”. Firms would no more seek to be inefficient as social-insurance purchasing agents for the principals that were their workers than firms would seek to be inefficient at production.

In Edward Filene’s vision, the welfare-capitalism of America’s large highly-efficient mass-production firms would see those firms performing two roles. In their role as producers, firm owners and managers would employ workers, and owners and managers would be the principals: they would take the risks and reap the profits of entrepreneurship and enterprise. In their role as benefit purchase agents, firm owners and managers would work for their workers and their families, and would be the agents of the workers.

One of the most interesting thing about Burwell vs. Hobby Lobby is that there are now five justices on the Supreme Court whose understanding of the employer-employee relationships is not “welfare capitalist” but is, I must say, positively medieval. The pooling provided by firms in benefits provision is no longer seen as the firm’s acting as a benefits-purchasing agent for the workers. The nexus of contracts that is the firm is no longer seen, in this role, as the agent of the workers–and thus as an instrumentality the workers use to exercise their right to pursue happiness as they choose. Instead, the firm’s provision of benefits is seen as a free gift from the owners and managers to the workers. Thus the liberty interests that are worth preserving are not workers’ interest in being provided with a benefits package that fits their situation and their values, but rather bosses’ liberty interest in specifying the terms of the free gift of benefits that they give their workers.

Thus, in the eyes of Sam Alito and his four Horsemen, we are really not talking “welfare capitalism” any more: we are–literally–talking industrial neo-feudalism.

Now this may be making much of the decision that is Burwell vs. Hobby Lobby. The decision may simply be based on the fundamental legal principle that when the sect to which five of nine justices belong claims that any burden whatsoever is ipso facto undue, than any burden is ipso facto undo. But even from the perspective of the sexual politics of the Roman Catholic hierarchy, Hobby Lobby is a very strange ditch to choose to die in. The center of gravity of the Vatican right now, is no longer the conservative prosperous first-world middle class of Italy or Germany or even Poland, it is the poor of Argentina. Having one’s rhythm method contraception fail and having an extra mouth in the household to feed is of more import and weight in a place where zero population growth is still far off and where the margin between the household’s income and its basic food budget is not that large. The first-world sexual politics focus that has absorbed the Vatican since Pope Paul VI does not seem high on the priorities of Pope Francis.

One can only even start to make sense of Burwell vs. Hobby Lobby by beginning with the decay of “welfare capitalist” doctrine–by forgetting that Edward Filene’s Progressive-Republican vision in the 1920s was one in which firms faced both directions, both working for workers in getting workers social-insurance benefits, and having workers work for firms in providing labor.