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THE LAW OF THE WELFARE STATE

Bruno Aguilera-Barchet

I. An Essay on the Constitutional History of the Welfare State

1. Addressing Poverty

a) The Medieval Period: Private (Church and Guilds) and Public Measures

Social protection was not originally in the hands of the king, as the Church was the first institution
to develop a way of covering risks run by individuals in need. It was, for instance, a relatively
common practice in medieval times for laymen and laywomen to donate their properties to
ecclesiastical institutions in exchange for care by the receiving monastery or abbey in their final
days, or if they were sick or disabled. The lands that the Church acquired through these procedures
often had broader social applications, such as making possible the foundation of ecclesiastical
hospitals.

Besides the Church, brotherhoods and guilds were also involved in social insurance. Brotherhoods
began as religious congregations for charitable purposes, but soon tended to draw together persons
sharing the same profession. Over time they evolved into guilds, which developed what could be
called a sort of social insurance, as their members had to pay a fee entitling them later to receive
social assistance. The money collected from fees, and also fines, was used to aid sick members by
paying them a stipend when they could not work, medical assistance and, later, as of the fifteenth
century, even a pension after retirement. Guilds’ social protection would be transformed through the
principle of mutualism into charitable funds that received deposits and issued low-interest loans to
help people in need.

All this was due to private initiative, but what about the poor who lacked any kind of church or
mutual social aid?

b) From the Renaissance to the Industrial Revolution: The Poor Laws System

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European public powers started dealing with poverty early, when it became a social problem due,
for instance, to labour disputes, such as those triggered by the English labour ordinances of 1349
and 1351, consequences of the shortage of workers after the Black Death.

Aside from these temporary situations, initially it was kings who took care of the poor only with a
view to preventing the antisocial conduct of vagabonds and beggars (Acts of Henry VII in 1495 and
Henry VIII in 1536). But the idea of organizing a public social assistance service did not appear
until the sixteenth century; this can be pinpointed to 1526 when the Spanish humanist Juan Luis
Vives (1492–1540) published in Bruges his ‘Treaty on Relief for the Poor’: De subventione
pauperum. Sive de humanis necessitatibus Libri II.

In England, Henry VIII, who had ordered the dissolution of monasteries and religious guilds, began
to approach the problem from a different perspective with his 1535 bill proposing the creation of a
system of public works to deal with unemployment. However, it was his daughter, Elizabeth I, who
implemented a permanent system of Poor Laws in which aid to the ‘impotent poor’ was dispensed
at the parish level. This system would endure until 1834, when the New Poor Law shifted the
system from the local parish level to a highly centralized one based on the large-scale development
of workhouses and poor law unions. This version of the system would remain almost intact until the
creation of the British welfare state after World War II.

2. The Advent of the Social Question

a) The Laissez Faire Model Of State and the Rise of the ‘Fourth Estate’

The number of the destitute remained more or less stable for centuries, but would grow
considerably as a result of the Industrial Revolution, which pushed farm workers into urban areas,
where the swelling population soon exceeded the number of jobs available. This labour glut enabled
industry owners to impose severe conditions on workers: long working hours, no rest days and low
wages.

The situation was made worse by the triumph of the liberal model of the state. The 1820 and the
1830 revolutions in Europe resulted in the seizure of power by the wealthy bourgeoisie who
imposed representative, parliamentary-based regimes in which delegates to parliaments were
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elected through a system of censitary suffrage, under which citizens were required to have a certain
level of income or property in order to vote, and even higher levels to stand for office. The upshot
was that representative assemblies were controlled by the financial and commercial elite, who
managed to control the state apparatus and dictate its rules and policies, supplanting (as in the case
of the French Republic) or at least restricting royal prerogative, then limited to maintaining order,
leaving everything else in the hands of the new ruling class, particularly economic policy. It was the
‘liberal’ principle of laissez faire that inspired a specific constitutional model based on constitutions
and a respect for fundamental rights in order to limit legally the power of the state, in accordance
with natural law and social contract theory as propounded by John Locke (1632–1704) and
espoused by John Stuart Mill (1806–1873).

In practice, the new liberal state protected the wealthy and their financial interests. It is true that
laissez faire regimes made possible prodigious economic expansion by European states, which,
through colonialism in the second half of the nineteenth century, came to control virtually the entire
globe. The problem was that the wealth resulting from this system was very unequally distributed,
and these mounting social differences called for essential political changes, as below the wealthy
oligarchy there was a growing middle class enjoying gradual improvements in its standard of living
and, accordingly, pressing for greater political representation through the introduction of more
democratic electoral procedures. This was the thrust of the successive electoral reforms that
extended censitary suffrage to a larger group of people, adopted in England in 1832, 1867, 1872 and
1884, and in France between 1814 and 1848.

Just when the middle class was gaining access to political representation, however, the social order
was once again shaken up, as enormous fortunes stood in stark contrast to masses of people
wallowing in the most absolute poverty. Beneath the middle class arose a new European social
stratum: the proletariat (from the Latin proles, meaning ‘offspring’), thus termed because its
members had no assets but their own children. While the ‘free’ person, i.e. one not subject to any
feudal servitude and living off the fruits of his own labour, was a social type appearing in the
Renaissance and spreading throughout Europe in the seventeenth century, by the mid-nineteenth
century the ‘working class’ was, similarly, a consequence of the abovementioned transformations.

Politically speaking, the proletariat was also referred to as ‘the Fourth Estate’ to differentiate it from
the former tripartite estate system under the Ancien Regime: the two privileged classes (clergy and
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nobility) and the Third Estate, made up of the common people, mainly living in the cities. From the
perspective of constitutional history, the proletariat burst onto the political scene in the mid-
nineteenth century, aiming to attain the political influence necessary to alter a constitutional system
in Europe that had relegated workers to a life of misery. This is what came to be known as ‘the
Social Question’, (Question sociale, Arbeiterfrage), which would precipitate a crisis of the liberal
state model and bring about reactions by thinkers dubbed ‘socialists’, as they tried to provide
solutions for people in social need.

b) The Socialist and Conservative Answers

Even if some lucid conservatives did express concerns about social inequality, like Benjamin
Disraeli, who in 1845 published his novel Sybil: or the two nations in which he described the fate of
the English working classes, it was initially progressive activists who strove to respond to the Social
Question, like Robert Owen, Henri de Saint Simon and Charles Fourier. These ‘Romantic
Socialists’ proposed solutions to relieve workers’ misery and suffering, but did not define a way to
implement them. It was not until the Communist Manifesto (1848) that proletarians acquired an
acute consciousness of their identity as a new social class, convinced that only together could they
fight for greater social equality.

i) The Second French Republic as the First ‘Social Republic’

It was, however, in France that socialism became a political force for the first time, during the
Revolution of 1848, a movement that clearly constituted an uprising of the masses, as opposed to
the quintessentially bourgeois Revolution of 1830. It was made clear by the Constitution of the
Second French Republic (1848–1851), which defined the new regime as a ‘social republic’ (article
1), and introduced universal (male) suffrage (Article 24). France would never return to the
oligarchic liberal regime.

There were social reasons for this development, as by the mid nineteenth century France had
become the only European country with a large number of small landowners, as a result of the
Revolution of 1789. It was, therefore, the country where political socialism started, with Louis
Blanc and his capital book The Organisation of Labour (1839). His ideas had a direct influence on

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the 1848 Constituent Assembly, where some representatives defended the revolutionary idea that
citizens had the right to work.
Of course, this was a blow to the liberal constitutional conception, as it required strong intervention
by the state. Therefore, liberal thinkers and politicians refused to accept these ideas. This explains
the reaction of Alexis de Tocqueville (1805–1859) when he made his famous speech before the
French Second Republic's Constitutional Assembly, on 12 September 1848, directly rejecting the
‘right to work’, and considering the ‘social rights’ that the Assembly wanted to include in the
Constitution as being incompatible with the fundamental political rights that the liberal state was
supposed to defend. In his view, accepting these postulates meant opening the door to the return of
political authoritarianism.
‘In its latest formulation, the Commission limits itself to imposing on society the duty to
come to the aid, be it by work or by assistance strictly speaking, of all hardships to the
extent of its resources. In saying this, the Commission undoubtedly wanted to impose on the
state a more extensive and more sacred duty than that which has been imposed until now;
but it did not want to create something absolutely new; it wanted to expand, consecrate, and
regularize public charity; it did not want to generate anything other than public charity. The
amendment, in contrast, does something different, and does much more. The amendment,
with the meaning given to it in speeches and, above all, by recent actions, the amendment,
which grants to each individual the general, absolute and irresistible right to work, this
amendment leads necessarily to one of the following consequences. Either the state will
undertake to provide work to all unemployed workers who come forward, thus being drawn
little by little into the industrial process; or, as it is the industrial contractor that operates
everywhere, the only one which cannot refuse to provide work and the one which usually
imposes the least work, it is invincibly led to become the principal, and soon, as it were, the
only industrial entrepreneur. Once this point has been reached, taxation is no longer the
means of funding the machinery of government but the principal means of supporting
industry. By thus accumulating in its hands all individual capital, the state finally becomes
the sole owner of everything. Well, this is communism’.1

Tocqueville’s warnings ultimately averted the inclusion of the right to work in the 1848 French
Constitution,2 but during the Second Republic ‘national workshops’ (ateliers nationaux) were
created in France, a policy that could be considered a precedent to the construction of the ‘welfare
state’. Moreover, after the Communist Manifesto, socialism took on a decidedly political tint and

1
Alexis de Tocqueville, Contre le droit au travail (Les belles lettres 2015) 36–37. Con formato: Francés (Francia)
2
In its Article 13, the Constitution of the Second French Republic did not establish the ‘right to work’ as a fundamental
right. It only guaranteed ‘the liberty of labour and industry’. It was not the state, but society that had an obligation to
favour the development of labour through free basic education, professional training, and the equal treatment of
employers and workers, providing, if necessary, public work for the unemployed, and assistance to abandoned children,
sick persons and old people without resources who could not be assisted by their families. Only Section VII of the
Preamble established the principle that the Republic should protect its citizens’ right to work and ensure help for the
needy, whether by giving them work, or direct support in the event that they could not work and had no support from
their families.
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became an international movement overtly aimed at toppling the liberal state. To achieve this
Marxist Socialism espoused class struggle, i.e. the proletariat as a united, international class
violently overthrowing the exploitative class: the bourgeoisie. For this purpose the International
Workingmen's Association (IWA), also known as the First International, was founded in London in
1864.

ii) The German Origins of Social Democracy and Bismarck’s Reaction

One year before the foundation of the IWA, Ferdinand Lasalle (1825–1864) had created the first
mass party in European History: the General German Workers’ Association (Allgemeine Deutsche
Arbeiterverein, ADAV), which featured a division between revolutionary and social-democratic
socialists (also called ‘reformists’). The failure of the Paris Commune (March-May 1871), however,
would lead Marx to renounce violence, and at the 1872 Hague Congress, radical anarchists led by
Bakunin (1814–1876) were actually expelled from the IWA. The split between the supporters of
revolutionary and reformist branches of the socialist movement would not last long, as
representatives of both met in 1875 at the Gotha Congress, creating a unique Socialist Party that
would become the Social Democratic Party of Germany (Sozialdemokratische Partei Deutschlands
SPD) in 1890. From this point forward, more socialist mass parties were founded all over Europe:
the Spanish Socialist Workers’ Party in 1879; in 1892, the Italian Socialist Party; the English
Labour Party in 1900; the Russian Socialist-Revolutionary Party in 1901; and in 1905, the French
Section of the Workers’ International (SFIO), the forerunner of the current French Socialist Party.

Of course, ruling classes all over Europe became frightened as organized socialism grew more
powerful. Some conservative governments initially reacted by enacting anti-socialist laws, such as
Bismarck, with his Sozialistengesetze of October 1878. Nevertheless, the Eiserne Kanzler was fully
aware that it was impossible to stop the socialist movement without relieving the pressure provoked
by social tensions, and the result was the enactment of Europe’s first social welfare legislation,
aimed at the creation of state socialism (Staatssozialismus).

Bismarck’s social policy has traditionally been considered from the public law perspective, the first
step towards the construction of the welfare state. In fact, this is technically incorrect, as the Second
Reich never actually implemented a system of public welfare sustained by taxpayers, but only
obliged private citizens to take out concrete insurance policies. It is clear, however, that Bismarck’s
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social policy set an important precedent, because from a political perspective, as Palier suggests, the
welfare state arose less as the result of workers’ victories over employers than from initiatives by
conservative governments to guarantee social accord by implementing cross-class concessions.

3. The First Step towards a Welfare State: Lloyd George’s Welfare Acts

Wilhelmine Germany, thus, cannot be cited as a model of the effective resolution of the Con formato: Tachado

Arbeiterfrage, as it was an authoritative model of state, predating the laissez faire model, which had
not prevailed in Junkers’ Prussia. In the same way, neither can post-Napoleonic France, despite the
short interlude of the Second Republic (1848-1851). From this perspective, the first significant Comentario [S1]: This is not ideal.
Consider rewording and repeating the
reaction against laissez faire would come from England, thanks to Lloyd George, first as President point in the first part of the previous
sentence, ‘cannot be cited…’, for
of the Board of Trade, and later as Chancellor of the Exchequer, before becoming the only Welsh clarity. What about this ? “Wilhelmine
Germany, thus cannot be cited as an
British prime minister to date. Lloyd George, upon counsel from his advisors William Henry example of the effective resolution of
the Arbeiterfrage, as it was an
Beveridge and Winston Churchill, decided to break with the old British tradition of public social authoritative state, predating the
assistance based on the ‘Poor Laws’, not only because he had approved through Parliament some laissez faire model, which had not
prevailed under the Junkers’ Prussia.”
essential statutes regulating unemployment and establishing a minimum wage (1906), providing for
pensions (Old Age Pension Act of 1908), establishing public insurance (National Insurance Act of Comentario [S2]: Do Acts of
Parliament need to be in italic? I
1911) and introducing sickness insurance (Sickness Benefits Act) in 1912, but, essentially, because would say no. I agree

the costs of his social policy were for the first time bankrolled by the state. Con formato: Fuente: Sin Cursiva
Con formato: Fuente: Sin Cursiva
Con formato: Fuente: Sin Cursiva
With the 1906–1914 welfare reforms, David Lloyd George dared to propose a shift from liberal
non-interventionist policies to a more collectivist approach, 3 in which government was to play an
active role in establishing welfare protection to benefit disabled citizens. This idea transformed the
approach to the Social Question with reference to public law, as for the first time, a government
seized the initiative to reinforce social protection publicly. The problem was how to fund this
intervention.

a) Financing the State’s Intervention through Increasing Tax Burdens

The model that opposed absolute monarchy and developed the model of a minimum laissez faire
state, rejecting public intervention to mitigate social inequalities, was in crisis when it began to be

3
A striking sign of flexibility, as he was the leader of the Liberal Party.
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accepted that the state could increase its pressure on private citizens’ assets by levying direct taxes,
both individual and corporate.

Initially, direct taxation was, however, imposed only under exceptional circumstances, as had
occurred in England with William Pitt the Younger when he created such a tax in 1799 to finance
the war effort against Napoleon. Abolished in 1816, it was only reintroduced in 1842 to stave off an
economic crisis and relieve the pressure from indirect taxes. In both cases the British government
imposed a progressive, reduced direct tax only on the wealthiest citizens.

It is also highly significant that Article 17 of the 1848 French Constitution, the most socially
advanced in Europe at the time, only accepted the establishment of direct taxes for a period of one
year. Only indirect taxes could be established for several years.

Sweden imposed a new income tax beginning in 1862, but it would not be until the set of Comentario [S3]: Set meaning
4 what? Start? Fixing the laws
Bismarck’s social laws that Europe saw the general application of direct taxes in Prussia (1891), somehow? Set in the sense of body or
collection of laws. I would keep it
Italy (1894), Austria (1896), Sweden (1897), Spain (1900), Denmark (1903), Norway (1905), and unless you suggest a more precise
word.
France (1914). There was, however, considerable resistance by legislatures, such as in France,
where fiscal reform proposed by Joseph-Marie-Auguste Caillaux in 1907 was not approved until
seven years later, and only then due to the imminence of World War I.

b) World War I and the Collapse of the Laissez Faire State Model

In general, however, Europe’s governments would remain relatively reluctant to protect the least
fortunate classes as long as their liberal states were enjoying considerable economic growth, the
fruit of their colonial expansion. This would change abruptly, however, with the catastrophic
turning point of the ‘collective suicide’ of World War I, which impoverished European nations and
precipitated the ‘Soviet Revolution’, prompting western governments generally to recognise the
need for the state to take an active role in mitigating economic inequality and social injustice. The
Soviet Revolution shocked the ruling classes of the western states to the point that they desperately
tried to prevent, by all means necessary, the triumph of Bolshevism. Developing what C.S. Maier
calls the ‘language of class anxiety’, they did not hesitate to back new mass parties led by
charismatic populist leaders who promoted drastic reforms to prevent social injustice.

4
Initiated with the Health Insurance Bill of 1883.
8
In fact, it was a sort of compromise between the old parliamentary system and communist
revolution, called the ‘Third Way’. Nevertheless it would bring to power Benito Mussolini (1922–
1943) and Adolf Hitler (1933–1945). These regimes, which Mark Marzower calls ‘non-democratic
alternatives’, were totalitarian and civil liberties almost disappeared, but for the European ruling
classes they were preferable, as they avoided the international revolutionary approach of Lenin. It is
highly significant that the National Socialist German Workers Party (NSDAP), was founded in
1920, months after the failure of the Spartacist Uprising and the foundation of the Kommintern.

It must be said that Italian Fascism and German Nazism were initially quite successful at rescuing
their countries from the huge crisis wrought by the First World War, as they achieved surprising
progress in the economic field. Mussolini’s government not only bolstered the economy through
major public works, but also reorganized production in key industries by founding major public
companies, and developed military industry, invaded Libya and Ethiopia, and intervened in the
Spanish Civil War. Hitler revived the German economy, creating massive public works, rebuilding
the armament industry, and even favouring the mass consumption of goods, previously available
only to the most affluent.5 All these economic measures were accompanied by active social policy,
as the state enacted major welfare measures to protect the needy.

4. The Establishment of Welfare Policies during the Interbellum Period

a) The Totalitarian Approach to the Social Question and the Development of Corporatism

Con formato: Tachado


As far as the constitutional history of the welfare state is concerned, it is interesting to note that the Comentario [S4]: This isn’t entirely
new totalitarian regimes were far more active in introducing general public welfare measures than clear – which is Soviet Russia?
Totalitarian or liberal? Reorganise the
were liberal parliamentary regimes, starting with Soviet Russia, where in 1925 Nikolai sentence for clarity! (I do know which
one Russia was – but reorganise the
Aleksandrovitch introduced the first national system of free medicine in western constitutional sentence!) What about the following
reorganisation? : “As far as the
history. constitutional history of the welfare
state is concerned, it is interesting to
note that the new totalitarian regimes –
starting with Soviet Russia, where in
With regards to regimes constituting alternatives to the system of Soviet Russia, the Italian 1925 Nikolai Aleksandrovitch
introduced the first national system of
dictatorship sought to establish a new relationship between employers and workers by overcoming free medicine in western constitutional
history- were far more active in
introducing general public welfare
measures than were liberal
5
This effort even included the creation of a car for the people (Volkswagen) – hitherto the only affordable car in the parliamentary regimes.”
world was Ford’s Model T, produced from 1908 to 1927.
9
the very notion of class struggle and fomenting mutual cooperation. This was the ‘corporatist’
system.6 Fascist Italy was a pioneer in this area, with the approval of Mussolini’s Labour Charter of
21 April 1927, inspired by Minister of Justice Alfredo Rocco, who had developed the theory of
corporatism (or corporativism) for the fascist regime. This approach would be reinforced by the
Law on Corporations of 5 February 1934, the creation of a mandatory ‘worker’s card’ for salaried
employees, and the implementation of the idea of vertical unions in which the principle of class
struggle was replaced by that of corporate promotion. This was the ‘corporate state’ or ‘corporate
statism’.

Other countries would follow the Italian example. In Spain, the tepid social protection of the
Restoration initiated by the Social Reform Commission (1883–1903), increased considerably during
Primo de Rivera’s dictatorship (1923–1930), as its regime was strongly committed to labour
protection and social welfare following the initiative by its minister of labour, commerce and
industry Eduardo Aunós, who admired the Italian fascist regime and tried to develop the corporatist
model in Spain. He not only favoured the approval of a Labour Code in 1926, but endorsed the
principle of mixed negotiation commissions in which workers and employers tried to resolve labour
conflicts together. It is interesting to note that the social policy of Primo de Rivera’s dictatorship
was surprisingly well accepted by the Spanish left, as is illustrated by the fact that Socialist leader
Francisco Largo Caballero was appointed by the regime in December of 1925 as Councillor of
State.

The case of Germany was more complicated. There labour protection initially had democratic
origins, as it was a reaction to the Spartacist revolt of January 1919. The uprising led by Rosa
Luxemburg and Karl Liebknecht was crushed by the provisional government of SPD leader
Friedrich Ebert. Thanks to this, in the following elections (February), the SPD became the leading
party in the Reichstag, and Ebert was able to form a moderate coalition government with the Liberal
Party and the Zentrum, opposed to the extreme left of the KPD and extreme right of the NSDAP.
This coalition not only made possible the approval of the Weimar Constitution (July 1919), but also
a set of statutes that would institute a social welfare regime in Germany for the protection of
workers, with the Work Hours Law (1923) and the Unemployment Insurance Law (1927), the
appearance of collective labour agreements as a source of law, and a concrete procedure and

6
In 1881 Pope Leo XIII had favoured the creation of a commission to study the idea of corporatism, which would lead
to his 1891 encyclical Rerum novarum.
10
jurisdiction for resolving labour conflicts. The basis of current German labour law dates back to this
period.

The Weimar Republic was very innovative with regards to social and labour protection, and Hitler’s
subsequent triumph in 1933 would consolidate this tendency. It was actually expanded, as Michael
Stolleis has noted, with measures such as the law for the reduction of forced unemployment, which
succeeded in slashing the number of Germans out of work from 6 to 2 million in just three years;
the creation of a Social Security system; and legislation to prevent layoffs and child labour. Other
social welfare measures adopted by Hitler’s regime included the granting of low-interest loans to
engaged couples, major tax reductions for large families, and the construction of affordable
housing, to be built on the largest possible parcels of land. 7 This housing policy was complemented
by rent control policies to prevent prices from exceeding 20% of the renter’s income. These
significant advances in social welfare allowed Hitler to transform Germany from a country in
shambles in 1933, when he took power, into the world’s second strongest economy by 1936.8

Other countries adopted the German example during the same period. In Spain, the New State
created by Franco on 1 October 1936 was active in establishing a public system of social protection,
as Franco made social welfare a top priority of his regime from the very outset. In 1938, in the
midst of the civil war, Franco’s government promulgated the Fuero del Trabajo, (Labour Charter),
the first of its ‘Fundamental Laws’, and a second one, the Fuero de los Españoles (1945), in essence
a declaration of fundamental freedoms, featuring an extensive enumeration of social rights. In this
regard Franco was clearly inspired by the ideas of the Spanish fascist party, La Falange, and its
former leader José Antonio Primo de Rivera, whose legacy Franco sought to adopt (or co-opt,
according his detractors) for his regime and party: the ‘National Movement’. This aspiration spurred
Franco to create the ‘Movement Unions’ (Sindicatos del Movimiento) and a specific jurisdiction for
the defence of employees with the 1938 ‘Work Magistracy’ (Magistratura de Trabajo).

Something similar happened in Portugal, where after serving as Tax Minister in 1928, Antonio de
Oliveira Salazar was later appointed by the military as President of the Council of Ministers. One
year later he promulgated a corporatist constitution inspired by the Church’s social doctrines under

7
The social policies of Hitler’s government led to the construction of over 677,000 buildings in Germany between 1933
and 1938, and more than 1,458,000 subsidized homes for those of humbler means.
8
Timothy Wright Mason, Social Policy in the Third Reich: The Working Class and the ‘National Community’ 1918–
1939 (3rd ed., Berg 1997) 109–150.
11
Leo XIII (1878–1903) and Pio XI (1922–1939). With a similar objective Oliveira Salazar would
promulgate a ‘National Work Statute’ in 1933.

An authoritarian and corporatist model of the state designed to achieve social welfare objectives
also prevailed in Austria, drawing upon the works of Othmar Spann, and imposed by Engelbert
Dollfuss and Arthur Schuschnigg, until Hitler unilaterally proceeded to annex the country
(Anschluss) on 12 March 1938.

b) The Democratic Approach to Welfare: The French Front Populaire

Democratic European countries during this period featured less robust social policies, with the
aforementioned exception of the Weimar Republic. The Spanish Second Republic (1931–1936)
tried to follow the model developed by the Weimar Republic, but political instability and the
outbreak of the Civil War explain the meagre progress made towards the consolidation of a social
welfare system, save for the creation of a National Savings Bank (Caja Nacional) against ‘forced
unemployment’ in 1931, and a general income tax bill in 1932. More interesting is the case of
France, where the leftist Popular Front triumphed in the elections of 1937. Though, again, political
instability explains why welfare measures were relatively limited compared to those of totalitarian
regimes, it is important to mention the significant achievements of the government under André
Léon Blum, who secured for French workers a reduction in work hours to 40 per week, and
guarantees of paid vacation time (15 days per year), rounded out by a 40% reduction in railway
prices.9 Blum’s government also consolidated the respect for trade union representation and social
negotiation through collective bargaining agreements according to the model approved in 1919.
France’s defeat in 1940 would usher in Petain’s authoritarian regime, and employment immediately
became one of the main priorities of the new État français. It is significant that the traditional
French national motto, Liberté, Egalité, Fraternité (Freedom, Equality, Brotherhood), was replaced
by Travail, Famille, Patrie (Work, Family, Fatherland).

5. Welfare Capitalism (From 1945)

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Thanks to this, in the summer of 1936 some 600,000 French workers were able to take a vacation. The following year
the number soared to 1,800,000.
12
Despite all the welfare measures adopted in Europe, particularly by totalitarian regimes during the
interwar period, we cannot technically speak of a welfare state prior to the end of World War Two.
Gosta Esping Andersen mentions two approaches to the welfare state, a narrower and a broader one.
The former deals with social ameliorations, including income transfer, social services and,
sometimes, the housing question. We might call it ‘social welfare’ and this is what we have seen so
far. The broader approach deals, essentially, with political economy as it refers to a model in which
the state has a large role in managing and organizing the economy itself. It includes not only
employment and wages but overall macro-economic steering. The broad approach is referred to as
the ‘Keynesian welfare state’ or ‘welfare capitalism’, originating after World War Two in Western
European countries.

a) Rise and Peak of the Universal System (1945–1980)

Despite the military defeats suffered by European totalitarian regimes in World War Two, the spirit
of welfare protection did not disappear. In fact the democratic regimes that had won the War took a
more assertive approach to social protection. As Tony Judt highlights, these governments drew
directly upon the lessons of the 1930s, concluding that a successful strategy for post-war recovery
was necessary in order to preclude any return to economic stagnation, depression, protectionism
and, above all, unemployment.10 This is why they came up with a general public welfare system
funded by taxpayers. The idea was originally a British initiative, advanced by Sir William Henry
Beveridge, who had been, along with Winston Churchill, instrumental in the social policy of Lloyd
George’s government. Beveridge, in his ‘Social Insurance and Allied Services report’ (1942), had
defined the basis for the expansion of the welfare state system in post-World War Two Europe,
espousing the idea of ‘universalism’, meaning that it should promote equality of status, as all
citizens have the same social rights, irrespective of class or market position. The ‘universal system’
sought to cultivate, therefore, a national cross-class sense of solidarity.

The British example was soon embraced by other countries. Social Security was created in France
by the provisional government headed by General De Gaulle, through the Regulation of 4 October
1945. And a general public Social Security system was also created in Francoist Spain, starting with
José Antonio Girón de Velasco, when he served as Minister of Labour and instituted Illness
Insurance (1942) and Obligatory Old Age and Invalidity Insurance (1947). It would not be until

10
Tony Judt, Postwar: A History of Europe since 1945 (Vintage Books 2010) 72.
13
1963, however, that a universal Social Security system was created, based on a publically managed,
unitary and integrated social protection model funded by mandatory contributions imposed by the
state on employees and employers, consolidated by the Social Security Act of 1966. In Germany,
Adenauer adopted the principle, extending the German corporatist insurance tradition with his
government’s Pensions Reform of 1957. In Northern European countries it was also during the
post-war period that the cornerstones of the modern welfare state were laid. Sweden led the way,
and from 1945 to the 1960s the other countries followed. Initially the dominant concern was to
establish a comprehensive system of universal protection on the basis of the flat-rate benefit system,
but after the 1960s the trend shifted towards earnings-related benefits and a stronger emphasis on
benefits pegged to contributions.11

i) A Fiscal Revolution Targeting the Middle Class

Establishing a general system of social protection required a radical change in fiscal policy. The
result was an increase in tax pressure. This was a true fiscal revolution, as for the first time in
European history, direct taxes affected the middle classes. Initially this was not a problem, as during
the Thirty Glorious Years (1945–1975) – also called the ‘Invisible Revolution’– Europe enjoyed a
period of sustained economic expansion, and western Europeans could afford the welfare state.
Paying increasing taxes was tolerable so long as salaries continued to grow. Only then, when the
state had enough revenue from levying taxes on the middle class, did the welfare state appear in its
proper sense, , meaning a state which systematically and regularly takes in and distributes funds in
the interest of social welfare. This is why Esping Andersen believes that no state can be regarded,
from this perspective, as a genuine welfare state until the 1970s.

ii) The Social Consequences of ‘Universalism’

As a consequence of the widespread, increasing levels of wealth, there appeared in the west a
sentiment of general affluence that ended up dampening the political struggle for worker protection
and economic equality. This meant that the distinction between the proletariat and the bourgeoisie
blurred and faded in the post-War era, particularly through the 1960s. Trade union and workers’
rights initiatives waned, in large measure because working class individuals, rather than striving to
11
Gösta Esping Andersen and Walter Korpi ‘From Poor Relief to Institutional Welfare States: The Development of
Scandinavian Social Policy’ in Robert Erikson et al. (eds.), The Scandinavian Model: Welfare States and Welfare
Research (Sharpe 1987) 39–74, 47.
14
seize power, concentrated their efforts on bettering their economic situations and forming part of
the expanding and increasingly accessible middle class.

The dwindling cogency of Marxist precepts was described by post-Marxist thinkers such as
Cornelius Castoriadis (1922–1997), Herbert Marcuse (1898–1979), and Thorstein Veblen (1857–
1929), who popularized the concepts of the ‘leisure class’ and ‘conspicuous consumption’, which
proved more pertinent than the old orthodox Marxist doctrine.

The approach to the universal welfare state system had to shift. Initially based on the assumption
that modest and egalitarian benefits would be adequate, it presupposed a class structure in which the
vast majority of the population were people of humble means. Soon, however, this did not
correspond to the reality of the post-industrial class structure, in which burgeoning working class
prosperity had generated a new middle class, which naturally led to a tendency to supplement the
equality resulting from the universal welfare system with private insurance. The result was that
welfare states became ‘dualistic’, with the poor relying on the state and the better off on the market.
In the Anglo-Saxon world, governments allowed the markets to satisfy middle class aspirations,
though this entailed the drawback that the middle class was reluctant to continue supporting the
high taxes necessary to sustain universal welfare states. In the Northern European Countries, such
as Sweden and Norway, the system evolved differently, as it was the state itself that allowed the
middle class to expect and receive greater welfare benefits. The fact that the state permitted and
provided for unequal benefits outside the market through progressive withholdings had here the
advantage of preserving broad support for high taxes and maintaining solidarity.

b) The Neoliberal Reaction: A Fight for ‘Deregulation’ (1980–2008)

The 1974 Oil Crisis, however, marked an end to Europe’s swelling prosperity and prompted a
reassessment of the welfare state model, which came to be considered unsustainable as governments
realized that unlimited economic growth would not allow everyone to enjoy higher standards of
living, and citizens began to find the tax burdens untenable. Against this backdrop came the fall of
the Berlin Wall and the disappearance of the Soviet Union. The US had won the Cold War, and

15
many concluded that socialism had failed, and that capitalism should be freed from the restraints
imposed by public welfare.12

From the point of view of constitutional history, the welfare state model was openly criticized and
challenged during the 1980s by the conservative administrations of Prime Minister Margaret
Thatcher in the United Kingdom (1979–1990) and President Ronald Reagan (1981–1989) in the
US. Both leaders implemented policies of ‘deregulation’, favouring private initiative and enterprise
in the economic sphere while restoring the principle that the role of the state is not to assure the
welfare of all, but rather to promote prosperity by allowing free markets to generate maximum
levels of wealth in order to create new jobs. These leaders’ economic advisors and allies were also
quick to point out that the private sector offers far more effective and efficient management than do
public entities. Economic interests, therefore, began lobbying for deregulation in the western world,
and the welfare state model entered into a deep crisis that it has still not overcome.

i) A Post-Industrial Welfare State for a Neo-Oligarchic Society?

Though the deregulatory policies adopted in the United Kingdom and United States in the 1980s
yielded considerable economic prosperity in the short term, in the long term they paved the way for
the ‘financial economy’, which began to play an increasingly pivotal role, superseding truly
productive sectors and activities. The consequence was the financial crisis that swept the globe in
2007, leading to the historic bankruptcy of Lehman Brothers in 2008 and sinking the world into a
major global economic crisis.

The worst part of this reaction against the Keynesian welfare state model, however, was that it
fostered not only structural imbalances in the western economies, but also pronounced social
inequality, as the richest grew richer, the position of the middle class stagnated, and the increase in
the numbers of the poor became alarming. In 2016 statistics showed that 1% of the world’s
population held 50% of its wealth. Social inequalities have, therefore, substantially increased in
societies due to what the French economist Thomas Picketty describes as the ‘economics of
inequality’.

12
Some historians consider the key date to be 1989. See Frank Nullmeier and Frank-Xaver Kaufmann, ‘Post-war
Welfare State development’ in Francis G. Castles et al. (eds.), The Oxford Handbook of the Welfare State (OUP 2010)
86–88.
16
The legal and constitutional consequences of these important economic and social transformations
is that, from the perspective of constitutional history, the democratic principle runs the risk of being
progressively supplanted by oligarchy, as the massive fortunes forged during the 1980s have allied
with the political class.

Democracies’ regression to plutocracy seems particularly clear when these oligarchies convene at
international forums to set global policies, with decisions made by groups of a private nature which
seek to conceal the magnitude of their power. Cases in point include the Trilateral Commission
created in 1973, the Bilderberg Group, and the Davos Forum, which Susan George calls the ‘Davos
class’ – influential pressure groups which play decisive roles in determining government policy
around the world. Today it seems that the state has granted itself license to intervene unilaterally in
the lives of individuals, with the means justified by the end of optimal resource management, as if it
were a kind of businessman. Some believe that this premise, however, might be dangerous, as this
kind of intervention could ultimately take precedence over representativeness and, taken to its
extreme, even over democracy and the rule of law. This tendency explains the spread of political Con formato: Tachado

populism after the 2008 crisis that led to the Brexit, and the surprising election of businessman Comentario [S5]: You might want
13 an explanatory footnote – Brexit was
Donald Trump as President of the United States on November 8 2016. 2016, a long time since 2008? What
about this? I suggest the following to
replace the crossed out text: “This
tendency explains the spread of the
ii) The Reappearance of the Welfare State Through the ‘Basic Income’ Proposal? populists, movements that have
shaken western politics, with
surprising results like the Brexit and
Might we conclude, in light of all this, that welfare capitalism is bound to disappear? Perhaps not. the election of businessman Donald
Trump as President of the United
The recurrent economic crises that have shaken the world, beginning in 2008, have convinced many States, a phenomenon which could be
explained largely as a reaction against
economists that full employment is no longer possible, so they have come up with the idea that the traditional political establishment,
which people consider responsible for
states should guarantee and preserve social peace by subsidizing citizens with universal ‘basic the recurrent economic crisis and the
dramatic rising of social
income’, meaning that every citizen or legal resident should receive an unconditional sum of money inequalities”.LOOK ALSO AT FN 13

from the government or a public authority. The idea is not new, as it was originally conceived by
Thomas Payne (1737–1809) in his Pamphlet ‘Agrarian Justice’, published in 1795. Payne was
against the unjust repartition of land, and advanced the idea that the state, drawing from a national

13
Economic insecurity creates a sensation of fear and anxiety among electorsvoters, who, that therefore, are more
than willing to accept the simplistic solutions that populists politicians offer to considerably complex problems. On
the political consequences of economic insecurity in contemporary Western societies see Ronald F. Inglehart and
Pippa Norris “Trump, Brexit, and the rise of Populism: Economic have-nots and cultural backlash” in Faculty Research
Working Paper Series (RWP 2016-026). Harvard Kennedy School

17
fund, should provide every citizen without land a fixed sum of money when they turn 21 years of
age, and a supplementary one after turning 50. And this not as charity, but as a fundamental right.
This principle was developed in the 1970s through the idea of a ‘social dividend’, and after the
deregulatory period of the 1980s was termed ‘basic income’.
This idea of creating a universal or unconditional basic income was initially endorsed by left-wing Con formato: Tachado

economists who wanted to distribute the profits of publicly-owned companies to benefit the entire
population as ‘social dividend’. This was seen by economists such as James Meade as the only way
of returning to full employment, as a(?) basic income would force employers to pay salaries high
enough to attract workers who, thanks to this basic income, would have their basic needs met. Comentario [S6]: Fundamental,
everyday…? Vary – we have basic
already in the same sentence. You are
absolutely right I have suppressed
It is interesting to note that even some economists with right-wing economic views consider the almost all “basic”. I hope this works
establishment of a general basic income for everyone as a way of eliminating expensive welfare Comentario [B7]: This is the new
text I suggest: “This idea was initially
services, and reducing taxes and the heavy bureaucracy characteristic of welfare states. endorsed by left-wing economists who
wanted to distribute the profits of
publicly-owned companies to benefit
the entire population as a `social
The welfare state, which was on the verge of dying out after the neoliberal wave of the 1980s may, dividend´. This was viewed by James
Meade, for instance, as the only way
then, reappear as a result of this. of returning to full employment as it
would force employers to pay salaries
high enough to attract workers who,
II. The ‘Role’ Of Law in the Welfare State thanks to this, would have their
fundamental needs met”

An overview of the history of welfare state law cannot be limited to the inevitable constitutional
history of the welfare state with its account of the increasing involvement of public powers in
economic and social matters, but also must include an examination of some interesting legal
questions, such as the debate over the legitimacy of including fundamental social rights as a
constitutional principle, in addition to traditional political ones. It is also important to mention the
changes in the structure of the sources of law, brought about by the consolidation of the welfare
state and, more precisely, the growing importance of collective labour agreements, and their
evolution from contractual agreements to legislative regulations. The history of the development of
a specific way of resolving labour disputes is another crucial aspect of the legal consolidation of the
welfare state, beginning with the establishment of joint committees of workers and employers,
which gave way in some countries to the creation of specialized labour jurisdictions within state
court systems. Finally, it is interesting to mention the appearance of Social Law as a distinct legal

18
discipline taught at universities, with its permanent balance between the areas of public and private
law.14

1. The Fight for Social Citizenship

If the state, under a liberal laissez faire model, mainly focused on defence, maintaining law and
order, and administration, the welfare state’s essential target is to provide citizens with social help,
meaning securing some modicum of assistance for all, according to a universal model, publicly
financed by a democratic flat rate on general revenues, as conceived by Beveridge. This means that
in the welfare state model the government assumes responsibility for everyone’s welfare, and not
only when the family or the market fails. A true welfare state does not limit its commitment to
marginal social groups, as was the case with the classical English Poor Laws approach.

It is important, therefore, to bear in mind that from a legal perspective the core idea behind the
welfare state is ‘social citizenship’, meaning that ‘social rights’ are given the same status as political
rights. They become, therefore, the second generation of fundamental rights. They must be
inviolable and should be granted on the basis of citizenship. This is what Marxist thinkers call the
‘decommodification’ of the status of individuals vis-à-vis the market. The term, coined by Karl
Polanyi in 1980 and developed by Gösta Esping-Andersen, refers to the idea that with the
development of capitalism people become ‘commodities’ in markets. They have a ‘commodity
status’.

From a legal perspective, introducing the concept of ‘social citizenship’ implies that individuals
lose their pure ‘commodity status’, attaining the ‘de-commodification’ stage, meaning that a person
can make a living without relying on the market, because he has the legal right to enjoy a certain
level of welfare. The state’s main role, then, is to emancipate the citizen from market dependence.
As Esping-Andersen affirms, from this perspective an optimum welfare state is one in which
citizens can freely opt out from work when they consider it necessary, without potential loss of
employment, income, or general welfare.

14
The growing complexity of the welfare state, however, makes it extremely difficult to take a comprehensive approach
to its intricate legal framework, as observed by Neville Harris in his work Law in a Complex State: Complexity in the
Law and Structure of Welfare (Hart Publishing Ltd. 2013).
19
This is the concept of ‘social citizenship’ coined by T. H. Marshall in his capital work Citizenship
and Social Class (1950) in which he argues that there is no welfare state if there is no granting of
social rights. That is, social rights are given on the basis of citizenship and are as inviolable as
fundamental political rights. This is what Neville S. Harris calls the ‘constitutionalisation of social Comentario [B8]: Please see also
15 notes 16 and 17.
rights’.
Con formato: Fuente: Times New
Roman

The result of this conception is that ‘social rights’ are included in some modern constitutions. This Con formato: Fuente: Times New
Roman, Inglés (Estados Unidos)
is clearly not the case in the German and Italian Constitutions, but it is true of the 1958 French
Con formato: Fuente: Times New
Constitution, which recognises the validity of the preamble to the 1946 Constitution concerning Roman, Inglés (Estados Unidos)
Con formato: Fuente: Times New
fundamental rights, including not only political rights but also ‘droits sociaux’. This refers not only
Roman
to the classic rights to strike and belong to a trade union, but also what could be called proper Con formato: Justificado
welfare rights (droits créances), such as the right to have a job, to health care, to education, Con formato: Fuente: Times New
Roman
housing, etc. Along the same lines, the Spanish Constitution of 1978 recognises this category of
Con formato: Fuente:
fundamental rights in its Chapter 3, dedicated to the guiding principles (principios rectores) of (Predeterminado) Times New
Roman
social and economic policy (especially Articles 41 to 43). This tendency has become European: the
Con formato: Fuente:
European Union Charter of Fundamental Rights, proclaimed in 2000 and binding since the (Predeterminado) Times New
Roman
ratification of the Lisbon Treaty in 2009, in its Article 14, refers to the right to education, and its
Con formato: Fuente:
Article 1516 cites the right to choose an occupation and to engage in work in any Member State.17 (Predeterminado) Times New
Roman
Con formato: Fuente: Times New
2. Legal Sources of the Welfare State: Legislative Regulation versus Collective Bargaining Roman
Con formato: Fuente: Times New
Roman
The welfare state also has important effects on the structure of sources of law. Generally speaking,
Con formato: Fuente:
in the Civil Law systems of Continental Europe the welfare state relies essentially on statutes (Predeterminado) Times New
Roman
created by legislatures, while in Common Law countries the legal relationship between employers
Con formato: Fuente:
(Predeterminado) Times New
Roman
15
Neville S. Harris, Social Security Law in Context (OUP 2003) 31. Con formato: Fuente:
16
‘Every citizen of the Union has the freedom to seek employment, to work, to exercise the right of establishment and (Predeterminado) Times New
to provide services in any Member State’ (no. 2 of Article 15) Roman
17
The main argument used by Brexit backpromoters, and widely used by pro-Brexit British newspapers –see Charlie Con formato: Fuente:
Cooper. Monday 20 June 2016 `EU referendum: Immigration and Brexit- what lies have been spread?´ The independent (Predeterminado) Times New
Roman
Charlie Cooper. Monday 20 June 2016. ‘EU referendum: Immigration and Brexit - what lies have been spread?’ The
Independent http://www.independent.co.uk/news/uk/politics/eu-referendum-immigration-and-brexit-what-lies-have- Con formato: Fuente:
been-spread-a7092521.html - was that getting out of the European Union would enable the British Government to ban (Predeterminado) Times New
the massive entry of Eastern Europe citizens. The UK has one of the highest standards ofin wWelfare protection inof Roman
the European Union, which has triggered massive and this has provoked the massive immigration of citizens coming Con formato: Fuente:
from Eastern Europe, increasing substantially increasing the British Public spending. (Predeterminado) Times New
Roman
20
and employees is more defined by the collective bargaining principle, relying on contractual
principles and not imposed by the Parliament or the government.

a) A Welfare State Imposed by Statute Law

If we consider the welfare state as being the result of the confrontation between the market
(property) and the state (democracy), legislation becomes the legal tool to provide citizens with
welfare assistance despite the market. This is why today, as we know, in the post-industrial era
neoliberals struggle against ‘regulation’, seeing it as the main feature of a welfare state, which they
believe to be financially unsustainable. Calling for laissez-faire, they believe that state intervention
(regulation) is dangerous, as it cripples freedom and efficiency.

On the opposite side, social democrats believe that reliance on the market for the basic means of
welfare is problematic, because markets tend to favour the accumulation of capital and exacerbate
class divisions. They point out that economic ‘liberals’ betray their commitment to non-intervention
when they endorse bailouts and assistance for the moneyed classes who control parliament and,
therefore, political power. They believe the laissez-faire model naturally spawns inequality and fails
to provide inalienable rights. This is why public power should intervene, creating statutes to
eradicate poverty and unemployment as a precondition for economic efficiency and to reduce social
divisions, as well as to ensure that workers have social resources (health, education) enabling them
to participate politically as citizens.

From this perspective, in every country we could draft a legal history of the welfare state by looking
at every statute aiming at imposing some limitations on employers in favour of workers; or, with a
broader approach, in favour of the socially disadvantaged. Conversely, we could also examine
deregulation under a neoliberal approach. From this perspective, the history of the law of the Comentario [S9]: Repeating start of
paragraph. What about “In this
welfare state should include the circumstances that led to the approval of concrete statutes by context...”

legislatures and the consequences of their implementation, in order to understand whether the Con formato: Tachado

statute was ground-breaking or ratified a pre-existing social situation.

The vision of a welfare state imposed by law is a classic one in Civil Law countries. It is, for
instance, the approach taken in the work directed by Jean Pierre Le Crom (1988), in which the
history of French Labour Law is deduced from a study of 17 essential statutes, from the Allarde-Le
21
Chapelier Law of 1791, approved by the Constituent Assembly during the conservative stage at the
beginning of the French Revolution, to the Auroux Laws of 1982–1983, during the first presidency
of Socialist François Mitterrand. These statutes have many different objectives. Some establish
limitations on working conditions: the laws of 1906 imposed weekly rest, the 1919 statute limiting
the number of working daily hours to 8, the laws of 1841, 1874 and 1892 limiting the work of
women and children. Some others have different aims: the statute of 1884 authorising professional Con formato: Fuente: Sin Negrita,
Color de fuente: Automático
trade unions, the statute of 1898 concerning accidents at work, the 1936 statute on collective
Con formato: Fuente: Sin Negrita
bargaining, the Petain’s Labour Charter of 1941, and the 1945 statute on work councils.

b) The Welfare State as a Result of Collective Bargaining

Another approach to the creation of welfare state law relies not only on statutes for its development,
Comentario [S10]: Criticized?
but also on the private initiative of workers and employers through ‘collective agreements’. This Stated his position? (Clarify.) I have
added fn 18 for clarification
new source of law, still central to European Labour Law today, was given legal validity for the first
Con formato: Inglés (Estados
time by a French statute on 25 March 1919. Unidos)
Con formato: Inglés (Estados
Unidos)
Weimar’s Germany followed, introducing ‘collective Labour Law,’ considered to be a product of Con formato: Inglés (Estados
interaction between social forces under the state’s supervision, which gradually replaced the Unidos)
Con formato: Inglés (Estados
traditional approach of German Labour Law, envisioned as the result of contractual freedom Unidos)
between employers and employees. Con formato: Inglés (Estados
Unidos)
Con formato: Inglés (Estados
The idea of a Labour Law organized around the concept of collective bargaining was originally due Unidos)

to Otto Kahn Freund (1900–1979). Born in Frankfurt to Jewish parents, he became a Labour Court Con formato: Inglés (Estados
Unidos)
judge in Berlin in 1929 during the Weimar Regime. With the rise of Nazism, he was very critical of
Con formato: Inglés (Estados
the Reichsarbeitergericht, Germany’s supreme labour court, on the eve of Hitler’s access to power. Unidos)
Con formato: Inglés (Estados
He did so in a ground-breaking article in 1931 in which he complained that the Court was taking a
Unidos)
Nazi turn.18 Kahn Freund’s views were, of course, rejected by the German Legal Academy and the Con formato: Inglés (Estados
Unidos)
Con formato: Inglés (Estados
18
Concretely Kahn Freund complained that sibnce 1929 the Reichsarbeitsgericht (Empire Labour Court) Unidos)
since 1929 had reinterpreted the general scheme of the work council laws, asserting in the sense that Con formato: Inglés (Estados
whenever representatives faced a choice, according to the mentionesaid Court, they were bound to promote Unidos)
the interests of ‘the business’ over those interests of employees. Conflictoperation among between syndicates Con formato: Inglés (Estados
of capital and labour unions werewas key to social relations. Whenever necessary, but whenever Unidos)
necessaryhowever, conflict would be suppressed in favour of unity and loyalty to a central authority. On this Con formato: Inglés (Estados
see Ewan McGaughey ‘The Codetermination Bargains: The History of German Corporate and Labour Law’ Unidos)
22
trade unions, which were by that time more and more narrowly controlled by the regime. When
Hitler became Reichskanzler in 1933, Kahn Freund abandoned Germany and travelled to England,
where he became a student at the London School of Economics. He would later become an
Assistant Lecturer there, in 1936, and full Professor in 1951. He ended his professional career at
Oxford University as a Professor of Comparative law, and is considered to be the founder of British
Labour Law.

Kahn Freund, in another important article from 1932, wrote that the function of Labour Law had Comentario [B11]: I changed that

shifted from what he called ‘employment legislation’ to the establishment of a collectivist system of Con formato: Tachado

Labour Law like the one established under the Weimar Republic.19 Departing from the social vision
of private law advanced by Karl Renner,20 Kahn Freund held that the central purpose of Labour
Law was to maintain equilibrium between employers and workers. He became, therefore, the main
exponent of the collective conception of Labour Law that prevailed in Europe from 1945 up to the
1960s, according to which the law sought, on the one hand, to redress unequal power relationships
between employers and employees, and, on the other, to provide the machinery needed to resolve
inevitable conflicts of interest between employers and trade unions.

In his later years, however, Kahn Freund began to have second thoughts about the continuing
validity of agreed Labour Law as a social ideal. In fact, from the end of 1960s until 1980 the thrust
of Labour Law shifted, as its social function was less important at the time than the need to control
the inflationary consequences of collective bargaining, and preventing inflation became the top
priority as far as Social regulation was concerned.

Things got worse, starting in 1979 when Margaret Thatcher became the British Prime Minister and
her government rejected any political commitment to collective bargaining. The result was the
Employment Acts of 1980-1982, which abolished the Fair Wages Resolutions and dismantled the
pre-existing structures of British Labour Law. From 1980 until the 2008 crisis, therefore, legislation

LSE Law, Society and Economy Working Papers 10/2015 (London School of Economics and Political
Science Law Department):26

19
Otto Kahn-Freund ‘The Changing Function of Labour Law’ in Labour Law and Politics in the Weimar Republic
(Oxford Blackwell 1981) 162–192.
20
Karl Renner, Institutions of Private Law and their Social Functions (1949; Reprint Routledge 1998–2001,
Introduction by Otto Kahn Freund).
23
was used to undercut the capacity of trade unions and groups of workers to engage in industrial
actions, and to reduce their bargaining strength. The new priority for the UK’s neoliberal
governments under Mrs. Thatcher and John Major, partially sustained by Labour leader Tony Blair,
was the control of statute regulation via the market. Therefore, an effort was made to minimise
public policies delivering employment subsidies, as economic growth was given priority over social
measures.

3. A Distinct Procedure for Solving Welfare State Conflicts

The legislative and the collectivist approach to the legal formation of the welfare state was soon
complemented by what Gunther Teubner calls the ‘jurisprudential variant of the general debate on
the limits of the welfare state’, a dimension that is the result of the clash between the interventionist
state and the rule of law. From this perspective, conflicts are continuously engendered by
government policies, as well as by general social and economic development. Therefore, the
resolution of labour conflicts constitutes one of the main legal issues in the history of the welfare
state.

The oldest approach was to consider labour conflicts to be of a private nature. As such, ordinary
courts were to deal with them. The result was that employers were generally in a stronger position
before Ancien Regime judges.

a) From the Conseil de prud’hommes approach to the mixed councils

The need to protect the weakest element in the labour relationship, the worker, led early on to a
negotiated solution of the conflict through the creation of a ‘council of good men’ (Conseil de
prud’hommes), partially established for the first time by Napoleon in 1806. The idea was to create a
mixed council of workers and employers. Of course, initially, in the Napoleonic precedent, the
councils of good men were mostly made up of employers. It would not be until the statute of 27
May 1848 that France would witness balanced work councils for the first time, featuring
employer/employee parity – a principle that is still the base of labour conflict resolution today, as
France still lacks a specific state jurisdiction governing Labour Law. The decisions of the Conseil
de prudhommes go directly on appeal to the ordinary superior French civil courts.

24
The French system of mixed labour juries was partially adopted in Mussolini’s Italy, and in Spain
during Primo de Rivera’s dictatorship, within the framework of the establishment of a corporatist
model of the state. This, Gosta Esping Andersen suggests, was a direct consequence of Bismarck
and Von Taffe’s Sozialstaat, a model whose roots could be traced to the old guild tradition, and
suited a highly stratified society that featured different legislation for different classes and status
groups, each with its own set of rights and privileges. This corporatist state also aimed to bring
about social harmony by inculcating individual loyalty to the monarchy or central state authority.

b) Towards a Public Social Jurisdiction

The next step was to create a specific state labour jurisdiction, a trend that started in Weimar’s
Germany with the development of a specific procedure for resolving labour conflicts, with the
Works Council Law (1920), the Mediation Law (1923) and, finally, the creation of a distinct and
specific Labour Jurisdiction in 1926. In Mussolini’s Italy they followed the same pattern, with the
creation of a ‘Work Magistracy’ (Magistratura del lavoro) in 1927. In Spain, Franco would
consolidate the principle of a specific jurisdiction whose aim was to protect workers from their
employers: the Magistratura del trabajo, created by decree on 13 May 1938 and consolidated via an
organic law on 17 October 1940, which established the functions of the new tribunal as the only
institution authorized to settle employment-related disputes. This system is still in place today.

4. The Appearance of Scholarly Social Law

All these transformations explain the development of scholarly literature in the field of Social
Law,21 which initially expanded in Germany, especially after 1919. First, because practice required
more and more systematic legislative editions on the matter, but also commentaries on social
legislation – such as the one on the Works Council Law of 4 February 1920. Social Law soon
extended into German universities, with the teachings of lawyers working in the field of private
law, and those of labour union jurists, but also with the first global treaties by eminent Public Law
jurists, like Erwin Jacobi, the author of Grundlehren des Arbeitesrechts (Leipzig 1927) and the
founder of the Leipzig Institute for Labour Law. There arose in this scholarly sphere a great debate
among Labour Law professors who believed that their field should remain in the area of private

21
Social Law is a broader concept than Labour Law. It includes not only the latter, but also Social Security Law, and all
the legal matters arising from the appearance of the welfare state.
25
law, and those who sought more vigorous state intervention. Hyperinflation (1921–1924) and the
1929 crisis tilted the scales towards indispensable public interventionism.22

Soon in the different European universities there would appear professors specialized in Social
Law. We have mentioned the crucial role played by Otto Kahn Freund in the development of
British Labour Law after World War Two, but he was not the only one. In Italy, Social Law as an
academic field was initially developed by Professor Lodovico Barassi (1873–1961)23 who was the
first Italian Professor of Labour Law since 1928. In Spain, Professor Eugenio Pérez Botija (1910–
1966) was the first to develop a scholarly approach to Spanish Labour Law in his Curso de Derecho
del Trabajo (1948). In France, the great scholar in the area of Social Law was Professor Gérard
Lyon-Caen (1919–2004), who believed that law should strongly protect wage earners and trade
unions, and guarantee a general Social Security system. He had, incidentally, a decisive impact on
the Aubry Law (1998–1999) governing public liberties and employment, a socialist initiative that
reduced working weeks to 35 hours.

III. Conclusion

The poor were considered a marginal group and not a government priority in western societies until
the advent of the ‘Social Question’, a consequence of the Industrial Revolution and of the laissez
faire model of state, under which a wealthy oligarchy ended up controlling government. This made
possible the amassing of enormous fortunes, in contrast to masses of people wallowing in the most
absolute poverty. Nevertheless, for the first time the needy were organised themselves(?) politically Comentario [B12]: I changed that

by means of Socialism, an international political movement launched to restore social equality. Con formato: Tachado

Bismarck's conservative reaction sought to prevent the triumph of a social revolution by introducing
compulsory social insurance, privately financed by the workers themselves, while David Lloyd
George devised the first ever social policy financed by the state.

The collapse of the laissez faire model of the state after World War I spawned a significant increase
in the level of state intervention in social matters. Besides Soviet Russia, the Fascist and Nazi
regimes adopted very ambitious social policies to protect the poor through ‘corporatism’, a doctrine

22
Michael Stolleis, A History of Public Law in Germany 1914–1945 (Oxford University Press 2004) 230–231. For a
general approach to Social Law as a scientific discipline, see Michael Stolleis, History of Social Law in Germany
(Springer 2014) 229–234.
23
Initially with his main book: Il contratto di lavoro nel diritto positivo italiano (1901)
26
that rejected class struggle and replaced it with the idea of cooperation between employers and
workers. Democratic regimes, which during the interbellum period were far less active than
totalitarian ones in implementing social policies, became far more committed to welfare initiatives
after 1945, as the welfare state became the democratic response to the Social Question. Up to the
1980s a universal welfare system was established in most European countries following the
Beveridge Model, with the momentous consequence that, for the first time, the middle class started
paying direct taxes, and most of the state’s financial resources were used to sustain public welfare
programs. Hence, some authors believe that we cannot speak of the existence of a true welfare state
model until the 1970s.

After the 1974 Oil Crisis, the cost of the welfare state began to grow untenable, and the fall of
socialist regimes in Eastern Europe paved the way for governments to cut taxes and reduce social
spending. In the first decade of the twenty-first century, neoliberalism led to a decline in welfare
protection and a dramatic increase in economic differences and social tensions, though the welfare
state still might make a comeback, thanks to proposals such as the universal basic income.

In addition to its constitutional history, the welfare state has impacted European legal systems in
various crucial aspects: the ‘constitutionalization’ of social rights was undertaken in some European
countries, and even by the European Union, by 2009; the collective bargaining principle has come
to function, along with legislation passed by governments, as a source of law; specific state social
jurisdictions to solve labour conflicts have supplanted, in some countries, the traditional joint
commissions made up of worker and management representatives, though this formula has survived
in others, like France; and, finally, Scholarly Social Law, pioneered in Weimar Germany, has
expanded to the UK and most European law schools.

27
Recommended Reading

Blahož, Josef, ‘The Welfare (Social) State, European Union and Globalization’ in (2014) 4 The
Lawyer Quarterly: International Journal for Legal Research 3, 178 ff.

Briggs, Asa, ‘The Welfare State in Historical Perspective’ in Christopher Pierson and Francis G.
Castles (eds.), The Welfare State: A Reader (3rd ed., Polity 2013)

Brodie, Douglas, A History of British Labour Law: 1867–1945 (Hart Publishing 2003)

van Gehuchten, Pierre Paul, ‘Les conventions collectives, sources du droit’ in Isabelle Hachez (ed.), Con formato: Francés (Francia)
Les sources de droit revisitées, vol. 2 (Anthemis, 2013) 383 ff.

Esping-Andersen, Gösta, The Three Worlds of Welfare Capitalism (Polity-Press 1990)

Kahn-Freund, Otto, Labour Relations: Heritage and Adjustment (OUP for the British Academy
1979)

Kahn-Freund, Otto, Labour and the Law (Paul Davies and Mark Freedland eds., 3rd ed., Steven and
Sons 1983)

Leisering, Lutz, ‘Nation State and Social Policy: An Ideational and Political History’ in Franz-
Xaver Kaufmann (ed.), Variations of the Welfare State (Springer 2013) 1 ff.

McCluskey, Martha, ‘Efficiency and Social Citizenship: Challenging the Neoliberal Attack on the
Welfare State’ (2003) 78 Ind. LJ 2, 783 ff.

Palier, Bruno (ed.), A Long Goodbye to Bismarck? The Politics of Welfare Reform in Continental
Europe (Amsterdam University Press 2010)

Picketty, Thomas, The Economics of Inequality (Harvard College 2015)

Sampford, Charles John, and Galligan, Dennis James, Law, Rights and the Welfare State (Croom
Helm 1986)

Stephens, John D., ‘The Social Rights of Citizenship’ in Francis G. Castles et al. (eds.), The Oxford
Handbook of the Welfare State (OUP 2010) 511 ff.

Teubner, Gunther (ed.), Dilemmas of Law in the Welfare State (Walter de Gruyter, 1986)

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