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Welfare Capitalism and the Social Security Act of 1935 Author(S): Jill S Welfare Capitalism and the Social Security Act of 1935 Author(s): Jill S. Quadagno Source: American Sociological Review, Vol. 49, No. 5 (Oct., 1984), pp. 632-647 Published by: American Sociological Association Stable URL: http://www.jstor.org/stable/2095421 Accessed: 16/09/2009 14:54 Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at http://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at http://www.jstor.org/action/showPublisher?publisherCode=asa. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. JSTOR is a not-for-profit organization founded in 1995 to build trusted digital archives for scholarship. We work with the scholarly community to preserve their work and the materials they rely upon, and to build a common research platform that promotes the discovery and use of these resources. For more information about JSTOR, please contact [email protected]. American Sociological Association is collaborating with JSTOR to digitize, preserve and extend access to American Sociological Review. http://www.jstor.org WELFARE CAPITALISM AND THE SOCIAL SECURITY ACT OF 1935* JILL S. QUADAGNO Universityof Kansas A central concern of political theorists has been the relationship between the state and the economy, or more specifically, how political power gets translated into economic power. Recent debates have been shaped around critiques of the corporate liberal thesis, which contends that class-conscious capitalists manipulate the polity so that government comes to pursue policies favorable to capitalism. Alternative theories suggest that the state is capable of transcending the demands or interests of any particular social group or class. The Social Security Act of 1935, which represented the beginning of the welfare state in the United States, was a conservative measure that tied social insurance benefits to labor force participation and left administration of its public assistance programs to the states. In this paper the Social Security Act is used as a case study to adjudicate between several competing theories of the state. The analysis demonstrates that the state functions as a mediating body, weighing the priorities of various interest groups with unequal access to power, negotiating compromises between class factions, and incorporating working-class demands into legislation on capitalist terms. A central concern of political theorists has synthesis of politics and economics. For been the relationshipbetween the state and the example, Kolko (1963)has arguedthat the reg- economy, or more specifically, how economic ulatory "reforms" of the Progressive Era, power gets translatedinto political power. Re- traditionallyexplained as a respose to muck- cent debates have been shaped around cri- raker's criticism, were actually desired by tiques of the corporate liberal thesis, which large industryas a way, not only of controlling stresses the strategies of class-conscious competition, but also of driving smaller com- capitaliststo manipulatethe polity. Alternative petitors out of business. As O'Connor theories suggest that the state is capable of (1973:68)explains, "by the turn of the century, transcendingthe demands or interests of any and especially during the New Deal, it was particularsocial group or class. apparentto vanguardleaders that some form of The core agenda of those espousing some rationalizationof the economy was necessary. variantof corporateliberalism has been to ex- And as the twentieth century wore on, the plain how major economic interests manipu- owners of corporate capital generated the fi- lated the polity in the twentiethcentury, so that nancial ability, learned organizational skills, governmentcame to pursue policies favorable and developed the ideas necessary for their to capitalism (Domhoff, 1979; Kolko, 1963; self-regulationas a class."' O'Connor, 1973; Useem, 1983). According to In recent years corporateliberalism has been this perspective, capitalists rationallypursued attacked on the grounds that it oversimplifies a series of policies designed to allow them the more complex causal processes involved in control of the political process, resulting in a policymaking,that it cannot specify the condi- tions under which interventions by dominant corporate interests will occur, and that it ne- *L)irect all correspondence to: Jill S. Quadagno, glects to confront the fact that these inter- Department of Sociology, University of Kansas, ventions sometimes fail (Block, 1977a:353; Lawrence, KS 66045. Skocpol, 1980:169). Several alternative so- This research was supported by a grant from the lutions to the problem of explaining how the University of Kansas General Research Fund and by state serves the interests of the capitalist class a grant from the Kansas Committee for the have been posed. Block (1977b:10) argues that Humanities, an affiliate of the National Endowment there is a division of labor between those who for the Humanities. I am grateful to Gordon Streib, accumulatecapital and those who manage the Joane Nagel, Norman Yetman, Brian Gratton, state apparatus.While capitalists are generally William Tuttle, Sandra Albrecht, William Julius not what is to Wilson, and Theda Skocpol for helpful comments on conscious of necessary repro- an earlier draft of this manuscript, to David James duce the social order, state managers are and Georgia Walker for participating in extensive forced to concern themselves to a greater de- discussions, and to Jack Hayes for assisting in the gree because their continued power rests on search for archival materials. the maintenance of political and economic 632 American Sociological Review, 1984, Vol. 49 (October:632-647) WELFARE CAPITALISM 633 order. The central constraint upon the struggles" (Skocpol, 1980:200). State decision-makingpower of state managers is structures and party organizations have, ac- that of "business confidence." Individual cording to Skocpol, independenthistories and capitalistsmake investmentdecisions based on are not simply shaped in response to socioeco- such tangiblevariables as the price of laborand nomic changes, dominant class interests or the size of the market, as well as such intangi- class struggles. "States and political parties bles as the political and economic climate. within capitalism have cross-nationally and Business confidence falls during political tur- historically varying structures. These moil and rises when there is a restoration of structurespowerfully shape and limit state in- order (Block, 1977b:16). Since state managers terventions in the economy, and they deter- are dependent upon the investment accumula- mine the ways in which class interests and tion process, they will necessarily use what- conflicts get organized into (or out of) politics ever resources they possess to aid that pro- in a given time and place" (Skocpol, 1980:200). cess. Normally, state managers formulate Whatare these politicalconstraints on policy policies supportive of capital accumulation. formation'?They may include such factors as Duringa crisis such as a depression, however, existing national administrativearrangements, when the decline of business confidence is not governmentalinstitutions, the extent of elec- a potent threat, pressures intensify to grant toral democratization, patterns of political concessions to the working class (Block, partyorganization and competition,and degree 1977b:24-25). of bureaucratization.For example, in com- In Block's (1977b:22)view, class struggle is paring two New Deal measures, the Agricul- the primaryvehicle contributingto the expan- tural AdjustmentAct and The National Indus- sion of the state's role in capitalist society. trial Recovery Act, Skocpol and Finegold Class strugglearises from the desires of work- (1982) contend that the former succeeded ers to protect themselves from the ravagesof a whereas the latterfailed because the AAA was marketeconomy. Workersoperationalize their placed inside an existing federal department concerns throughpressures for reforms. State that had the administrativemeans to imple- managers must then weigh three factors in ment its programs. In contrast, the NRA, granting concessions-the fear of damaging which had no "well-establishedstate adminis- business confidence, the escalation of class tration knowledgeableabout and sympathetic antagonisms that might endanger their own to the needs and aims of the business self- rule, and their recognitionthat their own power regulators," foundered due to the lack of a and resources will grow if the state's role is strong bureaucracy (Skocpol and Finegold, expanded (Block, 1977b:23-24). When 1982:267). Similarly, the Social Security Act working-classdemands for reforms do get in- took shape as three separate measures- corporated into state policy, they are rarely national old age insurance and federal-state grantedin their originalform. Rather, they are programs for old age assistance and unem- geared to the needs of capital accumulation. ployment insurance-because of previously Block's argumentis useful
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