The Welfare State in Western Europe

The governments of Western Europe created the welfare state to promote social and economic stability and prevent any return to fascism and war. They emphasized full employment as necessary to any democratic society. Only by actively intervening in the economy to prevent unemployment could they assure that there would be no return to fascism and war. To achieve full employment, governments became actively involved in industrial planning, including taking part ownership of key industries: coal mining, large factories, banks, and transportation.

At the same time, governments drew up economic policies designed to stimulate consumer demand and raise the standard of living. These policies included increased minimum wage levels, free medical care, unemployment and retirement benefits, improved public education, and affordable public housing. The goal of these policies was to ensure that all citizens were provided for, and no one would be vulnerable to the exploitation, underpayment, and exclusion that had made fascism and communism so popular in the 1930s. Governments became responsible for the well-being of all their citizens, so these policies became known as the welfare state.

To pay for this welfare state, Europeans voted for huge increases in taxation. These taxes were not on income but on wealth. Owners of land, factories, farms and large fortunes were asked to give up some of that wealth to ensure the welfare of others.