The Corporate State, the Welfare State, and John Steinbeck

In 1957, John Steinbeck wrote a slim satiric novel called

The Short Reign of Pippin IV. It isn’t one of his
finest works of literature, but there’s a passage in it that has
stayed with me in the three decades since I read the book, even as
I forgot the plot developments that led to it:

“You take a big corporation in
America, say like General Motors or Du Pont or US Steel. The thing
they’re most afraid of is socialism, and at the same time they
themselves are socialist states.”

The king sat bolt upright. “Please?” he said.

“Well, just look at it, sir. They’ve got medical care for employees
and their families and accident insurance and retirement pensions,
paid vacations–even vacation places–and they’re beginning to get
guaranteed pay over the year. The employees have representation in
pretty nearly everything, even the colour they paint their
factories. As a matter of fact, the’ve got socialism that makes the
USSR look silly. Our corporations make the US government seem like
an absolute monarchy. Why, if the US government tried to do
one-tenth of what General Motors does, General Motors would go into
armed revolt. It’s what you might call a paradox,
sir.”

Set aside that semi-syndicalist bit about the employees having
representation in “pretty nearly everything” — there may have been
some truth to that in
Germany at the time, but it’s a stretch to say it about
America. Think instead about this 1957-vintage vision of America’s
biggest corporations as private welfare states. This was a real
trend, and while part of it was a simple matter of employers in a
growing economy offering amenities to attract workers, there was an
element of public policy to it too. In particular, there were the
tax incentives
introduced in the 1940s and ’50s that played a major role in making
employer-provided benefits the dominant means of receiving health
insurance — and, more important still, in making insurance the
dominant means of paying for health care. This was one face of the
corporate state after the dust had settled from World War II: a
public-private partnership where the government set the parameters
and big businesses delivered the goods.

It wasn’t an ideological compromise so much as it was a
jerry-rigged accident. The limits of the vision — particularly
when it comes to health insurance — soon
became clear.

Decades later, Steinbeck’s passage feels less like a description
of an emerging social order and more like a glimpse back at the
discarded hopes of another time. But where it comes to health
insurance, we’re still living in a system erected in that era.
Obamacare is the latest, clumsiest attempt to put some patches on
the leaks.