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Welfare and Old Age in Europe and North America: The Development of Social Insurance

Reviewer(s):Silvestre, Javier

Published by EH.Net (April 2013)

Bernard Harris, editor, Welfare and Old Age in Europe and North America: The Development of Social Insurance. London: Pickering and Chatto, 2012. xvii + 270 pp. ?60/$99 (hardcover), ISBN: 978-184893-189-3.

Reviewed for EH.Net by Javier Silvestre, Department of Economic History, University of Zaragoza.

As noted by the editor Bernard Harris (University of Southampton) in the introduction to this book, there has recently been great interest in the history of mutualism in a variety of countries. This insightful book gathers together several contributions to the literature, almost all of which originated as papers presented at specialized conferences or sessions at congresses. One of the major virtues of the book is that it offers evidence from a number of countries. Of further significance is its demonstration of the wide variety of mutual benefit societies, differing on such issues as their voluntary or compulsory affiliation, their range of provisions, and their relationships to different social groups. It is, however, the important subject of the link between mutual aid organizations and the origins and consolidation of health and welfare policy that is the common thread running through almost all of the chapters.

The perspectives and methodological approaches of the chapters vary. For example, mutualism is addressed at different geographical levels and time spans. Some chapters concentrate on economic or actuarial questions, whereas others place more emphasis on political, social and cultural concerns.

The first two chapters deal with mining. John Benson (chapter 1) investigates why coalminers in late nineteenth-century England insured against the risk of having an accident at work. By comparing two coalfields, Benson argues that differences in the membership density of miners? permanent relief funds cannot be solely explained by differences in occupational risk, earnings, and access to supplementary sources of assistance. He also, and convincingly, argues that a better understanding of the determinants of friendly society membership comes from discovering which communities were endowed with a stronger tradition of cooperation.

Timothy W. Guinnane, Tobias A. Jopp and Jochen Streb (chapter 2), meanwhile, deal with two notable actuarial problems that may affect the functioning of relief funds. The authors focus on German miners? mutual social insurance, or Knappschaft, from the mid-nineteenth century to the 1920s. The Knappschaften provided sickness insurance, invalidity pensions or old-age pensions. Small Knappschaften, on the one hand, were claimed to be more effective than the larger ones in managing short-term (sickness) claims and the associated miners? moral hazard. On the other hand, it was also proposed that the Knappschaften needed to be large enough to generate resources to fund long-term claims. The empirical results do not provide clear support to contemporary discussions of the better policing of moral hazard by small societies, and confirm that the larger ones tended, up to a point, to better manage the risk of unexpected increases in claim costs for chronic illness and disability.

Paolo Tedeschi (chapter 3) examines mutual aid organizations in Eastern Lombardy, one of the most industrialized Italian regions before World War I. The author explains how friendly societies consolidated, primarily in response to the lack of state support. He also describes the different types of Italian mutual aid organizations and the benefits provided. One particularly interesting section of this chapter refers to the difficult relationship between the organizations and the state, especially under Fascism ? a regime, however, that did not hesitate to take advantage of the infrastructure created.

Disagreement between the societies and the dictatorial Franco regime is also one of the keys to understanding the decline of the societies in Spain from the early 1940s onwards, as shown in the detailed history of mutualism by Margarita Vilar Rodr?guez and Jer?nia Pons (chapter 4). The chapter also explores the reasons why the state intervened in health insurance only after interventions in other societies? domains. Vilar and Pons adopt a national perspective, complemented with the contribution by Pilar Le?n-Sanz (chapter 8), which focuses on one important mutual aid organization, confirming the problems that mutual aid organizations (even the Catholic ones) faced in surviving within the new institutional framework imposed after the Spanish Civil War (1936-39). Additional economic difficulties are also explained.

Two chapters analyze friendly societies in Britain. Bernard Harris, Martin Gorsky, Aravinda Guntupalli and Andrew Hinde (chapter 5) first examine the question of the apparent increase in sickness rates at the end of the nineteenth century, and proceed to show how the perceived deterioration of health, although it was not the only determinant, led to changes in the societies? attitudes to the introduction of old-age pensions and national health insurance. In the next chapter, Nicholas Broten (chapter 6) delves into the causes of changes in the attitudes of societies to the introduction of old-age pensions. The author uses data for one important society, along with empirical analysis, to argue that, contrary to what has been maintained by prior research, friendly societies at the turn of the century tended to be solvent. He therefore proposes that research must look beyond finances to other determinants of changes in attitudes to state insurance.

The situation in the United States is examined in comparison to European countries. J. C. Herbert Emery (Chapter 7) first discusses why the U.S. did not introduce compulsory health insurance. He comprehensively reviews the intense debate, and then demonstrates that, thanks to savings capacity, the majority of workers around 1910 could self-insure, or otherwise acquire health insurance. He extends and reinforces his arguments using data on household saving capacities for European countries.

The last two chapters focus on the Netherlands and Belgium, respectively. Robert A. A. Vonk (chapter 9) shows the evolution of not-for-profit organizations, which have provided access to health care for both workers and the middle class, throughout the twentieth century and up to present times. As indicated by the author, these organizations ? and their interrelation with commercial insurers ? have played a crucial role in the formation and development of health insurance in the Netherlands. Dani?le Rigter (chapter 10), for Belgium, provides evidence of the importance of mutual aid organizations, and their established infrastructure, in shaping the compulsory health insurance enacted in 1945. The author also explores subsequent problems in the operations of the social health insurance system.

Javier Silvestre is Associate Professor of Economic History at the University of Zaragoza. His publications include articles on the internal migration of natives and immigrants, and workplace safety. He is also the co-editor, with Jer?nia Pons, of a book on the origins of the welfare state in Spain [Los or?genes del Estado del Bienestar en Espa?a, 1900-1945. Los seguros de accidentes, vejez, desempleo y enfermedad (2010)].

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Subject(s):Markets and Institutions
Geographic Area(s):Europe
North America
Time Period(s):19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII