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Modern Manors: Welfare Capitalism Since the New Deal by Stanford Jacoby

Modern Manners: Welfare Capitalism Since the New Deal by Sanford M. Jacoby (345 pages, Princeton University Press, 1997)

(originally published by Booz & Company)

Any leading-edge career counselor these days would advise young people to forget about job security and, instead, devise ways to make themselves "employable" over a lifetime of job and career changes. Secure, golden-harnessed corporate executives are out; cocky, independent entrepreneurs, who are their own products, are in. For the most part, the message has been received. Young workers have few delusions about job security and company benefits; they know they are fodder for the new economic order.

New economic order? Not according to Sanford M. Jacoby, a professor of history, management and public policy at the University of California at Los Angeles and author of Modern Manors: Welfare Capitalism Since the New Deal.

What may seem new to some, Professor Jacoby argues, is strikingly like what coalesced in the 19th century, when the nation's rural-agrarian economy began to shift to an urban-manufacturing one. Industrialization separated workers from their traditional forms of support — family and community — and compromised their ability to get through bad times.

Many workers embraced what Professor Jacoby calls market individualism: "workers who saved as best they could while taking fierce pride in the independence and employability that came from having a well-rounded set of skills." Far from wanting to be bound to an employer, many workers sought a kind of free agentry. When they looked for help, they were more likely to depend on each other in associations and nascent unions than on companies.

It was employers who wanted stability — in a dependable labor force. Companies tried to entice workers into employment without creating conditions favorable to the development of unions. In the guise of providing a buffer against the perils of the new industrial economy, employers contrived to control labor-force mobility. In what came to be known as "welfare capitalism" or "welfare work," companies offered a range of paternalistic blandishments: cafeterias, medical clinics, housing, stock options.

In some cases, companies simply acknowledged that satisfied workers were more likely to stay put. Other programs were experiments engineered by social reformers. Many crossed the line between home and work, invading workers' private lives. Welfare-work programs bound people to their companies in the way serfs were bound to estates — hence the title Modern Manors. The notion that workers could move freely was illusory. To insure against risk and to gain some of life's necessities, they were forced to bear what in many companies were the outright brutalities of mass-production work.

The book makes breathtakingly clear how much American corporate energy over the last century has gone into anti-union activity. In Europe, craft unions were powerful enough that companies viewed welfare capitalism as a way to avoid class warfare. In the United States, companies used mass-production techniques that removed any skill from the work. This undermined the pride of the craftsmen and the usefulness of their skills. The breakdown of craft unionism and eventual rise of business unionism gave employers the upper hand in dealing with organizing drives and negotiations. Welfare capitalism helped maintain that upper hand.

Professor Jacoby disagrees with scholars who argue that welfare capitalism — as it was understood early in this century — died during the Great Depression, when most companies were forced by market conditions to slow production, lay off workers and suspend benefit programs. He argues that welfare capitalism in fact stayed put through the Depression and World War II to emerge later in a new form more appropriate to an expansionary economy.

Evidence of this, Professor Jacoby says, can be found in three companies instrumental in modernizing welfare capitalism: the Eastman Kodak Company; Sears, Roebuck & Company, and Thompson Products, which later became TRW Inc. All survived the Depression relatively unscathed. All managed to hold unions at bay, either by meeting or trumping union benefits or, with help from the local police, by muscling union sympathizers. All tried to do away with the more thuggish approach to supervising employees, moving instead toward a more consensual model.

Kodak, led by George Eastman in Rochester, N.Y., hewed closest to the classic manor mode. Mr. Eastman viewed the company and parts of the town as a large, extended family, with himself as the patriarch. In one form or another Kodak's welfare practices have survived, although competition with the Fuji Photo Film Company and others has challenged the company's future.

Can corporations afford to maintain the welfare-capital model? Many insist they cannot. But Professor Jacoby points out that despite the public outcry over downsizing, many companies retain the core of the manorial model. Even those that shed legions of workers have not completely abandoned it; they make a commitment to fewer, presumably more valuable, employees.

Modern Manors has its faults. Despite the subtitle — Welfare Capitalism Since the New Deal — coverage past the 1980's is skimpy, basically conventional headline wisdom that will be familiar to anyone who has kept up with the news. Professor Jacoby has a frustrating tendency to present seemingly problematic hypotheses as received wisdom.

He clearly is most interested in the central thesis: that welfare capitalism did not disappear with the Great Depression but stayed alive, to be modified by companies such as Kodak and Sears. That thesis, which occupies by far the bulk of the book, is clear and argued in detail. For those interested in pursuing the topic, the bibliographic notes are a bonanza.

For general readers, Modern Manors should be a cautionary tale. History tends to recontextualize and then repeat itself. The book is about the ripple effect of creating new markets and about the response of labor and capital to market change. Sound familiar? If nothing else, failing to learn from history is messy and expensive. That makes Professor Jacoby's book a real bargain.

Barbara Presley Noble, the former At Work and Business Book Review columnist for The New York Times, has an M.S. in journalism from Columbia University and was a Knight-Bagehot fellow in business and economic journalism at Columbia.
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