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Wily welfare capitalist: Werner von Siemens and the pension plan

Author

Listed:
  • Jakub Kast

    (Stanford University, Stanford, CA, USA)

  • Lyndon Moore

    (Université de Montréal, Montreal, QC, Canada)

Abstract

The German firm of Siemens and Halske introduced many enterprising features of what later came to be known as welfare capitalism in the mid-nineteenth century. Profit sharing, annual bonuses, a pension fund, a reduction in work hours, and an annual party were all means to ensure a productive, trouble-free workforce. We investigate the reasons why Siemens and Halske introduced this internal welfare system. We focus on the by-far most expensive part of the welfare system: the pension fund introduced in 1872, more than a decade before the nationwide social security system was implemented in Germany. We find that the adoption of the internal welfare system increased labor productivity, and in addition discouraged workers from striking. We estimate that the company’s gains due to strike prevention and higher productivity were at least as high as the cost of the pension fund. This suggests that (1) the introduction of a pension fund is not inconsistent with simple profit maximizing behavior on the firm’s side and (2) increased labor unionization induced firms to introduce subjective components of workers’ remuneration packages.

Suggested Citation

  • Jakub Kast & Lyndon Moore, 2010. "Wily welfare capitalist: Werner von Siemens and the pension plan," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 4(3), pages 321-348, October.
    • Handle: RePEc:afc:cliome:v:4:y:2010:i:3:p:321-348
    DOI: 10.1007/s11698-009-0048-x
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    Citations

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    Cited by:

    1. Tommy Krieger, 2024. "Elites and health infrastructure improvements in industrializing regimes," Journal of Economic Growth, Springer, vol. 29(3), pages 433-468, September.
    2. Tommy Krieger, 2022. "Elites and Health Infrastructure Improvements in Industrializing Regimes," CESifo Working Paper Series 9808, CESifo.
    3. Stefan Hielscher & Bryan W. Husted, 2020. "Proto-CSR Before the Industrial Revolution: Institutional Experimentation by Medieval Miners’ Guilds," Journal of Business Ethics, Springer, vol. 166(2), pages 253-269, October.

    More about this item

    Keywords

    Welfare capitalism; Siemens; Productivity;
    All these keywords.

    JEL classification:

    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • N33 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: Pre-1913
    • N83 - Economic History - - Micro-Business History - - - Europe: Pre-1913

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