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While it is true that the welfare state owes its existence to Bismarck and his reforms, it is also true that Bismarck created it in order to defuse the much more radical agenda being advocated by the German Socialists, thus inaugurating the grand social democratic bargain that holds sway in Europe to this day — despite the cracks around its edges — and has been the cornerstone of the social democratic agenda in the United States since the New Deal. 

In creating the welfare state Bismarck struck the devil’s bargain wherein the upper classes would essentially institutionalize putting out sufficient charity to mitigate the worst struggles of the lower classes in exchange for the perpetuation of the class system and their leading role in governance, and — incidentally — gave the lie to Karl Marx and his prophecies of the inevitability of the rising of the working classes against their masters. This same system had spread with few modifications to the rest of Europe in the aftermath of the Great War and has persisted there with few changes ever since.

The States, being a society without a traditional class system that was analogous to the European aristocracy of the sword of cloth, required a greater impetus to get on the welfare bandwagon. American upper classmen, being self-made and proud of their personal achievements, resisted claims on their earned wealth and power dilution with much vigor — and, since they were not averse to breaking heads, they were largely successful in suppressing social democracy until the FDR administration used the Great Depression to cram the beginnings of a social democratic system down their throats.

The contradiction in the American version of social democracy is that the grand bargain had been struck not with the old elite of wealth and bloodline but with the ever-shifting upper middle class of largely self-made men, and increasingly women, who resent the imposition insofar as they have inherited the obligation but receive no security in compensation, since their wealth depends always on the vagaries of fast-changing markets. The language of the American social democrats still emphasizes class war, never mind that there was never any truth in it, but they are beginning to realize that the language is empty unless there are, in fact, classes to which it may apply. Thus we have begun to see moves by social democrats to freeze class structure, by raising barriers for people in their striving to amass more wealth. Progressive taxes, stringent regulation, shrill demonization of the businessman — all matter more to those aspiring to wealth than those who already have it.

The most curious development of the ongoing debate is the role of the educated bourgeoisie, who — having been indoctrinated into the social-democratic orthodoxy of the myth of the class struggle, which in reality is rather a struggle of elites, in their younger years — remain quite faithful to the left-wing philosophies of their youth, despite their bourgeois jobs, bourgeois incomes and bourgeois taxes, continue to reliably agitate and vote against their own economic interests.