One of the most widespread legends explaining the structure of the universe goes something like this: “Of course, the Bolsheviks were very bad. But if it weren’t for them, the West would still be living under ‘wild’ capitalism. And so, the bourgeoisie were afraid that the proletariat would stage a revolution for them and were forced to make concessions.” That is, these “concessions” are supposed to explain why, as it turns out, “ordinary people” in the West live better than our “ordinary people.” Note that by “concessions” they mean the eight-hour workday, unemployment benefits, and — above all — an extensive system of social insurance.
I have always had a question: but how did people live before the “concessions”? After all, it turns out that without state guardianship and care, they were forced to swim in the turbulent waters of the free market. If the bourgeoisie felt fear and concessions followed, one must conclude that the turbulent waters of the market are very, very bad. Meanwhile, there were no particular upheavals in the good old England of the 19th century — the leader of the then “wild” capitalism. There were not even revolutions, so beloved on the far less capitalistic continent. Well, Luddites, Chartists — no big deal… That is, a certain inconsistency emerges: either the bourgeoisie after 1917 were afraid of something completely different, or there was no fear at all. Conspirology, in its great wisdom, offers the excuse of charity. They say the cunning bourgeoisie, to placate the proletariat, gave it something to eat. However, if charity worked so well, why be afraid in 1917? In general, it’s somehow unclear.
History of the State and History of Society
Unfortunately, popular history is very state-centric. This is not surprising — after all, it is believed that the state “makes decisions,” and the state is also the main producer of the documents that historians work with. The life of civil society is not specially documented, and there is no single center in it that would “make decisions.” So it turns out that we know nothing about the main thing. The more valuable, then, are studies devoted to this — the main — side of our life. David Green’s book, “Back to Civil Society,” is one such study.
David Green tells the story of friendly societies in England. This history begins at the end of the 18th century and ends in 1911. The societies existed until the end of World War II, but their displacement from the sphere of social services began precisely in 1911.
Friendly societies are voluntary associations for the purpose of providing assistance in case of illness, aid to families in case of the death of the breadwinner, and so on. These are not insurance companies — they are non-profit organizations. Such an organization deals with the expenses of its members, without generating income. In the case of England, the societies mainly covered the working class itself, whose indignant reason, according to Marxist predictions, was supposed to boil over at any moment.
Friendly societies were the main mechanism of “social protection” in Britain, generated by self-organizing civil society. In 1910, 6.6 million members were in friendly societies, while trade unions had 2.5 million and another 2.5 million were in cooperative organizations.
The first organizations of this kind arose as early as the 16th century — the Corporation of Carmen of Leith was organized as early as 1555, but the rapid growth of such organizations began in the 18th century.
The societies provided sickness benefits, medical assistance to their participants and members of their families, financial and practical assistance to widows and orphans. Medical services were usually provided by a local lodge doctor, whom the societies elected by voting; however, in large cities the societies had their own medical facilities, like modern clinics. In addition, most societies had a special benefit to help their members travel in search of work.
By 1801, approximately 7,200 societies with 648,000 members were operating in England (with a population of 9 million). Two years later, in England and Wales alone, there were already 9,672 societies with 704,350 members (data from a report in preparation for the “Poor Law”). Throughout the entire 19th century, the number of friendly societies constantly grew, and the rate of growth increased. When the government adopted the Compulsory Social Insurance Act in 1911, its effect extended to 12 million people. At least 9 million of them were already using insurance voluntarily within friendly societies.
Origins. Associations of Neighbors
A typical birthplace for a friendly society was a pub where local proletarians rested after the working week. These people usually knew each other well, as they were neighbors. Such is, for example, the history of the Manchester Unity of Odd Fellows, which originated in the “Ropemakers Arms” pub. The society was created in 1810 by Robert Naylor as “Abercrombie Lodge.” In 1814, the lodge proposed to existing friendly clubs that they unite under its auspices “for the purpose of mutual support, protection, and exchange of experience.” In 1838, the society already had 90,000 members; in 1848, 249,000; in 1876, more than half a million.
Diversity and Development
Initially, societies operated on a simple scheme — all members paid equal contributions, from which payments were made to those who applied for assistance. At the end of the year, the balance in the treasury was divided equally among the members of the society.
Subsequently, societies developed both organizationally and in terms of specializations. There were federated and unitary societies, those with clearly defined charters and those without, those registered with the government or existing without registration, specializing in medical insurance, a wide range of mutual aid, compensation for losses in shipwrecks, savings societies, “Holloway societies,” and so on. The development of societies laid the practical foundations of the insurance business. Many societies, having started with a group of people of the same age, eventually found that their contributions did not cover the costs of treatment, which increase with age. Special systems for calculating future contributions arose, which are now used in insurance. Some societies adhered to the principle of annual division of balances; this was a good guarantee against simulation of illnesses, while another part tried to find ways to use these funds “beneficially.” Deposit societies and Holloway societies developed quite complex mechanisms of mutual insurance. Large societies, such as the Manchester Unity of Odd Fellows, also provided pension savings. Many societies collectively organized disability benefit payments and even maintained sanatoriums.
The societies created some services that the state could not reproduce when it nationalized this sphere. For example, this was the special activity that helped members of societies in job search. A member of the society who was traveling and had no debts received a “balance” — a certificate certifying his payments and a “traveling password.” Upon arriving at the destination, such a person had to contact the local lodge and give the password. He received a kind of benefit, usually for a month. If he found work, he could also receive a relocation allowance. This system operated on an international scale as well, meaning that emigrants in Canada, Australia, and so on immediately found support.
Medicine
One of the main types of activity of societies was medical insurance. It should be said that the medical care system was quite diverse, including private practice, medical institutions of charitable societies, and friendly societies, among others. Interestingly, the same workers quite often preferred private medical practice. A significant volume of services was provided free of charge. David Green writes that in London, the outpatient clinics of friendly societies provided free assistance to a quarter of the population in 1877, a third in 1894, and almost half in 1904. It is clear that this refers to medical care and consultations, not treatment. True, London’s statistics differ from the rest of the country.
Thus, the practice of friendly societies significantly expanded the volume of medical care. Now those who were not members of any societies could also receive it. The societies believed that they had no right to refuse those who applied for such assistance. However, understanding where the funds for “free” service came from established natural limits on this practice.
The societies themselves practiced three main methods of medical service — practicing doctors at lodges, their own medical facilities, and lists of “recommended” doctors.
School of Self-Governance
Friendly societies were a wonderful school of self-governance, especially large societies with many branches. Issues of governance and preventing the concentration of power were solved in various ways — through the institute of referendum, annual congresses, and so on. In many societies, the functions of the center were performed by local branches in turn. The principle of rotation of leadership, as well as elections, was widely used. Chairmen (Noble Grands, Masters) were elected for six months or a year; treasurers for longer terms. As a rule, assemblies (congresses) were held off-site so as not to create “centers of power.” The institute of ex-chairmen was widely used; they were supposed to advise and guide the activities of current ones (how do you like the title “Previous Noble Grand of the Grand Order of Odd Fellows”?).
The well-known three-level structure of an organization consisting of a central bureau, local branches, and an annual congress of representatives was developed precisely by the practice of British friendly societies. At the end of the 19th century, a significant part of them used exactly this structure.
I note that people always and everywhere differ in laziness, and societies also faced the problem of ensuring functioning. One of the charters of a local branch of the Order of Foresters stated that members of the society living within two miles of the “Clock Hounds” tavern on Wellington Street had to pay a fine of 3 pence in case of non-appearance at quarterly meetings. However, other societies found more adequate ways to ensure attendance — contributions were paid on the day of regular meetings.
Philosophy. Freedom, Independence, Dignity
Friendly societies were not just organizations managing the expenses of their members. Most of them, especially the so-called orders, set idealistic goals of improving their participants. “Those who ‘possess a bad character, lead a disorderly life, are inclined to bad company, are guilty of regular drunkenness, or behave aggressively’ cannot be admitted to the order” — the instruction of the Order of Foresters states.
Mutual aid was one of the practices that allowed a person to become responsible and gain a sense of dignity. Let us not forget that in most cases we are talking about workers. Friendly societies were a place of socialization for these people, where they could feel like useful and independent members of society.
Friendly societies believed that as many of their participants as possible should undergo practice in various positions within the society itself. The instructions of the Order of Foresters state: “A man who has served in the court knows how virtuous submission to lawful and benevolent instructions is, and will become a better servant of society than one who submits blindly and acts without reasoning. A man who exercises authority in the court, called to this post by the free choice of brothers, is equally suited to occupy a responsible position in the external world, and is far less likely to exercise the power given to him with contemptuous arrogance than one who has not known the importance of duty to others and has not learned the noble lesson of humility in power, humility that the school of mutual dependence teaches.”
Worldview and organizational principles were set forth in the so-called instructions, which were approved at congresses. The “Foresters” were one of the largest orders, whose instructions became the basis for other organizations.
This passage is very telling: “The power of the members of the Order is like sunlight — it is natural, primordial, and not limited by any human forces, while the power of our officers is borrowed, delegated, and limited by the intentions of the members of the Order, to whom it belongs and before whom all officers are accountable.”
Friendly societies clearly distinguished mutual aid from charity. Accepting charity was considered degrading to human dignity and permissible only in extreme cases. The instruction of the foresters, recounting the story of a certain Sir Philip, who, being fatally wounded, gave the water brought to him to a wounded soldier, writes: “Here is an example of generosity, since it was a good deed toward a person in trouble, not accompanied by a jot of selfishness. If someone shared something they themselves did not need, that would be a good deed. If they shared part of what they would have had in abundance, that would be charity. We, as members of the Brotherhood, are particularly called to follow generosity in its highest and noblest manifestations.” However, these concepts are clearly demarcated from the lawful right of a member of the society to receive assistance. “To receive a certain sickness benefit, all brothers create a common fund, the use of which is an inalienable right of each member of the brotherhood when circumstances arise for which it is intended. Here it is not a question of generosity but of a legal right” — the instruction directly states.
When the state took on the functions of social insurance, the concept of right migrated into this sphere from friendly societies. However, in societies this right was ensured by contributions from its participants. In the “welfare state,” such a “right” is ensured at the expense of others.
Rituals
As the reader has already noticed, many friendly societies copied knightly and Masonic orders. The names alone are worth something: Grand Order of Odd Fellows, Ancient Order of Foresters (it is clear that hardly all of its million members were foresters), Society of Druids for Mutual Benefit, United Ancient Order of Druids, and so on…
Rituals formed an important part of the life of societies. The Foresters, for example, when admitting new members, practiced cudgel fighting, which they only abandoned in 1843. Rituals created an atmosphere of involvement in a common cause. Passwords, initiation ceremonies, secret handshakes, and other attributes also had practical significance. The author of these lines has long been convinced of the usefulness of things that seem superfluous to many. For example, in most societies, a newly elected chairman at a meeting personally read out his duties, or answered questions from a special appointee. A very useful practice, as is voting by standing up. I think everyone will understand me if I say that instead of taking an oath (or along with it), a newly elected Ukrainian president would better read Article 106 of the Constitution.
The State and Societies
Any state does not particularly like when its subjects begin to undertake something without its guardianship. The state tends to think that they are plotting something against it, especially when it comes to the “lower classes.” Before 1834, friendly societies were under the control of justices of the peace, who permitted (or did not permit) their activities. In 1834, this guardianship was abolished and societies were let free. State registration was introduced, but it was not mandatory. Registration provided advantages in case someone decided to appropriate the treasury; in this case, a registered society was a party in court.
The state repeatedly attempted to impose on societies “the only correct and scientifically grounded” system of contributions depending on age. However, the state of that time had enough sense not to make it mandatory, and after several such recommended systems failed in practice, it abandoned these attempts.
However, all this ended with the advent of the era of mass politics, the struggle for the votes of the mass electorate, and pressure groups.
Finale
In 1909, the government published its intentions to introduce a nationwide system of social insurance along the German model. Despite the fact that the initial draft made friendly societies part of this system, it did not find their support.
The Grand Master of the Manchester Unity of Odd Fellows, speaking at the annual congress in 1909, said: “I dare to assert that the overwhelming majority of my fellow members, as well as thousands and thousands of members of other friendly societies, unambiguously oppose the government taking over the insurance of the working class of our country for disability or illness in any form.” The Grand Master acknowledged that even among the ranks of his society there is a small number of people who believe that social evils can be cured “by suppressing individual voluntary efforts and completely relying on the state.” This point of view, in the master’s opinion, did not take into account the effect of such a situation on people’s character. “The state can force a person to participate in an insurance system, but it will not make him cautious, nor thrifty, nor a good citizen.”
However, the negative reaction of friendly societies did not stop the government. The National Insurance Act was passed in 1911. The government’s attempts were immediately taken advantage of by pressure groups — above all, the British Medical Association (BMA), medical trade unions, and insurers united in a lobby structure with the eloquent name Syndicate. These groups were dissatisfied with competition from friendly societies; doctors were separately dissatisfied with the “control of non-professionals” over their activities. The thing is that societies followed the norms of common law, one of which states that no one can be a judge in their own case. Therefore, conflicts with doctors were resolved by the societies through arbitration. Medical organizations believed that they themselves should settle disputes.
In general, as a result of the combined efforts of the BMA and the Syndicate, the initial draft underwent several changes, and then amendments were made to the already adopted law. All this undermined the positions of friendly societies, creating a system actually subsidized by the state. The income of doctors participating in state insurance schemes doubled out of nowhere.
However, societies continued active activity until the beginning of the 1950s. There are BMA reports complaining about friendly societies, whose activities in some cities did not allow doctors to serve clients at “established rates,” since the services of society doctors were cheaper.
Conclusions
By introducing a system of social insurance, the state did not create anything new; it used the models developed by friendly societies.
However, the state changed the very foundations of this activity. Instead of voluntary non-profit friendly societies, it created a system actually subsidized by the state. This completely changed the motivation of participants.
The very state intervention enabled pressure groups — the Syndicate and the BMA — to take advantage of the situation and “solve their problems.”
As a result, the quality of services and control capabilities decreased. Doctors became judges in their own case. The impersonal centralized system could not be as effective as the competition of independent groups. By the way, the societies themselves knew this well: the “Druids,” the most centralized society that did not have local branches at all, once compared their payment statistics with the “Foresters.” It turned out that the number of sickness benefits paid by the “Druids” regularly exceeded the similar indicator of the “Foresters” by a third. The reason is simple — the “Foresters’” benefits were paid from the funds of local branches, where people were familiar with each other and understood that they were using each other’s funds. What to say about a situation where insurance is essentially conducted at the expense of an impersonal “taxpayer.”
The priorities that guide the state are revealing. Friendly societies worked, developed, competed; their activities covered almost as many people as the new state system. What then caused state intervention? It was dictated by the shaky majority that the Liberal Party then had in parliament. Lloyd George simply wanted to buy the votes of workers. After the publication of the draft, Lloyd George was already afraid of the army of insurance company agents — 70,000 people, who, in the words of the prime minister himself, “are tireless, often very smart, and can enter every home.”
The history of the adoption of the social insurance system act in England is typical in that it clearly shows that the state, guided by political motives (support in elections), as a rule, in such cases sides with service producers at the expense of consumers. It was the efforts of lobbyists pursuing group interests that “adjusted” the initial draft to the detriment of the consumer.
The adoption by the state of such massive obligations as social insurance inevitably leads to inflationary policy. Let us note that the activities of societies took place under the gold standard, when money does not turn into trash over time. This was the economic foundation that allowed workers to combine efforts and improve themselves. World War I undermined the gold standard, but “social obligations” did the same. Since then, inflationary policy became the norm, and the economic foundation for combining the savings of ordinary citizens became increasingly shaky. Civil society began to collapse.
Well, what about our little Bolsheviks, about whom we talked at the beginning of this note? As we can see, they have nothing to do with it here. The “concessions” in the form of a state system of social insurance were made before any Bolsheviks; moreover, it turned out that these were not even concessions at all, but simply the nationalization of what had already been created by the efforts of citizens themselves and worked quite well.