The term describes a form of capitalism that includes social welfare policies. This approach, popular in the 1920s, involved employers providing benefits to employees such as pensions, profit sharing, and company-sponsored health insurance. A key example is Henry Ford’s implementation of the $5 workday, which significantly improved worker morale and productivity while simultaneously reducing employee turnover.
The adoption of these practices aimed to reduce worker unrest and discourage unionization by fostering a sense of loyalty and well-being among the workforce. By voluntarily offering benefits, businesses sought to create a more stable and productive labor force, ultimately benefiting the company’s bottom line. This strategy also served to project a positive image of the company to the public.