Towards late 19th century, liberal sentiments of the 1848 revolutions were being replaced with radical socialist ones. Rapid industrialization caused many people to migrate from rural areas to urban centers. Many workers found themselves in extremely poor working conditions and the connivance of the state to this misery that workers had to endure, helped socialist ideas to rapidly spread among these said workers.
Coming to 1870’s, socialism was at its peak thus far in Germany and looked to grow within the parliament. Chancellor of Germany and the main architect of the German Empire, Otto von Bismarck, was at the time in search of a new enemy, after his failure in his Kulturkampf policy in the first few years of the empire. The rise of the socialism and socialist presence created the perfect environment for Bismarck to find himself a new internal enemy and he was luckier this time because unlike his earlier enemy, this new enemy was hated by pretty much everyone in 1870’s politics. Both the liberals of west Germany and monarchists of east Germany (core Prussian territories) saw the socialist rise as a danger that needed to be dealt with as swiftly as possible.
An assassination attempt on Kaiser Wilhelm I gave Bismarck the opportunity to go for a full scale attack on socialists. He immediately passed a series of laws banning socialist newspapers and journals and purging socialists from the parliament. The main political wing of the socialists, Social Democratic Party, responded to this attack by forming an underground resistance movement based in Switzerland. Quickly understanding that suppressing the socialists by force wasn’t going to work permanently, Bismarck developed the idea of a state socialism. The idea was simple; whatever the socialist party offered to its voters, the state was going to offer the same with its own resources. To keep the balance between the expectations of his own voter base and those of the socialist voters, Bismarck’s plan was to implement these socialism-inspired reforms with minimum value. This way capitalists wouldn’t be in such a loss to complain about and the workers would be somewhat satisfied.
First of these laws, the Health Insurance Law, passed in 1883. It was, a year later, followed by the Accident Insurance Law, which compensated workers injured by work accidents. Another significant one was the Old Age and Disability Insurance Law of 1889, which provided the old and the disabled with state funded pensions. Even though these reforms didn’t stop the eventual rise of the Social Democratic Party in the long run, they surely helped Germany in becoming a “welfare state”. The Empire went on to grow industrially and matched the British Empire in terms of social welfare. This policy of Bismarck later influenced similar movements in the United Kingdom and the United States of America. It is often argued that F.D Roosevelt was inspired by Bismarck’s system while creating his own welfare system.
Despite the effectiveness of his new welfare system, Bismarck got utterly defeated in 1890 federal elections. His biggest enemies; National Liberals, Social Democrats and Centrists gained the far majority in the parliament. On top of that, Bismarck’s biggest supporter Kaiser Wilhelm I had recently died. New young Kaiser Wilhelm II, even though he admired Bismarck’s capabilities, didn’t want to start his reign by resenting most of the members of the parliament, so he declined Bismarck’s demands on dismantling the parliament and forming a new one with conservative members that could work with Bismarck without struggle. Bismarck was forced to resign on 18 March 1890, at the age of 75. The new government removed anti socialist bans after Bismarck’s resignation, and the workers’ rights and welfare reforms continued to be implemented.