I suppose after some 70 years or so our western societies have forgotten where "welfare capitalism" came from. There was a time when we had no healthcare, no welfare payments for the poor, no employment insurance, etc. The State was not involved in those things. Taxes were low, governments were small and those in need had to fend for themselves.

We have to go back to the 1920s and 1930s. If you were poor, you had very little and you had to somehow survive. You would look at the rich and wonder why they had so much, while you had so little. The end result was massive social unrest. It became so bad that from 1917 to 1949 we went from a world that was entirely Capitalist to 1/3 of the people of the world going into revolution and falling under Communist rule. After all, the Communist promise sounded good. Take from the rich and give to the poor.

Then we had millions of people returning home from WW II. Those people fought hard to protect their freedom. They would come home and find no work. They would ask themselves "Is this what I fought for?" So Communism was still sounding really good.

Capitalist governments faced a lot of pressure to change, or else have huge revolutions. So those in power figured that if they taxed the wealthy and the middle class, and used that money to provide services, then they could reduce hardship on people and put an end to the rising social unrest. It was pressure from Communists and Socialists that made things change. Just as the French Revolution had made western societies abandon aristocratic rule and give people democracy, so the Soviet revolution made western society give up some of its capitalist selfishness and greed and give people some relief from their poverty.

Now Capitalist countries wish they could do away with many of those programs. The question is: "Could they?" I think that without those social programs we would fall back into the anarchic days of social unrest. I think that if poverty were to increase massively, people would rethink their posture against Communism. Then they would look at China and say "look at their economic prosperity, maybe Communists got it right after all".

Welfare capitalism is there for one main reason, to stop Communism from gaining ground.