Enterprise and Society Advance Access originally published online on January 9, 2007
Enterprise and Society 2007 8(1):136-174; doi:10.1093/es/khl071
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Model of Welfare Capitalism? The United States Rubber Company in Southeast Asia, 1910–1942
Associate Professor in the Department of History at the University of Malaya and is also the current Deputy Director of The International Institute of Public Policy and Management. Contact information: Department of History, Faculty of Arts & Social Sciences, University of Malaya, 50603 Kuala Lumpur, Malaysia
shakila{at}um.edu.my
Welfare capitalism, the management ethos adopted by American business leaders in the early twentieth century, emphasizes the role of business rather than trade unions or government in taking care of its workers. This article focuses on the reasons why the United States Rubber Company (USRC), one of the four largest U.S. rubber manufacturers, promoted welfare capitalism at its rubber plantations on the east coast of Sumatra and Malaya between 1910 and 1942. In addition, this study assesses the development of USRC's system of welfare in the areas of housing, profit sharing, pension plans, health care, and recreation. This article argues that USRC's intention was not to forestall unionization (the intention of U.S.-based companies in adopting welfare capitalism), as union formation in Southeast Asia during that period was very unlikely, but to overcome labor shortages and high turnover rates and to ensure labor stability. With reduced labor costs, the availability of financial resources allowed for technical innovations and R & D, which ultimately would lead to increased productivity.
I am indebted to Geoffrey Jones for his thoughts on the first draft of this article. In addition, this article has benefited from helpful comments made by Peter Ward, Peter Miskell, and Teresa da Silva Lopes at the Association of Business Historian Conference, 2004, Nottingham Business School, the United Kingdom. I am also grateful to Khoo Kay Kim for his insights on the subject. Thanks also go to Greg Sibley and Kenneth Lipartito for the editorial support and to the anonymous reviewers for their contributions.