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Responses to the coronavirus reveal the complex roles corporations play not just as economic institutions, but also as social institutions. With their personal messages of support, their leaders proudly position themselves as front-line responders. Properly understanding such gestures requires tracing the development of corporate behavior back to the early 20th century. It was in this era that corporations, having already been granted their legal status as “people,” first unveiled their more human face.

The American economy was at that time settling into unprecedented levels of concentrated economic power. A wave of mergers in the 1890s saw the swallowing up of smaller businesses by giant, bureaucratically coordinated corporations. The newly emerged leviathans faced significant opposition from populist discontent, trade unions, antitrust efforts and calls for industrial democracy. Industry leaders responded to these pressures in a manner that would shape corporate behavior for the next century.

What emerged was two distinct but closely related modes of “personable capitalism.” The first is generally called welfare capitalism. Essentially, employers began assuming responsibility for providing their workers different modes of security and stability in the form of assistance programs, health insurance and other benefits. Welfare capitalism blended a progressive-era vision of reforming the working class with an older form of employer paternalism.

Earlier entrepreneurs such as Robert Owen and Josiah Wedgwood had long offered employee assistance programs, health services and even provided housing for their workers. But the mammoth corporations that arose at the end of the 19th century, due to size and complexity, were largely coordinated by bureaucratic administration and an indifference to employee welfare. This was industrial capitalism in its most impersonal form.

Many business leaders soon recognized strategic reasons to change course. For one, it served to ward off the siren calls of statism and socialism that many workers at the time found compelling. Employers discovered they could effectively “buy off” organizing workers with perks and benefits. But these leaders also argued that this was simply good business. Henry Ford famously believed his overextended paternalism — offering workers higher wages while closely monitoring their private lives — would instill the discipline necessary for both orderly work and consumption. Other leaders, such as General Electric President Gerard Swope justified worker benefits on economic grounds. Happier workers were better workers.

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