Model of Welfare Capitalism? The United States Rubber Company in Southeast Asia, 1910-1942

Welfare capitalism, the management ethos adopted by Americanbusiness leaders in the early twentieth century, emphasizesthe role of business rather than trade unions or governmentin taking care of its workers. This article focuses on the reasonswhy the United States Rubber Company (USRC), one of the fourlargest U.S. rubber manufacturers, promoted welfare capitalismat its rubber plantations on the east coast of Sumatra and Malayabetween 1910 and 1942. In addition, this study assesses thedevelopment 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 forestallunionization (the intention of U.S.-based companies in adoptingwelfare capitalism), as union formation in Southeast Asia duringthat period was very unlikely, but to overcome labor shortagesand high turnover rates and to ensure labor stability. Withreduced labor costs, the availability of financial resourcesallowed for technical innovations and R & D, which ultimatelywould lead to increased productivity.