Anton Kainz senior, my great-grandfather, was the innkeeper in the outer suburb of Vienna: Währingerstrasse 146 in the 18th district. My grandfather, Toni was raised there and as he was destined to take over the running of the inn, he was trained as a waiter and cook and went abroad to perfect his catering skills working as a waiter and cook in hotels and restaurants in Switzerland and other fashionable destinations of the bourgeoisie of the 1920s. After the early death of his father his mother took over as innkeeper and when Toni fell desperately in love with my grandmother, he married her against the will of his mother. His mother resisted the marriage because she considered Lola, a beautiful Jewish shop girl in a confectionary shop, an inappropriate match for her middle-class son and heir to an inn. Nevertheless the young couple moved into a tiny room above the inn and worked in the inn alongside the grumpy and tyrannical Mrs. Emilie Kainz, the widowed innkeeper. Toni was the manager of the inn since 1931, but his mother remained the innkeeper; a constellation that could never have succeeded. She continuously harassed both of them until they decided to leave and rent a coffeehouse in the 8th district, Josefstadt. Emilie Kainz was born Emilie Ühlein, daughter of the innkeeper Rudolf Ühlein in Nußdorferstrasse 50 in the 9th district. She must have been the prototype of the strict, rough and uncompromising Viennese innkeeper’s wife, as on can see in the photo:
Toni and Lola, the “young bohemians”: They both enjoyed the carefree life of middle class Viennese youngsters in the “Roaring 1920s”.
My grandmother remembered that they both, Lola and Toni, were not cut out for an innkeeper’s career and that they were definitely not gifted entrepreneurs, in fact they were lousy managers. They never seemed to regret not running the “Anton Kainz” inn. Lola immensely enjoyed the company of the guests, but she was no good in the kitchen, where she was supposed to work as long as her mother-in-law was the innkeeper, and Toni loved cooking, but rather for family and friends. He was a rather withdrawn person with lots of aesthetic and philanthropic interests such as philately, music, photography, painting, woodcraft and he loved sport, but not necessarily managing an inn.
My grandmother Flora Kainz, née Sobotka, who everybody called “Lola” grew up with her three sisters, Käthe, Agi and Mitzi, in Kaiser Ebersorf near Vienna in a bourgeois family. Her father, Ignaz Sobotka, was the manager of the brewery in Kaiser Ebersdorf (see article on beer brewing in Vienna). She was born in 1902 and received the standard education of a middle class girl of the time. In the course of the musical education that all girls of her class underwent at that time, it was discovered that she had some talent for the piano. Lola showed an intense interest for the opera and regularly went to see performances at the Vienna Opera in the standing room area, which was extremely popular among the young in those days. Lola was a very charming happy-go-lucky girl who loved all kinds of entertainment and went out a lot, much to the regret of her father. She even had her cut, which was a sacrilege for a young bourgeois woman in the early 1920s. When she came home after her visit to the hair dresser she hid her hair under a funny hat and with jokes made her father laugh out loud and finally went unpunished. None of her sisters would have dared to challenge their father’s rules in the way she did. She liked dressing up, going to parties and going out with groups of young men and women for sports and entertainment – and the opera’s standing room. She adored tenors such as Leo Slezak, Joseph Schmidt and Richard Tauber and waited for the adored singers after the performance in front of the stage door or watched their films in the cinema.
She was admitted to the Vienna Musical Academy in the piano class of Professor Manhart. Later on in her life she was still very proud of that achievement, but admitted that she had not been serious enough. She was not the hardworking studious type as she loved entertainment too much. She used the smallness of her hands and the narrow span between her fingers as an excuse and quitted the class to start work as a shop girl in a sweet shop, where she got to know her later husband, Anton Kainz, my grandfather. After Ignaz Sobotka had lost his job as the manager of the brewery in Kaiser Ebersdorf, the family moved to a small flat in Vienna, Mariahilferstrasse. Ignaz worked as a menial labourer for the construction company “Teerag-Asdag” and the family was no longer well-off. But Lola’s enthusiasm for classical music, especially the opera, never ceased and the standing tickets in the opera were very cheap. Yet despite her skills as a pianist she was always reluctant to play the piano at home. Her husband, Toni, was an amateur who loved the piano, but he always had to urge Lola and coax her into playing with him four-handed piano pieces. Nevertheless, the classical opera remained with her all her life and when I was a child we always had to listen to the one-hour radio programme after lunch the “Opera Concert”, when she told me about the greatest opera singers and her favourite arias. My parents, her daughter Herta and her husband Werner, carried on that tradition. During my whole childhood and youth we listened to records of classical music in the evening – there was no television set bought – and went to operas, classical concerts and operettas. At the reopening of the Vienna Opera house on the “Ring” in 1955, which was destroyed at the end of World War II, my parents acquired a subscription for the Vienna Opera, which they kept until just a few years before they died in 2016. My mother being a dressmaker and my father an electrician, they could only afford the cheapest category, which was the last row before the gallery standing room, but they loved it and were very proud of their subscription that dated back to the reopening of the opera. They knew the opera lovers sitting next to them and enjoyed the atmosphere of the standing room audience behind them without having to endure hours standing up while listening to Wagner, Verdi and Richard Strauss. They also saved up for tickets to see one of the first “New Year’s Concerts” in the now world-famous “Musikverein” after the war.
The Vienna State Opera was a court theatre at the time of the Habsburg Monarchy, financed by the state, just as the “Burgtheater”. After the end of the monarchy, the Austrian Republic took over the financing of the state operas and theatres. In 1870 the old court opera house, the “Kärntnertortheater” was demolished and a new building was erected at the Ringstrasse – today’s “Staatsoper”. The architects van der Nüll and Sicardsburg designed a building in the romantic- historical style. The new opera house was opened in 1869 with Mozart’s “Nozze di Figaro”. After an Allied bombing attack the opera was destroyed on 12 March 1945. Only the main walls, the great staircase and the Emperor’s tearoom survived. Soon after the end of the Second World War the reconstruction of the legendary monument to Vienna’s love for classical music started. The opening ceremony took place on 5 November 1955, when Karl Böhm directed Beethoven’s “Fidelio”.
The Viennese public transport system is one of Europe’s most efficient and affordable public transport systems. It all started with the first horse-drawn tramway in 1865 that connected the former gate in the city wall “Schottentor” with the suburb of “Hernals” which was famous for its many entertainment venues where famous musicians, like the family Strauss, Josef Lanner, the “Schrammeln” and many others performed. So this tramway was built to offer the Viennese a quick and more comfortable possibility to get to their leisure activities. The fast developing network of tramways – first horse-drawn, then steam-powered, too, and finally electric – employed an increasing number of tramway workers who were an ever-present appearance in the Viennese city scape at the end of the 19th and the 20th century. Their protest against the excessive exploitation by the private tramway owners in 1889 resulted in the first wide-spread strike in Vienna and gave a boost to the newly founded socialist movement of Victor Adler. The workers of the tramways also later remained a pocket of resistance, most of all in the Austro-Fascist era 1934-1938 and then during the time of Nazi occupation 1938-1945. A monument in Vienna lists the names of 42 Fascist and Nazi victims of the Vienna transport system workers 1934-1945 (3rd district of Vienna, Kappgasse1). The tramway workers who were active Socialist party members were either dismissed in 1934 when the Austro-Fascist regime of Engelbert Dollfuß put an end to the democratic system of the 1st Austrian Republic or after March 1938 when Hitler made Austria a part of the “Third Reich”. Then all workers of the Viennese tramways who were Jews or had Jewish ancestors were not only sacked but had to flee the country, such as my great-uncle Karl Elzholz, who managed a last-minute escape to Bolivia with his wife, my great-aunt, Marianne (Mitzi), the sister of my grandmother. Those who were unable to find refuge abroad were sent to Nazi concentration camps where many of them were murdered.
The title “Cooking for Peace” is wishful thinking on my side, but the following investigation into food supply measures, cooking techniques and recipes during war times will illustrate the similarities of methods in dealing with these challenging situations of want on both sides of the front, the later victors as well as the defeated. Furthermore, despite nationalistic rhetoric on both sides, such as naming recipes, for example “Hötzendorf Gemüse” (a vegetable stew named after the Austrian military commander) in the Austro-Hungarian Empire during World War I or “Victory in the Kitchen. Wartime Recipes” in England during World War II or the patriotic “Eintopf Sonntag” (“one-pot stew Sunday”) of the Nazis in World War II, “enemy dishes” were still around. English “puddings” (“Wurstpudding”, a pudding made of sausage), “orange marmalade”, “Marillenjam” (a jam made of apricots) and “mixed pickles” recipes were popular in Vienna during World War I and on the other hand, there was an influx of Viennese cooking traditions in England via Viennese refugees who worked as maids and cooks in wealthy English households and even booklets with continental recipes were distributed in England. Women on both sides of the trenches had to deal with the same problems trying to make ends meet and still put tasty meals on family tables in Vienna and in England. The highest priority was to avoid any waste of food and to provide the people on the “home front” with healthy and nutritious dishes, which might be of greatest interest also today because many of the techniques of preserving food, using vegetable scraps, replacing meat and an economical use of fuel, such as the use of a “cooking crate” (“Kochkiste”), are advertised nowadays, too, in order to improve our diet to reduce health-damaging consequences of too much fat, meat and sugar in our present-day meals. You can for instance find guidelines for building your own cooking crate, which was introduced in World War I, online now, which helps to reduce the costs of energy and preserves the vitamins in the steamed vegetables.
You will ask now, what’s the connection to my family? Well, first of all my great-grandfather, Ignaz Sobotka, who was 42 years old, when World War I broke out, was involved in the war effort on the home front by brewing beer in Kaiser Ebersdorf near Vienna and growing animal fodder and vegetables on the grounds of the brewery. An interesting document of 15 April 1917 signed by Anton Iritzer, the owner of the brewery, asks for “… the dispensation from military service of Ignaz Sobotka, manager of the malt factory and living on the premises of the factory (11th district of Vienna, Mailergasse 5) as he is indispensable for the war industry…. My company is busy producing fodder for animals and transforming worthless rubbish into animal fodder and I therefore need my manager. Further I have to dry coffee surrogate and I use 15,000 square metres of my garden to plant vegetables, cabbage and beans, etc. I furthermore collect the otherwise worthless vegetable cuttings in Kaiser Ebersdorf in large quantities and turn them into urgently needed animal fodder which I deliver to the fodder centre…. The k & k Uniform Depot has stored large quantities at my premises and these need an overseer who lives on site… All these tasks are carried out by my manager alone and he is therefore indispensable and there is no replacement. In case of his conscription operations would have to be terminated and the uniform depot would have to be vacated.”
My grandfather, Anton (Toni) Kainz, whose father owned an inn in Vienna’s 18th district in the Währingerstrasse, was a trained cook and waiter, who had acquired experience in Switzerland and France after the successful completion of his apprenticeship in 1924 (see the certificate below).
After being drafted by the Nazis for the campaign against France at the age of 33 – much to his regret because he loved the French and their way of life – immediately after the outbreak of World War II, he was later sent back to Vienna to work as a fishmonger – a war-necessary trade at the home front – because he had stubbornly refused to divorce his Jewish wife, my grandmother Lola, and was therefore considered “unreliable” by the Nazis. Contrary to the Nazi’s intention, this offered Toni the possibility to protect his wife and his daughter, my mother Herta, from deportation to concentration camps. My mother often recounted the wonderful dishes he cooked from the meagre provisions that were available during the war. Once she received from her piano teacher a single small piece of old and grey chocolate in tinfoil, a former Christmas tree decoration, which she brought home. Toni cooked the most marvellous chocolate cream from this one grey piece of old chocolate at a time when chocolate was unavailable in Vienna. My grandmother, Lola, on the other hand did not like cooking very much and happily handed over the pots to Toni, whenever there was a family festivity. In the interwar years Lola and Toni ran a café in Vienna’s 8th district at Hamerlingplatz, where my great-grandmother, Ritschi Sobotka, Lola’s mother, did the cooking. Ritschi’s famous “Buchteln” (yeast dough dumplings filled with curd cheese and / or a special type of plum jam) is a simple recipe for a rich, fluffy and tasty Viennese sweet that can be eaten as a main course. But Lola herself was extremely skilled at bargaining for food during the 2nd World War. This was called “hamstern” in Vienna and signified the attempt at bartering any possessions city dwellers still had for food from the farmers in the vicinity of the city. In that way she put to good use her beauty and her charm in helping feed her family because Toni always sent her to the farmers and remained discretely behind. Two of Lola’s Viennese recipes are still treasured in our family, namely a delicious cocoa cake made of only two eggs and little butter or margarine and her famous brawn made of pigs’ feet is always served at our New Year’s Eve celebrations.
My great-aunt Käthe, a bank clerk and Lola’s sister, diligently prepared for her escape from the Nazis in 1938 – Austria had become part of Nazi Germany in March 1938 – by learning English and acquiring cooking skills. She then applied for the position of a cook in a wealthy English household and landed in Dover on the 7th of November 1938. She worked in 25, Warkworth Gardens in Isleworth in Middlesex as a cook until she joined her newly-wed second husband, Karl Elzholz, in Bolivia in 1944. She passed on her collection of English wartime recipes and her handwritten Viennese recipes to me. In the same way as she had introduced Viennese cooking in the English household in Isleworth, she brought back to Vienna English recipes after the 2nd World War, such as the traditional full English breakfast and her recipe for making traditional English marmalade of oranges.
Two more members of my family brought Viennese cookery to the Anglo-Saxon world: First, my grandmother’s youngest sister, Mitzi, who had fled with her first husband, Karl Elzholz to Bolivia. There she married the German Bill Stern and migrated with him to the United States after the 2nd World War where she worked as a housekeeping skills teacher, teaching cookery, sewing, knitting, etc. until her retirement, when she moved back to Vienna with Bill to live in Baden near Vienna. Her concept of cooking was meanwhile strongly influenced by the American way of life, which caused some amusement among her Viennese relatives in the 1960s and 70s: She for example advised against the consumption of milk which was supposed to be health damaging, or she excessively washed a chicken inside out with soap before roasting it to eliminate any bacteria, and she complained about the quality of apples in Austria which at that time still housed worms – something unimaginable in the US of the time where pesticides were widely and abundantly used. Second, a cousin of my mother, Edith Loewenstein, the granddaughter of Mali Markstein, Ignaz Sobotka’s sister, lived in London and worked as a cookery and German teacher there after the 2nd World War. I remember her wonderful Viennese speciality, “Brandteigkrapferl” (choux pastry puffs) with chocolate sauce. She was, above all, the one to introduce me to my best English friend since adolescence, Lynette, one of her pupils, who loves Viennese sweet dishes and desserts.
Bolivia is still one of the poorest countries in South America and in the 1930s it was a developing country that was definitely not the desired destination of refugees from Vienna like the United States, Brazil, Argentina or Chile, where the living conditions were similar to Central Europe. But Bolivia ended up as a refuge for many who did not have any other choice and who were desperate to grab any visa available to be able to flee the Nazi terror. You sometimes had to bribe the diplomatic personnel at the embassies to get visas that later turned out to be faked, but even after a stop to immigration, Bolivia handled the issue flexibly and all those with visas, genuine or faked, were allowed into the country, most of them on agricultural visas, although they had no idea of farming. Fortunately for the refugees did Bolivia not annul faked visas, in contrast to other Latin American countries. The country that offered the refugees from Nazi terror rescue was riddled with economic crises, unrests and military coups and had lost a large part of its territory in the “Chaco War” against Paraguay. The German community that had settled in Bolivia before 1938 was under the influence of the NSDAP, led by the German ambassador. Therefore the possibilities for making a living were very limited for the Austrian and German Jewish immigrants; they were restricted by the German community, the Bolivian administration and the Bolivian professional associations. Only few joined agricultural projects, like those of the mining entrepreneur Mauricio Hochschild, most resorted to small retail trade and craftsmanship, where they competed with the local population and thereby triggered some resentment. Within three years the approximately 7,000 to 8,000 refugees to Bolivia formed the largest foreign community there, but most of them moved on to other countries, such as the United States, Chile, Argentine and Uruguay as soon as it was possible. In 1945 around 4,800 Jewish immigrants still lived in Bolivia. The tropical and sub-tropical climate and the extreme altitude were a huge challenge to the immigrants, but the country saved the lives of many refugees from persecution of the “Third Reich” – it accepted the largest numbers of Jewish refugees from Europe of all Latin American countries relative to its inhabitants and my relatives always preserved a loving memory of the beauty of the country and its colourful population mix.
My great-uncle Karl Elzholz, a mechanic at the Vienna tramways, was married to the youngest sister of my grandmother, Marianne (Mitzi), who was several years younger than him. She was his much loved second wife, after his first wife had died young from a lung disease. They had no children and decided rather late that they had to flee Vienna when Hitler invaded Austria in March 1938. Karl was an enthusiastic socialist and a dedicated patriot of the young Austrian republic. As most of the possible destinations had already closed their borders, he managed to procure a visa for Bolivia as an agricultural worker. Karl was a skilled mountain hiker and they fled Austria across the Alps in the winter 1938/39. The last message that my great-grandparents and my grandparents in Vienna received from them was a postcard from Hermagor in Carinthia with the following message:
Dearest parents, Don’t worry and don’t get excited. We are very well. We eat, drink and wait. We have passed the border without problems. There is a lot of room in the train, so we will sleep well. It is half past six and we are already at the border. Many, many kisses, yours Mitzi. Greetings Karl
Norbert Katz, the husband of my great-aunt Agi, was a very talented and successful professional footballer in Vienna until he had to emigrate in 1938. As a very young player he became champion of the Austrian second league in 1919/20 with his team Hakoah Vienna and was Austrian Champion in the season 1924/25 with Hakoah Vienna. Later in England he was employed as a bank clerk, but continued to work as sports trainer and football functionary. This fact offers the chance to investigate the significance of football for the city of Vienna as a vehicle of identification with the young Austrian state. May great-aunt, Agi, was a free water Danube swimmer for the sports club Hakoah, one of the “Danube Maidens”, before she married Norbert. Swimming, just as football, was a very popular and internationally successful sport in Vienna in the 1920s and 1930s.
At the end of the 19th century the English sport football was introduced in Graz, Prague and Vienna, but Vienna soon took the lead because football was directly introduced by Englishmen in Vienna, whereas the clubs in Graz and Prague were subsidiaries of Frankfurt clubs. At that time many English people worked and lived in the Habsburg Empire’s capital city. They introduced the ethics of sport and its benefits for health and mind in the Austro-Hungarian Empire. The gasworks in Simmering, for example, were an English subsidiary and the British company brought many English engineers, skilled workers and white collar staff to Vienna and they started to play football at the “Jesuitenwiese” in the Vienna Prater. Other important British companies that had established businesses in Vienna were Clayton & Shuttleworth, which produced agricultural machines and typewriters, Thomas Cook & Son, the travel agent, and several British sanitary firms. Gandon of the gas works, Gramlick, the owner of a British sanitary firm, Shires, a salesman of the “Underwood” typewriter, Blackey, the director of Clayton & Shuttleworth, Reverend Hechler of the Anglican Church in Vienna, Blyth of Stone & Blyth and Loew, director of the Viennese hat factory Böhm, these were the men who introduced football to Vienna. In 1892 they founded the “Vienna Cricket Club”, but cricket could not find enough players and spectators in Vienna, so the club decided to introduce football in Vienna, too, and in 1894 they changed the club’s name to “Vienna Cricket and Football club” (later “Austria Wien”). Just a few days earlier another group of Englishmen had registered the “First Vienna Football Club” with the imperial administration in 1984, which means the “Vienna” was the first Viennese football club in the city. The two clubs “First Vienna Football Club”, called “Vienna” and the “Vienna Cricket and Football Club”, called “Cricketer” (later FK Austria Wien) were based in Döbling and Heiligenstadt and their first players were the gardeners who Baron Nathaniel Rothschild had brought to Vienna to tend his gardens at the “Hohe Warte”. “Vienna” was the first Viennese football club that also accepted Austro-Hungarian players and was not exclusively managed by Englishmen. Franz Joli, son of the inspector of the Rothschild gardens was enthusiastic about football after his stay in England and he and his brother Max Joli boosted the enthusiasm for the new game among the local population. They started to play with the English gardeners in the Rothschild gardens. So, father Joli had to look for an appropriate football ground outside the gardens in order not to have the lovingly tended meadows of the Rothschild gardens devastated. The first football ground of the “Vienna” was an unused plot at the Heiligenstädterstraße, later the “Kuglerwiese”. The founding assembly took place at the inn “Zur schönen Aussicht” at the “Hohe Warte” on 22 August 1894 and the colours chosen for the club were blue and yellow, the colours of the Rothschild horses competing at the race course in Freudenau. The club was founded under the patronage of the director of the Rothschild bank in Vienna and Baron Rothschild paid for the rent of the football ground and subsidised the club. The first club pub was “Bittners Restaurant” at the Heiligenstädter Pfarrplatz. On the 15 November 1894 the first football match between the two rivalling clubs took place at the Kuglerwiese and the “Cricketer” won 4:0. This was the birth of the Viennese football sport.
“Brunnenmarkt”, street market in Vienna’s 16th district
After the disasters of the first half of the 20th century, First World War, Great Depression, Second World War, disintegration of the Austro-Hungarian Empire, Austro-Fascism and Nazi regime, holocaust and ethnic cleansing, Vienna, the former 2-million multi-ethnic capital of a 50-million peoples’ empire, had turned into a provincial town, capital of a 7-million country, with a decreasing, rather homogenous population. Since the middle of the 1960s the lack of much needed workforce at the times of the economic boom years led to a change of attitude towards labour migration in Austria. The census of 1961 registered 7,074,000 inhabitants in Austria; 102,000 of them foreigners, most of them German citizens, the lowest number ever.
In 1961 the first recruitments abroad for the construction industry took place. Of the agreed 7,300 persons only 1,800 arrived, mostly from Italy. In 1962 a recruitment agreement with Spain under the fascist regime of Franco was unsuccessful. Between 1962 and 1964 37,000 “guest workers” were invited annually, but those numbers of migratory workers never arrived in Austria. Austria did not seem to be an attractive destination at that time. Finally in 1964 a recruitment agreement was signed with Turkey and an official Austrian recruitment office was opened in Istanbul, which was closed nearly 30 years later in 1993. In 1966 such a recruitment agreement was signed with Yugoslavia, too, together with a social agreement that regulated the claims of the workers with respect to health, accident and pension insurance. An official Austrian recruitment office was opened in Belgrade. In 1969 a similar social agreement was negotiated with Turkey. In general, recruitment offices were of minor importance because most migrants entered Austria via tourist visa and their stay was later legalised after they had worked here for some time. The status of these migratory workers was precarious, as the two following examples show: In 1965 Yugoslav workers at the company Iso-Span in Obertrum, Salzburg, went on strike because they received lower wages than agreed. As a consequence the strikers were taken in custody pending deportation. The same happened in 1966, when Yugoslav workers in a construction company in Admont, Styria, went on strike.
Political crises in neighbouring countries also had an effect on migratory movements in Austria. When the dissatisfaction of the Hungarian population with the Soviet domination culminated in the Hungarian revolution of 1956, approximately 180,000 Hungarians fled to Austria and took residence here temporarily. In 1968 160,000 Czech and Slovak refugees settled in Austria for some time due to the revolution in Prague that was crushed by the Soviets as well. After the military coup-d’état In Turkey in 1980 – one of several coup-d’ètats there – the Turkish refugees in Austria received “guest worker” status and that’s why their exact number is not known. When in 1980 martial law was imposed on Poland, more than 35,000 Polish refugees came to Austria, most of which remained here permanently. When in 1991 the war in Yugoslavia started Austria welcomed approximately 90,000 refugees from ex-Yugoslavia over the next four years.
In 1942 William Beveridge, a British academic and civil servant, published his blueprint of a welfare state for Great Britain in his account of the “Five Giants”: disease, idleness, ignorance, squalor and want. He proposed new benefits for the retired, disabled and unemployed, a universal allowance for children and a nationwide health service. Polls found that majorities of all social classes backed these proposals. The blueprint was translated into 22 languages and the Royal Air Force dropped summaries on Allied troops and behind enemy lines. Such zeal for the welfare state is rare nowadays. Liberals such as Beveridge believed that people should take more responsibility for their own lives, but that government should support them. They did not see it as industrialised charity, but as a complement to free-market capitalism. In the second half of the 19th century the rise of unfettered markets brought demands for protection against its effects. Charity and churches were seen as failing to cope with poverty, as mass urbanisation weakened traditional bonds. Pressure came from socialists, but liberals responded, too. “New liberals” such as John Stuart Mill and Leonard Hobhouse argued that freedom meant ensuring that people had the health, education and security to lead the life they wanted. The development of welfare states was then hastened by the Great Depression and World War II. The war fostered a sense of unity and as middle classes shared the risks, their demands for support meant the welfare state became about more than just looking after the poor. The post-war government in Britain implemented most of Beveridge’s plan and similar reforms soon followed elsewhere in Europe. Welfare states have always differed from country to country, but from the 1970s on approaches diverged further. In the 1990s the Danish sociologist Esping-Anderson distinguished three varieties of “welfare capitalism”. First were the “social democratic” versions in Scandinavian countries with high public spending, strong trade unions, universal benefits and support for women to stay in the workplace. Second, “conservative” welfare states, such as Germany’s were built around the traditional family and had a strong contributory principle. Third, the “Anglo-American” welfare states, which put greater emphasis on guaranteed minimums than on universal benefits as in Britain.
Perhaps the most common charge against European mature welfare states is that they have created a culture of dependency. So policy makers have made programmes more “conditional”, forcing recipients to look for work, for example; and to help them, many countries expanded “active labour market policies”, such as retraining. The wide-spread notion that the welfare state is mainly about redistribution from rich to poor is a myth. Nowadays its role is more to allow people to smooth consumption over their lifetimes, in effect shifting money from their younger selves to their older selves. As countries become wealthier, public spending increases as a share of GDP. Spending on social protection, like pensions, health care and benefits, in OECD countries has increased from 5 per cent in 1960 to 15 per cent in 1980 to 21 per cent in 2016. Nevertheless, since 2000, some Scandinavian countries, for example, have combined high levels of public spending with high rates of economic growth. The effects of welfare depend not just on how much is spent, but how. Subsidised child care, which helps mostly women stay in the labour market, is more growth-friendly than pensions. The difficulties welfare states in rich European countries face are about more than just their size. The three main difficulties relate to demography, migration and changing labour markets. The fact of the ageing European population means that welfare spending is increasingly shifted towards the elderly. This threatens the implicit contract between generations. Meanwhile Denmark and Finland have linked state retirement ages to life expectancy, so will the Netherlands. In Germany, Portugal and Sweden pension levels are adjusted according to the ratios of workers to non-workers.
Immigration poses another challenge to the welfare state. In 1978 Milton Friedman argued that you could have open borders or generous welfare states open to all, but not both, without swamping the welfare system. Moreover, taxpayers are more tolerant of benefits that are seen to look after “people like them”. A study published in 2017 using survey data from 114 European regions found a correlation between areas with higher shares of migrants and a lack of support for a generous welfare state. Another survey of changing attitudes in European countries between 2002 and 2012 found both rising support for redistribution for “natives” and sharp opposition to migration and automatic access to benefits for new arrivals. Such popular views form a core part of the appeal of populists in Europe such as the Front National in France, the Sweden Democrats or the Danish People’s Party. The nature of the benefits influences attitudes as well. Immediate access to health care and public education for immigrants is widely supported by European populations, but benefits should not extend to unemployment or child benefit. Moreover, attitudes towards immigrants are volatile and swayed by the political climate. In 2011, for example, 40 per cent of Britons said immigrants “undermined” the country’s cultural life, and just 26 per cent believed they enriched it. By 2017, in the wake of the Brexit vote, only 23 per cent believed immigrants undermined British culture, compared to 44 per cent who believed they enriched British culture. Immigration might offer a partial solution to the first problem of ageing because since at least 2002 EU migrants have contributed much more in taxes than they have cost in public services, as economic research in Britain and Denmark has found out.
The third issue is adapting to changing labour markets. The welfare state developed at a time of powerful government, powerful companies and powerful trade unions. The economic aim after World War II was full male employment. Recent research by the OECD in seven of its member countries estimated that 60 per cent of the working-age population had stable full-time work. Of the other 40 per cent, no more than a quarter met the typical definition of unemployed, namely out of a job, but looking for one. Most had dropped out of the labour market completely or worked volatile hours. The causes are complex and overlapping, but hey include the incentives and disincentives to work that complex benefits systems produce. Universal basic income (UBI) may be one way to avoid such problems. It may take many different forms, but basically replaces a wide range of means-tested benefits with a single unconditional one, paid to everyone. Scotland and the Netherlands are running experiments involving UBI, but in no country is it yet the foundation of the benefits system of working-age adults. The OECD recently modelled two forms of basic income. Under the first one, a country’s spending in benefits is divided equally among everyone – a revenue-neutral form. Under the second one, everyone would receive benefits equal to the current minimum-income guarantee, and taxes would rise to pay for it, if necessary.
Britain’s current decline is relative rather than absolute. The average citizen of today’s Britain is far richer than was the average citizen at the time of the British Empire. Other advanced economies have suffered from years of slow growth while Britain’s science and medical research boom. But the evidence of decline is too evident to ignore. Britain’s core political institutions are in a state of decay. In the past, big crises have produced great leaders, such as Lloyd George during World War I and Winston Churchill during World War II, but today’s politicians range among the mediocre. In a recent survey a quarter of Britons say they would vote for a far-right party because the mainstream parties have let them down. Economic growth has been slow since 2015 despite low interest rates and a fall in the value of the pound. Productivity growth has been marginal and real wages have been falling for a decade. A growing proportion of the population is trapped in a cut-throat economy, in which the young fear to be much worse off in future than their baby-boomer parents.
This is not the first time Britons have been gripped by fears about decline. In the 1890s they worried that America and Germany were replacing Britain as the workshop of the world. In the 1950s they worried that an old-fashioned establishment was strangling the forces of progress. The 1970s saw a particularly fierce debate, as the country was plagued by strikes and three-day weeks. But three aspects make today’s worries especially troublesome. The first is disappointment. For the past 40 years Britain felt that it had put decline behind it. Margret Thatcher, John Major, Tony Blair and David Cameron cemented the new consensus that economic growth, deregulation and privatisation were the key to permanent wealth increase. This was a huge benefit to the new elite that could pride itself that it was more progressive than the old one while stuffing its pockets with gold. But this new consensus also suffered from mounting problems. There was the problem of one-off windfalls: selling off council houses was wonderful for the tenants and the Treasury, but left Britain short of social housing. There was the problem of regional imbalance. The boom in financial services poured money into the south-east while the north remained in economic trouble. This Thatcher-Blair consensus finally ended with the financial crisis of 2008 and the Brexit vote of 2016.
The second problem Britain is facing is the lack of collective agreement in deciding to leave the European Union. Brexit was driven by a particular combination of despair about the way the old consensus had left so many people behind and of optimism that by freeing itself from the EU Britain would be able to reignite its growth engine. The despair was probably justified, but the optimism definitely not because most of Britain’s problems are internally generated. There is nothing about membership in the EU that prevents British entrepreneurs from trading with the rest of the world. Indeed the EU has just signed a trade deal with Japan and is negotiating with the USA about lowering trade barriers. Most economists predict that any version of Brexit – hard or soft – will depress Britain’s growth rate. If Britain leaves without a deal, the consequences will be dramatic. The Brexit secretariat is already drawing up contingency plans to stockpile medicine and food and put electricity generators on barges in the Irish Sea. The third problem is that of compounded error. Irresponsible politicians may well feed the people’s appetites for populist and nationalistic decisions. The Brexit debacle has already injected the poisonous charge of betrayal into the heart of politics. Tony Blair said that politics at the moment is about either riding the anger of finding the answer. The trouble is that fresh answers are hard to find and the anger is mounting daily.
In 2018 Jaguar Land Rover ((JLR) opened a new plant with 640 robots on a former farmland in Nitra in western Slovakia. The robots together with 2,800 workers can assemble a Land Rover Discovery every two minutes. JLR was just another carmaker to come to Slovakia. VW arrived in 1991, followed by Kia and PSA. These firms together turn out over one million cars annually; more per head of population than any other country. Nitra is close to the motorway and Slovakia has an impressive supply chain with more than 300 factories making car parts. This spoke for Slovakia. The JLR factory gives a fair picture of Slovakia’s, and more broadly Central Europe’s model of economic development. First, it was built with foreign capital and largely by foreign contractors. Membership in the EU has facilitated the flow of capital from the western members to the eastern ones. Second, the economy of Central Europe depends on customers in economies to the west purchasing goods made relatively cheaply in the hinterland. Third, government support was essential for this economic take off. Government subsidies luring foreign companies into the country are common in Central Europe. Investors flock to special economic zones across the region, attracted by tax advantages. Furthermore EU funds have boosted investment in infrastructure that appeals to foreign investors like, road and rail. Even in Poland, the region’s biggest and most diversified economy, these EU funds matter: by 2022 they will make up 22 per cent of public spending each year.
This foreign-led development model has had much success. Countries from the Baltic states in the north to littoral Black Sea states have become considerably richer over the last two decades. GDP per person in the Czech Republic is now close to Spain. Bulgaria and Romania are much poorer in terms of GDP, but managing to win investment and to grow, too. The European Commission tracks the progress of five EU members immediately east of Germany and Austria, namely the Czech Republic, Hungary, Poland, Slovakia and Slovenia, compared with a group of four western frontier EU countries, namely Austria, Denmark, the Netherlands and Sweden. In 1995 the average GDP per person at purchasing power parity was around 55 per cent lower in the five Central European countries than in the western frontier countries. By 2016 the difference had shrunk to 39 per cent. Average incomes in the five countries are now equal to those in Portugal and far above those in Greece, of course also due to the financial crisis and sovereign debt crisis since 2008. Of all the Central European countries Slovakia saw the most dramatic gains.
But the challenge for these countries, as for any hinterland reliant on supplying labour to produce goods for richer neighbours, is to keep closing the income gap. The next step of economic development is going to be harder, requiring more productive firms, more private capital and more skilled labour. The region was not that hit by the financial crisis and is growing strongly once again. The IMF expects these countries to expand nearly twice as fast as Western Europe and this expansion looks more sustainable than the one that ended with the financial crisis in 2008. Back then cheap foreign loans, including Swiss franc mortgages taken out by individual households had boosted consumption but became hard to pay back. Nowadays banks are in better shape and consumption is less supported by debt and more by rising incomes. Despite nationalistic policies by populist governments in some countries foreign companies are not retreating. Corruption and some political instability seem not to deter investors as long as other economic conditions are beneficial. Building firms are doing particularly well. Construction activity in the region has typically grown twice as fast as GDP in recent years. Central Europe accounts for a fifth of Strabag’s – Austria’s biggest construction company – business. Business in Poland has gone so well that Strabag is branching out from EU-funded infrastructure into hotels, shopping centres and office blocks. Wienerberger, an Austrian building-materials supplier, has 64 plants across Central and Eastern Europe (CEE), including the ones in Austria and Turkey. 30 per cent in the region are not connected to a sewer system, compared with 5 per cent in Western Europe, which means big business for the firm. Subsidies for better housing, for instance in Hungary, have meant a boom in brick sales.
Services are playing a bigger part in this expansion in Central Europe than in the pre-crisis boom. This means that also white-collar work is doing well. Western banks are moving back-office jobs east to pleasant and affordable spots such as Krakow. McKinsey has 1,000 analysts in Poznan in central Poland, serving clients world-wide. Brexit is moving some mid-level finance jobs away from London as well. Erste Bank, an Austrian bank with 16 million customers in Poland, the Czech Republic, Slovakia, Croatia, Serbia, Romania and Turkey, expects banking in the region to grow faster than in Western Europe for many years to come. Central Europe has also transformed Vienna Insurance Group, a nearly 200-year old Austrian institution. Its 21 companies across CEE now provide half of all VIG’s premiums and profits because as income rises, spending on insurance increases, too. So it seems that Central European economies are well set for sustainable economic growth. Yet there are still three reasons for worries, namely a lack of innovation in local firms, a coming demographic squeeze and an over-dependence on foreigners, especially Germans, to drive development.