Also under the influence of the bolshevik revolution, Western governments instituted social welfare programs. Embracing the philosophy that government should take an active interest in the well-being of the citizenry, they took responsibility for ensuring that citizens had shelter, medical care, and support in old age or in case of disability.

Pressure from the political left had spurred some movement on welfare issues in the closing decades of the nineteenth century. In Germany, Bismarck instituted Europe's first social insurance programs in the 1880s, providing for old age pensions, as well as protection in case of unemployment, illness, accident, or disability.

At Bismarck's initiative, the German Reichstag adopted a Sickness Insurance Law (1883), under which employers and employees contributed to a fund to cover medical expenses in case of an employee's sickness. In 1884 followed an Accident Insurance Law under which employers were required to set up a fund to compensate workers injured on the job. In 1889 came an Old Age Insurance Law under which employers and employees contributed 50% each into a fund for old age pensions.

Bismarck's aim was to counter the social democratic movement in Germany, which was making more thorough-going demands. Undermining Germany's social democrats, wrote one historian, was “the ultimate motive” for Bismarck's social reform laws. Speaking in support of these laws in the Reichstag, Bismarck said that a promise had been given “to remove the legitimate causes of Socialism.” Bismarck had been lobbied by Ferdinand Lassalle, the German socialist leader.