The unique design of the modern workers’ compensation system of accident insurance owes a surprising amount to the anxieties and fears of democratic reforms that beset Prussia’s upper crust throughout much of the 19th Century.

As earlier reported, Prussia’s supreme court took a law intended to protect landowners from railroad engine sparks and turned it into a political instrument of state-socialist paternalism.

What allowed this was the state judiciary’s grossly politicized nature and indifference to widely acknowledged principles — at least in other countries — of the actual rule of law.

This essential corruption within Prussia’s judicial system was an important element in Bismarck’s unique ability to manipulate and dominate William I, king of Prussia and, later, German emperor.  

The corruption of legal process also attracted international attention when the judiciary’s official counselors to the monarchy, the Crown Syndics, produced — to Bismarck’s specifications — specious arguments sanctioning Prussia’s double-dealing conquest, in the mid-1860s, of the Danish duchies of Schleswig and Holstein.

Observed the German historian Erich Eyck:

Bismarck knew his King well enough to understand the two conflicting arguments which fought for supremacy in his mind. On the one hand, he was not willing to take anything which lawfully belonged to another prince [Prince Frederick Augustenburg, heir-apparent to the duchies]; on the other hand, however, he was just as eager for the possession of the Duchies as King Ahab had been to acquire Naboth’s vineyard.

He therefore wanted nothing more than to be released from the scruples which prevented him from obtaining the Duchies. Bismarck had to destroy these scruples, and he certainly knew how to do it.

He asked the Syndics of the Crown to give a legal opinion about the question of succession to the throne of the Duchies. Bismarck was sure that he could depend completely on the willingness of the Crown Syndics to give that opinion which was most favourable to the Prussian crown.

The Crown Syndics were an invention of Frederick William IV in his most reactionary mood. When he constituted the Upper Chamber (das Herrenhaus), as an instrument of the arbitrary royal will and of the interest of the Junkers, he reserved for the crown the right to appoint, “by special Royal confidence,” some lawyers as members of the Herrenhaus and Syndics of the Crown.

Except for the few years of the “New Era,” [at the beginning of William I’s reign], only the most reactionary lawyers were appointed to the leading posts in the High Courts or the State Attorneyship. From these the Crown Syndics were selected. They represented the spirit of Prussian reaction in its most extreme and uncompromising form.

The Syndics’ chairman, a confederate of Bismarck also appointed by the crown, was Prussia’s minister of justice, Count Leopold Lippe.

Wrote Eyck:

“Most Germans, agreed with the opinion of the famous President of the Paulskirche [Parliament] of 1848, [Heinrich] von Gagern, who said: “Only in an ironical sense will it in future be possible to speak of the sense of justice of the Prussian kings and of the sense of duty of the Prussian judges.” But that did not trouble Bismarck in the least. What only did matter was that William had been released from his scruples. Now the King was able to persuade himself that he merely wanted that to which he was entitled.

The essential corruption of the Prussian Ministry of Justice, was also apparent in the episode of the Karl Twesten indictment:

At the same time, the constitutional conflict was again aggravated by a new attack which Bismarck made on the constitution. Freedom of parliamentary speech was one of the elementary rights which the Prussian constitution explicitly guaranteed. It forbade, in so many words, any indictment against a deputy on account of words spoken in parliament. The framers of the Prussian constitution had learnt from the history of the English parliament.

Nevertheless, Bismarck and his Minister of Justice, the notorious Count von Lippe, ordered an act of indictment against the Progressive deputy Twesten for having slandered Prussian Courts of Law in a speech in the Chamber of Deputies. Twesten was certainly neither a demagogue nor a radical but a Prussian patriot of moderate but firm principles. He was a judge himself. Thus his criticism was all the more effective — one more reason for Bismarck and Lippe to get him out of the way.

But the Highest Court of the Prussian Monarchy, the Ober-Tribunal, packed by Lippe, allowed the indictment by a decision of January 1866 which circumvented the constitution by a sophistry not worth repeating. It is one of the darkest pages in the history of Prussian jurisdiction.

Twesten was perfectly right when he apostrophized the miserable Lippe in the Chamber: “You may decorate your judges with all the orders of the Prussian Monarchy. Your decoration will not hide the wounds which these judges have inflicted upon their own honour and upon the honour of our country.”

Eduard Simson, whom in later years Bismarck made the first President of the Reichsgericht (a kind of Chief Justice of Germany), said: “The present Government cannot rule with a free press; they cannot govern without improperly influencing the judges; they cannot govern with a parliament in which speech is free. But how they can squander irreplaceable hundredweights of Prussia’s future for one grain of the moment, only to keep things going for a short while — that is incomprehensible for my poor brain.”

To Bismarck's dismay, the industrial "proletariat" kept returning liberal representatives of the middle class to the Prussian and German parliaments — politicians who constantly challenged the feudal and autocratic presuppositions upon which the Hohenzollern dynasty, the Junker landowners' hegemony and Bismarck's own power rested.

Thus the energy with which Bismarck pursued strategems that appeared to promise some possibility of dividing the ever-growing worker class from the liberal, capitalistic-inclined middle class that spearheaded Prussia's economy (and thus the creation of worker jobs).

One of the most infamous such ploys by Bismarck was his support for Adolph Stöcker, an ambitious court chaplain through whose rhetoric "endemic German anti-Semitism was elevated to the dignity of a political principle," in Crankshaw's words — a "principle" that Bismarck then encouraged be deployed against the middle-class liberal parties in elections, foreshadowing Hitler in identifying liberal and democratic ideas with Jews.

Yet Bismarck himself was not virulently anti-Semitic. Indeed, he very much appreciated intelligence wherever it could be found and spent long hours, as he later acknowledged, in conversation with the brilliant Ferdinand Lassalle, founder of the German Social-Democratic Party.

What they had in common, notes Eyck, was the hostility of both to the dominant liberal party in 19th Century Prussia, the German Progressive Party. The socialist Lassalle saw that party as the incarnation of the bourgeoisie, the middle class, and lobbied Bismarck to get the King to establish universal suffrage by monarchical fiat. 

Doubtlessly, in those many secret nocturnal conversations with Lassalle, Bismarck discerned how state-mandated industrial insurance might be presented to the proletariat as evidence of the Prussian monarchy's paternal Christian love for the country's laborers. As a result, supposedly, members of the working class would eventually see that their real, long-term interests lay with Prussia's state socialism, rather than with either middle-class liberalism or some version of revolutionary socialism.

It must be acknowledged that the cumulative consequence of all of Bismarck's strategems in defense of Prussian autocracy did work to deeply injure German liberalism for many subsequent decades.

However, the success of the Prussian approach to the challenge of industrial accidents is much more mixed. Although it provided a template which has been copied all over the industrial world, still today virtually all knowledgeable professionals will agree that work comp too frequently resembles, in one attorney's words, "a conglomerate of discordant parts meting out rough justice."

Yet this situation persists in the wake of almost 13 decades of trial-and-error experimentation by intelligent people.

Could it be that something is fundamentally wrong with the original Prussian template? Could it be that Bismarck's original divisive intent ultimately saturated the entire enterprise?

About a year ago, the president of WorkCompCentral.com, David DePaoli, spoke before the California Society of Industrial Medicine & Surgery. His sub-theme, he wrote later, was "You can't trust a system built on mistrust."

However, the remarkable complexity of modern workers' comp regulations and case law — in addition to the constant efforts in virtually every state to rewrite its relevant statutes — itself demonstrates that America's state industrial-insurance systems are, indeed, built upon mistrust.

In fact, such distrust appears necessarily essential to today's system, since in its every facet, as currently constructed, participants — workers, insurers, employers, doctors and administrators — are institutionally incentivized to attempt to predatorily game the system.

Remarkably, such gaming of the extant system recapitulates the essence of Bismarck's personality, as recounted by a legion of biographers. Coupled with his admittedly remarkable tactical political intelligence, that amoral personality produced short-term gains for the German people, but catastrophe for that people in the longer term.

When 19th Century German liberals opposed Bismarck's state-socialist proposals, it was ultimately because they recognized — even if only inchoately — that the spontaneous order that operates behind voluntary human decision-making regularly produces better, more widely satisfactory, solutions than do the officious top-down mandates of impatient governmental officials.

That is an insight that today, more and more, is penetrating the wider world of workers' compensation in America — as succeeding installments in this series will show.

Steven Miller is the managing editor of Nevada Journal.