Abstract
The objective of this chapter is to investigate whether finance capitalism over the 1980–2010 period was able to penetrate the Swedish social democratic institutions of egalitarian and universal coverage, to the extent of changing its pattern of income distribution. Backed by radical elements and truly committed to the ideas of economic democracy, trade unions and the Swedish Social Democratic Party tried to implement reforms that could definitely be interpreted as being socialist. The attempt to socialise ownership arranged in the form of wage-earner funds was confronted by capital’s counter-strike in the form of pro-market restructuring. However, business elite revisionism of the Swedish model in the 1980s did not lead to a neoliberal ideational transformation.
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Notes
- 1.
Gunnar Myrdal (1898–1987) was an internationally recognised Swedish economist and politician, who contributed to social democratic thinking and is considered as a founding figure of social policy through his studies exploring the notion of the welfare state. Ironically, he shared the Nobel Memorial Prize in Economics with Friedrich Hayek in 1974 and he subsequently argued for its abolition, because it had been given to such reactionaries as Hayek and Friedman.
- 2.
In 1938, representatives of the trade union federation (Landsorganisationen, LO) and the organisation of employers (Svenska Arbetgivarforeningen, SAF) met in Saltsjobaden to reach an agreement concerning settlement of collective contracts and peaceful resolution of labour market conflicts. The agreement also formed the basis for a class compromise, where private property would be secured in exchange for welfare state expansion and high incomes for workers (Wilks, 1996).
- 3.
Labour demands included tackling problems of alienation and working life conditions, environmental degradation and uneven regional development. Inadequate labour representation in the workplace was also an important part of the claims from the left (Ryner, 1999).
- 4.
It is worth mentioning that, in 1974 constitutional amendments were introduced to make Swedish democracy more direct and more responsive. The upper house of the Riksdag was eliminated, which transformed governance model in the sense that even small changes in election outcomes would influence who held the reins of government. In fact, the SAP lost the election in 1976 for the first time in 44 years (Steinmo, 2003).
- 5.
Wigforss was a Swedish politician and a prominent member of the Social Democratic Workers’ Party and Swedish minister of finance. He was one of the main theoreticians in the development of the Swedish social democratic movement’s revision of Marxism, from a revolutionary to a reformist organisation.
- 6.
In 1968, the Central Bank of Sweden established a new award, ‘The Central Bank of Sweden Prize in Economic Science in Memory of Alfred Nobel’, also known as the very prestigious Nobel Prize in economics. According to Harvey (2005), Friedrich Hayek and Milton Friedman as well as other neoliberal pundits were awarded the prize in the early 1970s to legitimise the new neoliberal orthodoxy.
- 7.
The programme document ‘A Future for Sweden’ was presented at the 1981 SAP congress by the party’s ‘Crisis Group’, which reformulated traditional social democratic values into a neoliberal objective (Belfrage, 2008).
- 8.
The new coalition government led by the Conservative Party pledged that, ‘During the next few years economic policies, with all their strength, will have to aim for a permanent reduction in inflation. This task must take precedence over all other ambitions and demands’ (quoted in Blyth, 2001, p. 20).
- 9.
The most important documents legitimising neoliberal restructuring of the EU member-states include the 1992 Maastricht Treaty on European Union, the Stability and Growth Pact of 1996–1997 (SGP) and the unratified European Constitution. The SGP particularly stipulated membership of the Economic and Monetary Union (EMU) and its single currency, the Euro, on the condition of meeting the criteria of budgetary restrictions, low inflation, a public deficit not exceeding 3% and government debt no higher than 60% of GDP (Milios, 2005, p. 210).
- 10.
Sweden joined the EU in 1995 but refrained from joining the EMU. In 2003, in a referendum on introducing the Euro, the majority voted against joining the single European currency (Bieler, 2003).
- 11.
However, this did not help the bourgeois coalition to stay in power, as it was revealed that the Swedes did not tolerate even the slightest assault on social programmes and the SAP triumphantly returned to office in 1994. Moreover, the party’s platform included provisions to increase taxes and halt budget cuts (Pierson, 1994).
- 12.
Also important to note is that in the 2006 election campaign even the centre-rights mostly focused on employment issues and achieving ‘the goal of full employment’, rather than controlling inflation. Unemployment rates in Sweden increased from 5.6% in 2000 to 7.7% in 2007 and then declined to 6.2% in 2008, which is the subject of envy of most of the OECD countries (Schnyder, 2012, p. 1138).
- 13.
In the corporate governance theories, there is a distinction between an ‘insider-oriented corporate governance regime’ and ‘shareholder-oriented regime’. In the former, which is characteristic of the Swedish model, ownership is concentrated with loose legal protection of minority shareholders’ rights; the latter is distinctive of the Anglo-American model (Roe, 2003).
- 14.
Voting right distortions, stock pyramids and dual class shares are arrangements that enable a controlling shareholder to maintain control of a company, while holding less than a majority of the cash flow rights associated with its equity. These instruments along with state tax policies, favouring the emergence of the Swedish companies, have helped to concentrate private ownership in a few hands. A limited number of ‘capitalists’, such as the Wallenbergs family and the Svenska Handelsbanken bank, have thus had a dominating position in the Swedish economy since the 1970s (Collin, 1998).
- 15.
Differential voting rights (DVR) shares are like ordinary equity shares, but are different in that they give the shareholder fewer voting rights compared with the rights that an ordinary shareholder has. Companies usually issue these shares to stop a hostile takeover and the dilution of voting rights. The issue of DVR shares also helps those investors who do not want control and are just looking at a sizeable investment in a particular company. A golden share is one in a company that gives control of at least 51% of the voting rights, especially when held by the government. It is afforded special voting rights, giving its holder the ability to block another shareholder from taking more than a ratio of ordinary shares. Moreover, ordinary shares are equal to other ordinary shares in terms of profits and voting rights. These shares also have the ability to block a takeover or acquisition by another company.
- 16.
Capital gain is the profit made out of selling a capital asset (stock, bonds or real estate) that gives a higher worth than the purchase price. Consequently, the gain is not realised until the asset is sold. It is difficult to allocate information on realised capital gains correctly and it is usually excluded from the income concept, like in the influential Luxemburg Income Study. Nevertheless, where possible, studies have presented top income shares both including and excluding realised capital gains (Roine & Waldenström, 2012).
- 17.
Olsen (1992, p. 11) terms ‘economic democracy’ as ‘the collectivisation of ownership and control’, which did not happen in Sweden. The view proposed in this study is to define ‘economic democracy’ as extending democratic values into economic management and capitalist relations, where workers would have more control over the means of production within a market economy. This implies powerful labour which, in turn, would facilitate and secure a stronger foundation for equal distribution of income (see Archer, 1995; Dahl, 1985). In line with this interpretation, in this thesis it is held that Sweden managed to advance towards achieving this goal during the Social Democratic Keynesian Era. As Eduard Bernstein (a revisionist who advocated a reformist path to socialism) stated, ‘“the final goal of socialism”…is nothing to me, the movement is everything’ and ‘there can be more socialism in a good factory law than in the nationalisation of a whole group of factories’ (in Olsen, 1992, p. 4).
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Akizhanov, K.B. (2023). Sweden: Defending Economic Democracy. In: Finance Capitalism and Income Inequality in the Contemporary Global Economy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-21768-5_7
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