How Swedish Socialism Failed

Despite the fact that Sweden benefited greatly from the post-WWII economic expansion, there were speed bumps in the road that were inevitable given the country’s capitalist foundations. Chief among them was the full employment/inflation dilemma. Essentially, the goal of full employment clashed with the need for stable prices. Inflation was a serious problem in Sweden and the unions were resistant to wage freezes or reductions—as well they should be. Even more problematic was the transformation of the Swedish economy that led to an increase in jobs outside the “Fordist” mass production in auto plants and other bastions of heavy industry where there was not much skill differentiation between one job and another. After all, assembly line work is more a function of muscles and stamina rather than the intellect. As Sweden moved more and more in a New Economy direction, skill became more important and as such undermined the “solidaristic” elements of the economy that if not exactly socialist were at least consistent with the party’s ideals.

However, the greatest ideal—worker ownership of the means of production—came crashing to the earth in the 1980s and 90s as the Swedish economy followed the same path as other European nations, as well as the USA and Japan. The Meidner Plan was a bid to put the workers in the driver’s seat of Sweden’s largest corporations just when the corporate owners had decided that they would take advantage of the “globalization” that made runaway shops possible, the very ills that the Sanders and Trump campaigns target.

In the 1930s it was possible for workers and their bosses to hammer out a “peace treaty” in Sweden that made work stoppages and other forms of resistance a thing of the past. The Saltsjöbaden Agreement of 1938 was made possible because the ruling class had a vested interest in production within the national boundaries. Up until 1973 or so, the long wave of economic expansion that began in the late 1800s operated within a “nationalist” framework. Like the biggest American industrialists and financiers from Ford to Rockefeller, their Swedish counterparts were “protective” of their investments since the possibilities of capital growing wings and taking flight in the David Harvey geographical sense was inconceivable. In the USA, this meant that even though there were bitter struggles between GM and the workers in Flint, there was little likelihood that auto production would be moved to Mexico. In Sweden, the bosses were far shrewder than their American counterparts. In exchange for concessions they could obviously live with, factories would not be besieged by sit-down strikes and the like.

Starting in the 1980s, the bosses behaved just like they would elsewhere. In case after case, firms became multinationals prowling the earth looking for the most profitable place to plant their flags. Meidner writes:

Large Swedish companies, favoured by governments and by the wage policy of solidarity, have grown into multinationals, expanding their employment more in their foreign subsidiaries than in the Swedish mother firms. Some of them have transformed themselves into transnationals – companies owned by Swedes but located outside the country. Ironically, a few of them have expanded thanks to social democratic policies. Thus Tetrapac, the world-wide packing industry, had its origin in the Swedish agrarian regulation system which permitted the dairy industry to act as a monopoly, thus guaranteeing the use of the company’s milk pack by all Swedish households. IKEA had its domestic basis in furnishing the million.apartments which were built as part of the social housing program in the 1950s and 1960s.

It is worth mentioning that between 1994 and 1997 Ikea was charged with using child labor under degrading conditions in Pakistan, India, Vietnam and the Philippines. (For the entire sordid record, read “The Secrets in Ikea’s Closets”) It is also worth mentioning that Volvo, the car company that practically defined Swedish high technology and attention to consumer safety, is no longer Swedish-owned. It was bought by a Chinese company in 2010 and the cars are now being made there by workers making between five and seven thousand dollars per year, a not very “solidaristic” wage.

Stuart Wilks made a correct assessment of the current relationship of forces in Sweden in the Spring 1996 edition of Capital and Class that should make us wary about hopes to return us to the 1930s labor-capital partnerships that prevailed either there or to a lesser degree in the USA.

To understand the full extent of change in contemporary Swedish politics it is therefore necessary to consider how recent events have undermined the historical foundations of the Swedish social democratic model. In this sense, social democracy can only be understood in terms of its relationship to capitalism and the Swedish social democratic model is regarded here as a system related to a period of history bounded by two major crises of global capitalism. The first of these crises, in the 1930s, established social democratic class compromise as a national response to the threat posed by global economic uncertainty. By contrast, the second of these crises, from 1973 to the present day, necessitated an unravelling of this national class compromise as a response to the globalization of international capitalism. Whereas in the 1930s, the conditions of the economic crisis benefited social democrats and created a compromise favourable to the labour movement, the undermining of this compromise during the more recent crisis has resulted primarily from a shift of power to capital which has occurred as part of the process of globalization.

Writing four years earlier in the Summer issue of Capital and Class, Lawrence Wilde referred to the same set of problems in an article titled “The Politics of Transition: The Swedish Case”. The transition mentioned in the title refers to the hopes that Meidner and others had that Sweden might have made a transition to socialism using his plan. He concurs with both Meidner and Wilks:

There was hardly any consideration of the effects of the internationalisation of the economy on Sweden, and therefore little estimation of the likely effects on the class struggle of changes in the accumulation process in response to the downturn in growth experienced since 1974 (Pontusson, 1984). . . However much the state intervenes to maintain investment with schemes such as the wage earner funds and the renewal funds [the Meidner Plan], the ultimate power to invest rests with management, and the possibility of shifting operations to countries with lower taxation and more flexible bargaining arrangement placed an enormous constraint on the SAP government.