The Swedish model

Sweden proves that ‘a better world is possible’, argues a Compass pamphlet. GERRY LAVERY thinks we should take notice.

Robert Taylor’s pamphlet for Compass, Sweden’s New Social Democratic Model: Proof that a better world is possible, is not just a record of achievements in social democratic Sweden but also an argument that, compared to other states, Sweden stands as a testament to the fact that there are alternatives to more neo-liberal responses to globalisation. Taylor goes further than this and suggests that the high level of social protection afforded to its citizens is an integral part of the economic success achieved by Sweden and other Nordic states.

But before we assess developments in Sweden and the thinking behind them, we should remind ourselves of some of the relevant background.

The background
Swedish social democracy has long historical roots, a point Taylor could have developed further to set the context for crisis as well as progress. The Swedish Social Democratic Party (Socialdemokratiska Arbetarpartiet or SAP) first came into power in 1932 and held on to it until 1976. Traditionally, the SAP had an organic relationship with the trade union movement particularly the blue collar federation, the LO (Landsorganisationen).

The celebrated Swedish welfare state emerged in the post-war years, following an historic deal between capital and labour in 1938. It was underpinned by universalist principles, funded by national insurance, and achieved redistribution through taxation. The economic context was one of growth and full employment within a framework of demand management. All of this was overseen by pragmatic, gradualist, consensual and humanistic, rationalist social democracy.

However, in the 1970s, an economic crisis propelled by international financial pressures, wage inflation and an increasingly uncompetitive economy led to questions about whether the Swedish dream could continue. In the face of trade deficits a programme of currency devaluation was embarked upon to maintain competitiveness. There were also criticisms of over-powerful trade unions and a monopolistic public sector, as well as high taxes and high spending.

In the late 1980s Sweden and other Nordic countries underwent economic restructuring, with mergers and takeovers, in the face of increased competition and globalisation. Although financial markets were reformed to stimulate investment, and greater financial prudence was pursued, the protection against markets afforded by the Swedish welfare state was not abandoned, although taxation levels were reduced, with some impact on the public sector. There was also increased unemployment and inequality, and some privatisation. In 1991 the SAP lost power to a centre-right coalition, which had to deal with a serious financial crisis. The SAP was re-elected in 1994.

The economic crises faced by Sweden may not be disimiliar to the British experience, but the response to them was. The British experience has been a largely neoliberal one, more harshly so in the case of Thatcherism, but that project continues under new Labour. More specifically, as Stuart Hall has recently argued, the new Labour government is committed to a hybrid political formation with neoliberalism as the dominant discourse and social democracy as the subordinate one.

Taylor persuasively argues that despite the apparent achievements of what he terms ‘the British model’, neoliberal responses have generally proved inefficient, both in economic and social justice terms. Sweden and other Nordic countries, he states, show that a commitment to economic modernisation, growth and progressive welfare states go hand in hand and can deliver traditional values of equality, freedom and solidarity.
But what is the nature of contemporary social democracy in Sweden and what have been its achievements?

The project
Inevitably, earlier versions of social democracy in Sweden have been reviewed in the light of changes at the level of ideas, economy and society and, according to Taylor, part of its continuing success is the ability of the SAP to adapt to changing times and circumstances. In power for all but nine years since 1932, the SAP has not only held office but has done so with what Taylor describes as ‘the democratic approval and active consent of the Swedish electorate’, all necessary ingredients of a long-term hegemonic project. However, a narrative is also necessary to such a project.

The creation of the most recent variant of the Swedish model is a good illustration of that ability to adapt, and explains its longevity. Taylor spends some time rooting this model in a thoughtful programme that the SAP declared in 2001. It was drawn up in the light of globalisation and technological innovation but continues to emphasise the importance of freedom, equality and solidarity.

People should be free to develop and be free from various threats. They should have the freedom to decide and to participate with others. Such freedom, however, should be founded on equality. People should be given the same opportunities without their differences creating divisions of rank, power and influence. Thus, the programme argues for a society without ‘division into higher or lower orders, without class differences, sexual segregation or ethnic divisions … where children can grow up to become free and independent adults, where everybody can run their own affairs, and in equal and solidaristic co-operation work for the best social solutions that serve the community best’. The programme emphasises solidarity as being important for recognising mutual dependence, participation and obligations.

While recognising the opportunities that capitalism brings, the programme is also critical of capitalism, especially the dangers of international speculation, the lack of democratic accountability in monopoly ownership, and the threats to the environment. Despite Sweden’s particular accommodation with capitalism, the SAP remains an anti-capitalist party, says Taylor, and therefore recognises the need to have measures to balance the power of capital. The answer to this lies in: ‘the reassertion of the concept of the public interest through the progressive activities of an enlightened state, effective and strong trade unions, independent non-governmental movements in civil society, professional associations and wider democratic forces at local, national and international level.’

The SAP sees itself as a progressive political force in the context of globalisation, for democracy, welfare and social justice. The programme argues for the regulation of the market economy by independent public bodies. Social rights such as care, education and health should be provided by mechanisms that deliver best in terms of justice and efficiency, recognise the need for alternatives to meet a variety of different needs, but only allows such alternatives to have recourse to public funds if they follow the same rules as public services. What’s more, the public chooses the services and not the other way round. Such services should be delivered within the context of equality and should strive to eliminate inequalities. The commitment to social rather than private insurance is reinforced.

Taylor argues that the SAP has effectively written ‘an ideological manifesto for the new age’ with ‘underlying values … applied in a clear and coherent way so that they are rooted in the realities of our dangerous and complex world’. This is a bold claim and one that needs to be tested against the future behaviour of capital. Despite moments of crisis, Taylor argues that Swedish social democracy’s adaptability and flexibility demonstrates its resilience.
But how has the Swedish economy fared in the turbulence of globalisation?

The economy
Supported by a wealth of data, Taylor describes the Swedish and other Nordic economies as ‘open, thriving and efficient’, reflected in good export records, especially in relation to telecommunications equipment, although investment is also healthy across a range of other industries. Integral to this, argues Taylor, ‘is the ability of its governments to pursue sensibly prudent and responsible financial policies without undermining their publicly funded welfare states’. For instance, the Swedish currency remains strong, wage and price rises have been modest, and inflation has remained low in recent years. Sweden also reports a healthy surplus on its current account, which, according, to the Ministry of Finance, helps to protect its citizens in less economically congenial times.

Sweden’s famous companies, such as Volvo, Saab, Ericsson and Electrolux, are now largely foreign-owned. While this kind of investment helps to account for Sweden’s economic success, it also shows that welfare state models are not necessarily ‘a disincentive for foreign investors and companies’, argues Taylor.

While Sweden enjoyed full employment in the post-war period, during the 1990s unemployment rates climbed to 10 per cent, and now stand at just over five per cent. Rates of growth in labour productivity, both now and in the recent past, are also higher in Sweden and other Nordic countries than most other European countries. Sweden’s ability to compete in world markets is underpinned by comparatively low wage rises and labour costs despite strong unionisation (a staggering 85 per cent of the workforce is unionised) and a continued commitment to collective bargaining. Of course, this does not take account of the social wage enjoyed by Swedish workers and citizens, a topic we shall return to.

There is also evidence of a commitment to new industries rather than a defence of old ones. For instance, in a recent survey Sweden was ranked fourth (Finland was ranked first) among the countries most prepared to use new technology, with impressive rates of ‘network readiness’ among people, businesses and public authorities. The commitment to modernisation is also matched by comparatively significant investments in research and development, with Sweden spending more than twice the amount on R and D that the UK does. Sweden also rates highly on its investment in knowledge. In fact, Sweden and Finland have a greater proportion of IT in business services than all other countries. Taylor also highlights the high personal usage by Swedes and their Nordic neighbours of new technologies. Sweden ranks third in the world and the UK 15th in this regard.

Although many of the old corporatist structures have gone, according to Taylor, active participation by workers in industry continues and trade unions are seen by the state as necessary to social cohesion and corporate success. Taylor emphasises that Swedish trade unions tend not be defensive but have been in favour of investment, innovation and participation to humanise work and maintain competitiveness. Such an approach, argues Taylor, has not only resulted in gains for trade union members but ensured that many workplaces are among ‘the most environmentally friendly and healthy in the world’, although he does point to a problem with ‘high levels of sickness absenteeism’.

Taylor further argues that Sweden’s employers take the notion of corporate responsibility seriously. Those at the leading edge of export industries are ‘open and consensual’ in their dealings with well-organised trade unions and an increasing number of firms in the Nordic region have abandoned the unhelpful command and control management strategies. Taylor makes strong claims for them:

‘They not only preach the virtues of flat hierarchies, workplace diversity, informal team-working, direct communication and commitment but they apply such human resource management techniques in a coherent and holistic way with positive effect … the pervasive influence and creative strength of trade unionism in mutual co-operation with openly progressive companies has worked effectively to stimulate the most advanced forms of work humanisation and corporate success.’

In other words, Taylor suggests, progressive trade unions have been ‘a precondition’ to Swedish economic success.

Taylor also points out that short-term responses by firms to market fluctuations, such as hiring and firing, are less common in Sweden. More ‘mature companies’ tend to regulate turnover and appreciate experience. When this is not possible, many firms try to avoid compulsory redundancies and have programmes for training, job relocation and financial compensation.

While it is not always clear what evidence there is for some of the managerial practices of employers, the industrial and economic achievements are impressive. His point about workplace absenteeism is an intriguing one. While Swedish social democracy may have socialised capitalist society considerably, a significant part of the economy still has to operate within capitalist production, no matter how humanised, and we might speculate that the absenteeism suggests the problem of workplace alienation is still difficult to resolve. A fully socialist society would need to address the question of work, well-being and human fulfilment.

The society
Taylor provides some interesting data on contemporary Swedish society which help us to make some judgements about its nature and how far it matches the aims of the 2001 SAP programme.

Quality of life
When it comes to quality of life issues, for instance, Sweden scores highly, Taylor informs us. According to one authoritative annual survey carried out by the Zurich Contonal Bank on quality of life in the most advanced countries, Sweden scored most highly in the 2004 report. Other Nordic countries also scored highly. One hundred measures are taken into account, covering environmental protection and sustainability (US came bottom in this regard), and social indicators including ‘levels of crime and corruption, civil rights, living standards, life expectancy, gender equality, international commitments on aid, arms and refugees, levels of alcohol and tobacco consumption’. The report, Taylor says, commended Sweden’s relatively high spending on research and development and the sense of social responsibility shown by companies.

Income equality
While Taylor acknowledges a recent increase in inequality in the distribution of disposable income, including in Sweden and other Nordic countries, they nevertheless remain, according to OECD data, ‘significantly more equitable than their competitors’. The standard measure of income inequality is the Gini coefficient, with 0 representing perfect equality and 100 a situation where all income goes to those who earn the most. In 2002 Sweden scored 24 (the other Nordic countries scored 26), while Britain scored 31 and the US 36. Although impressive, we have to note the slippage since the earlier days of social democracy, a fact that does not warrant a great deal of space by Taylor.

Looking beyond its own territory, Sweden more than meets its obligations on international aid. In fact, all five of the Nordic countries meet the UN target of giving 0.7 per cent of GDP as foreign aid. In 2004 Sweden gave 0.83 per cent, much more generous than both the US and the UK.

Benefits for the unemployed are generous by British standards and people in such a situation are encouraged and supported back to work. Such a policy operates in a different context in Sweden in that there is a strong Lutheran work ethic within society.

Sweden’s and the other Nordic countries’ achievements in terms of quality of life and equality are of course paid for by high taxes. OECD figures confirm Sweden’s high rates of taxation as standing at 51.9 per cent of GDP whereas Britain’s is 37.3 per cent. Taxes for the average worker (as a percentage of labour costs) were 46.6 per cent in 2003 whereas in Britain and the US the figure was 31.1 per cent.

Gender equality
Part of the commitment to equality by the SAP has been the emphasis on gender and race equality. In terms of gender, the progress in tackling inequalities have been striking, the most impressive in Europe, according to Taylor. For instance, according to the World Economic Forum, in a survey of 58 countries, Sweden scores most highly on gender equality when the areas of economic participation and opportunity, political empowerment, educational attainment, and health and well-being are aggregated. For instance, it is interesting to note 45.3 per cent of Swedish MPs are women compared to 19.7 per cent in the UK.

While child care provision has always been more impressive in Sweden, reforms in 2003-4 ensure that every child from one to five has the right to child care and fees are kept deliberately low so that all can participate. To dovetail with the education system, there is a commitment to lifelong learning and a national curriculum to ensure common standards and values. While local authorities are the main providers of child care, some private and co-operative provision is also publicly funded and fees are charged at the same rate in all provision. As many as 80 per cent of one to five-year-olds take up child care places. School age child care is also taken up by 75 per cent of six to nine-year-olds. But such provision does not come cheap at a staggering two per cent of GDP.

Race
Sweden faces problems as it has a modest birth rate and a significant growth in the population of people over 65. Immigration has taken place and the growth of a multi-cultural Sweden will test the strength of its model. Despite an ambivalent attitude to immigration of various sorts in the past, since the 1970s Sweden has given asylum to foreign refugees fleeing oppression. Now over 11 per cent of the Swedish workforce are thought to be migrants and Sweden practices what Taylor describes as ‘regulated immigration’, although there are no restrictions on the free movement of labour within the EU.

While there is evidence of ‘racial incidents’ there is no ‘threatening populist movement of the radical right … seeking to incite racial and religious hatred’. Sweden has a strong commitment to progressive integration policies with ‘substantial financial support for language learning, cultural adjustment and labour market adaptation’. As Sweden faces up to its labour market shortage immigration will expand and test its commitment to multiculturalism.
Taylor ignores any reference to the right wing party, Ny Demokrati (New Democracy), which won 25 seats in the 1991 election. Although they have since disappeared, as recently as the 2002 election the Folkpartiet (Liberals) focused on immigration and increased their vote. Nor does Taylor explore the issue of residential qualifications and the social wage issue in Sweden. Some benefits, for example, depend on the length of time citizens have lived in the country.

Taylor argues that the Swedes are a comparatively happy people despite accusations of high suicide rates (not true), alcoholism and depression. He suggests that the Swedish are proud of their country, that there is a ‘close identification between social democracy and the nation’, and that ‘this has ensured the encouragement of a rather benign and peaceful form of national identity, less defined by any exclusive attempt to distinguish “us” from “them” but founded on the creation of a genuinely internationalist image of well-being, altruism and moral virtue’. While this might seem ‘complacent’, he says, it has ‘protected Sweden from the ethnic tensions and cultural confusions of other European countries’. The experience of 1991 suggests that this conclusion might only apply when social democracy is not threatened.

Conclusion
Taylor has performed a valuable service in highlighting the extremely impressive achievements of Sweden. Swedish social democracy, it seems, despite its crises, continues to be hegemonic with a high degree of popular consent. Its hegemony is also underlined by the degree to which opposition parties, broadly speaking, do not propose to unravel existing arrangements.

If I was to be critical of Sweden – and Taylor is not – then I might be concerned by current levels of inequality compared to the SAP’s past record, and question whether racial equality is quite as advanced as Taylor suggests. The achievements also need to be set alongside the future impact and unpredictability of a capitalist global economy, which caused crisis in Sweden in the recent past. There are also aspects of Swedish life that Taylor does not cover, such as gender relations in the home, the care of older people, and the position of children, to name but a few.

Finally, Taylor reflects on what the Swedish experience might mean for the UK left. Although he acknowledges the different cultural and historical contexts of Sweden and Britain, he does list some key principles. These include: the importance of the public realm; modernising social partnerships; an enabling state; pluralism; social justice and its link to economic efficiency; and freedom.

While we might support such a list, that’s what it remains, a list. The real trick is how the left in the UK advances such changes within the British context. Any move in this direction clearly needs to be long-term and would require what Gramsci referred to as ‘intellectual and moral reform’. It would also require that other key Gramscian strategy, ‘a war of position’, and a skilful one at that. And we must remember that what is striking about the Swedish context is the organic relationship between a significant and imaginative trade union movement and the SAP. Nevertheless, Taylor and Compass are right to stimulate debate by publishing this pamphlet. It deserves to be widely read.

Gerry Lavery teaches politics at Leeds Metropolitan University.