Socialist Non-socialism in Sweden

by RTJDudek, Apr 5, 2014, 7:39:40 AM

Journals / Personal

Text written by Per Olsson, R�ttvisepartiet Socialisterna (CWI in Sweden)

Within the left internationally, the question often arises about the politics and
economy of the Nordic states, particularly Sweden, and whether these societies
represent a form of �socialism� or an alternative to neo-liberal capitalism. Per
Olsson of R�ttvisepartiet Socialisterna (CWI in Sweden) dissects the �Swedish
model�, or what is left of it.

"Sweden has always been a solid market economy", states the present right-wing
government on its website. And that is certainly true. Sweden has never been a
socialist society - based on public ownership of production, workers� control and
management, social equality and a democratic plan of production. Neither has Sweden
been a �mixed economy� or provided a �third way� - an alternative to both
capitalism and socialism, if such a thing were possible.

However, in the 1960s and in the early 1970s, thanks to the "worldwide capitalist
boom and a working class movement at home", a welfare system was created that
became a model for the rest of the world. Universal welfare financed by public
means (through taxation) provided a highly developed education system, world class
healthcare, pensions, a childcare system second to none, and numerous other social
benefits and insurance cover. The �welfare state� and the social harmony that
existed in those days became known as the "Swedish model", although that term
already entered circulation in the 1930s.

But this Swedish model ceased to exist long time ago. "It is a long way from the
halcyon days of the 1970s, when the �Swedish model� of cradle-to-grave welfare for
all was held up to the world as an example of modernity and progress", reported CNN
almost triumphally in 2003.

Nowadays, most capitalist commentators point to a �new Swedish model� of

privatisation, deregulation and other market orientated "reforms". They also point
to the way Sweden supposedly managed its banking crisis in the beginning of the
1990s. In short, the present Swedish model reads as a capitalist success story to
show that neo-liberalism �works�.

"To speak of Sweden as socialist today is pretty far off the mark. Neo-liberal
reforms have gone much further here in some sectors than in the US. Sweden has
become a sort of laboratory for privatization" , commented Brian Palmer, a
professor of anthropology at Sweden�s Uppsala University. Olle W�stberg, a liberal
and the former Consul-General to New York, boasted that: "In many fields, we
[Sweden] have more private ownership compared to other European countries, and to
America. About 80 percent of all new schools are privately run, as are the
railroads and the subway system."

The end of the post-war boom in the mid 1970s marked the end of the old Swedish
model, but even some years before that the economy entered a phase of stagnation.
However, Swedish capitalism benefited enormously from the fact that the country�s
productive forces were intact at the end of the World War II - Sweden was not
occupied during the war and claimed to be neutral. The capitalists made huge
wartime profits, fraternising from the start with Nazi Germany. For many years
Germany was the country�s main export market - iron ore and roller bearings made in
Sweden were essential for Hitler�s war machine. But when it became obvious the
Nazis were going to be defeated, Swedish capitalism turned towards the Allied
countries to sell goods, and for protection against the rapidly advancing Stalinist
Russia.

When the war ended there was an enormous worldwide demand for goods - such as
steel, iron ore, timber and so on - that Swedish companies could sell at a good
profit. At the beginning of the 1950s, Sweden was by far the richest country in
Europe.

During this �golden age� of capitalism 1950-75, when world production and markets
were growing at an unparalleled rate, the Swedish economy developed at a rate of 4
percent annually. However, long before the world upswing exhausted itself, Swedish
capitalism began to stagnate, while other capitalist countries were catching up or
outstripping it. Sweden�s share of the world market began to decrease after 1965.

The 1970s were a decade of relatively slow growth compared to Sweden�s main
capitalist competitors, and a chain of industrial crises. The Swedish shipyard
industry, the second largest in the world in 1975, collapsed in the following
years, as did the textile industry. Throughout the 1970s, Sweden experienced for
the first time in decades a lower annual growth rate than the rest of Western
Europe.

Despite this, the �welfare state� continued to expand in the 1970s. There were many
reasons for this: the re-awakening of workers� struggle, the weight of the labour
movement within society, and the process of political radicalisation that set in
after France 1968. A big influx of women workers into the workforce vitalised and
strengthened the labour movement. In fact the �welfare state� reached its peak in
those years. The capitalists were forced to accept reforms in the workplace that
gave more rights to the trade unions, for example the Law on Cooperative Decision
Making (MBL in Swedish) and Working Environment Law, a new Employment Protection
Law, etc. Furthermore, a public childcare system was built up and a progressive
Parental Leave Act was implemented.

Even at this time, however, there were many signs that the capitalist class thought
they had given too many concessions and that the clock had to be turned back. The
era of social peace was over; there was no longer a material - economic - basis for
classical reformism and class collaboration, although the labour leaders still
clung to this illusion and the dream of �capitalism with a human face�. In 1980,
the ruling class tried to draw the line, organising a massive lockout which was
followed by strikes by the workers, but this capitalist offensive failed. After
being defeated on the industrial arena, the ruling class turned to the political
arena. The capitalists and the organisations of the petit bourgeoisie, with the
support of the traditional right-wing parties, launched a vicious campaign against
the so-called Wage Earners� Fund. This, in reality harmless idea, had been proposed
by the trade union federation, LO, already in 1976 as an attempt to get influence
in the running of companies through buying shares. The original proposal of the LO
was watered down several times, but the Swedish capitalists campaigned not against
the Wage Earners� Fund as such, but against the general idea of socialism. The
counter-offensive by ruling class paid off - the social democrats and the LO
leadership gave in, again showing that their intention has never been to really
challenge capitalism and its private ownership over the means of production and
distribution.

Likewise, what is sometimes called the �mixed economy� in Sweden was never a mix of
public and privately owned companies. In fact, Sweden�s state sector was smaller
than in many other countries and the role this state sector played was to provide
cheap energy, infrastructure, and research and development (R&D) to the big
monopolies that dominate the economy, while the welfare system and social
democratic governments would guarantee the necessary political and social stability
for capitalist expansion.
The concentration and centralisation of capital probably went further in Sweden
than in most other advanced capitalist countries. "It�s a family business that
dominates its country�s business sector with some of Europe�s biggest in its
stable...", wrote the Financial Times (July 12, 2004) in an article about the
Wallenberg family and its empire. According to he same article: "No other family
dominates the business sector of a developed country in the way that the Wallenberg
hold sway in Sweden." And "Wallenberg dominance of corporate Sweden has been helped
by successive social democratic governments." At one stage, the Wallenberg family
controlled almost 40 percent of the shares traded on the Stockholm (Sweden) stock
exchange.

Even Peter Stein, an extreme neo-liberal Swedish economist, admits that "Although
nationalisation was a point of principle in the social democrat�s programme it was
never implemented. Until 1970 government controlled manufacturing accounted for 5
percent of the total. State ownership and management where they existed were guided
by professional ethics and not hampered by political considerations". (Peter Stein:
Sweden: From capitalist Success to Welfare - State Sclerosis, September 10, 1991).

Nationalisation was never "a principle". Social democracy ruled the country for
almost 40 years concurrently - from the 1930s to 1976 - and during this time hardly
nationalised any industry. And the few state-owned companies that do exist are
mirror images of privately owned companies, and that is how social democracy and
the trade union leaders want things to stay.

The trade union representatives on the boards of companies act as the defenders of
shareholders, not the workers. Being in the boardroom has been a doorway to an
extra income for the trade union leaders, and without any democratic control from
below, or alternative to capitalism, the trade union representatives have almost
always sided with the bosses. Recent examples illustrates this. Olle Ludvigsson,
from the Metalworkers� union, who has been the employees� representative on the
board of Volvo since 1998, even voted for a big increase in dividends in 2009 at
the same time as the company sacked thousands of workers. The LO chairperson Wanja
Lundby-Wedin voted yes to a generous retirement package for the head of the
"pensions company" AMF. The very same AMF lowered its pension payouts to existing
pensioners as a result of huge losses in its equity holdings. When this became
public knowledge in Spring of 2009, a poll showed that 90 percent wanted Lundby-
Wedin to step down as LO chief. Sitting on several company boards gave her an extra
half million krona each year.

In terms of membership, influence and weight in society, the Swedish labour

movement was one of the world�s strongest, if not the strongest. At one stage more
than 85 percent of the total labour force was organised. The peak year was 1986,
with 86 percent. Since then the rate of unionization has fallen, particularly after
2006. It now stands at 71 percent and is heading towards 61 percent by 2025, if the
present trend is not reversed.

During the �golden age� of capitalism the trade unions could deliver steadily
increasing wages and there were jobs for all. In that period, class collaboration
became the norm; the employers, the LO leadership and the social democratic
government worked almost in tandem to advance growth. Collective bargaining was the
cornerstone that, "developed into a system of centrally co-ordinated wage
bargaining procedures. From the 1950s to the 1980s wage bargaining in Sweden was a
question for LO and its counterpart at the time, SAF (the Swedish Employers�
Confederation). It was up to the national unions to adapt the generally set wage
framework to their respective sectors of the labour market", as the LO wrote in a
short pamphlet.

Since then, wage formation as it called in Sweden, has changed. Today, each
national union negotiates directly with their counterparts on the employers� side,
and the agreement they sign only guarantees, at best, a minimum wage increase for
the workers concerned - the final increase being decided at workplace level or in
individual �negotiations�. By dissipating collective power, this de-centralisation
and individualisation of wages has naturally not benefited workers.

However, the wage agreement thus accepted is binding upon all workers. Since 1928
it is a criminal act to strike once an agreement - often for a period of two or
three years duration - is signed. This in turn, means that the trade unions must
pay huge fines (the sum has increased over the years), including their local
organisations, if they go on strike or even give verbal support to a strike within
the time frame of an existing agreement. Workers involved in a so called �wild cat�
strike not only run the risk of fines but also of being sacked. In short, while an
agreement is in force there is a ban on strikes.

Sweden�s labour laws have become more and more repressive over the last 20 years:
higher fines, longer warnings in advance of strike action, compulsory meditation by
a state body (the National Mediation Office) that has the legal power to postpone
industrial action, and so on. All these measures were supported or introduced by
the social democrats.

Against the back drop of the Cold War, with its witch hunt against Communists and
other left-wingers, almost all elements of workers� democracy within the unions
were erased in the period following the end of the World War II. The left was
marginalised and silenced. The unions became extremely bureaucratised and
centralised, ruled by well-paid full time officials (all card-carrying member of
the social democratic party), without any channels for members to influence
decisions and policies. Already in the 1950s the members lost the right to vote
over national wage agreements, to elect trade union officials, while the period
between congresses became longer and longer.

For a long time, the Swedish social democrats, next to their Austrian sister party,
was the European party with the highest ratio of members to votes in general
elections. The party boasted 1.2 million members in the mid 1980s. This, in a
country of just 8.3 million inhabitants (in 1985). Most of the members came from
the local trade unions through the process of collective affiliation. However, once
collective affiliation was abandoned in 1990, when the social democratic leadership
began to refer to the trade unions as "one of several pressure groups", the
membership figure dropped dramatically. It was down to 260,000 already in 1991, and
since then the party has lost nearly 10,000 members each year. If present trends
continue there will be no members left in 15 years time!

It was the social democratic government of the late 1980s that started what is
known in Sweden as the "the system change" - the rolling back of public welfare
combined with deregulation and privatisation. This right-wing turn was made
possible due to several international och internal factors: 1) There was no left-
wing or oppositional trend within the party that could challenge the new course
after the expulsion of the Marxists (CWI members) in the early 1980s. After the
expulsions, as we warned at the time, the rest of the left inside social democracy
just caved in or moved to the right in search of "new ideas", at the same time as
the number of left-wing activists within the trade unions declined. 2) The
stagnation of Swedish capitalism left no room for an expansion of welfare, instead
capitalism demanded cuts in public spending and workers� share of the economic
cake. 3) The acceleration of globalisation and increased competition from abroad
resulting in a new neo-liberal regime globally, after the failure of Keynesianism
in the 1970s. 4) The collapse of the Stalinist states in 1989-1991 gave a further
impetus to these trends, including the right-wing turn of social democracy, not
only in Sweden. Welfare in Western Europe had also been implemented as a means of
gaining social support for capitalism in its race against Stalinism in Russia and
Eastern Europe. When Stalinism collapsed the capitalists became even more convinced
that welfare was an unnecessary and costly "luxury" and that turning public
services into private ones would open new profitable markets.

In Sweden, the social democrats began the "system change" with deregulation of
capital markets and the financial sector. The deregulation of the 1980s created an
internal money market as well as an excessively rapid credit boom that fuelled
speculation and bubbles (most of the money borrowed was used to buy property). The
property bubble created was then followed by large capital outflows, loan losses
and insolvent banks. Many banks collapsed and the state had to step in.

Also in the 1980s less and less was spent for example on the health sector and its
share of the GDP fell. "Another sequel is that during the 1980s the percentage of
GNP spent on medical care in Sweden actually declined. Sweden was the only nation
in the world where that had happened as of 1996", wrote Andrew C Twaddle in his
book "Health care reforms in Sweden 1980-1994". The old meaning of the term reform
was no more - from now on �reforms� became counter-reforms. This was exemplified by
the major tax reform, officially named the "tax reform of the century", implemented
in 1991. This so-called reform, jointly worked out by the social democrats in
government and the bourgeois liberal People�s Party (Folkpartiet), ended what was
left of progressive taxation. The "tax reform" lowered income taxes, particularly
for the better off, while increasing sales tax to 23 percent and also rents. "The
tax change was controversial because it was seen as a retreat from the ideal many
Swedes cherish of creating an egalitarian society", commented the New York Times
(20 February 1990). This was a modest way to describe the scale of opposition and
how ordinary people regarded this "reform".

This right-wing policy of the social democracy paved the way for a crushing
election defeat in September 1991. This coincided with the most severe crisis for
Swedish capitalism since the 1920-30s. All the main crisis measures adopted by the
conservative government of 1991-1994 were supported by the social democratic party,
including the beginning of selling out state-owned companies. However, the crisis
got worse, and in November 1992 not even a hike in the central bank�s benchmark
interest rates to 500 percent could stop the flight of speculative capital from the
country. The government was forced to abandon the fixed exchange rate and carry out
a devalutation. This was the dictatorship of the market. "The bank crisis was upon
us. To prevent the system from collapsing, the central government was forced to
rapidly intervene with a general, overall blanket guarantee that promised that all
of the Swedish banks would meet all of their obligations, existing and future,
towards all lenders." (A speech delivered by the central bank deputy governor, Lars
Nyberg , March 2006). Several banks were nationalised or compelled to ask for
public money to stay afloat.

The government spent four percent of gross domestic product, or at least 65-70
billion krona - 20 billion in today�s U.S. dollars according to the New York Times
- to save the banks. A budget surplus in 1990-91 was turned into a budget deficit
of 10 percent of GDP in 1993-94 and gross public debt jumped from 43 percent of GDP
in 1990 to 78 percent in 1994. However, when the social democrats returned to power
in 1994, the debts and fiscal deficits became an excuse for a savage programme of
spending cuts, tax increases and market orientated reforms. This programme was in
main supported by the Left Party (the former Communist Party).

For working class people the crisis certainly was not over. Economic growth after
1994 was not followed by improving living conditions or job security, and did not
even offer a pause in the neo-liberal attacks. Quite the opposite.

"The 1990s can be described as a decade of mass unemployment in Sweden. A

considerable part of the population was affected by unemployment at some point in
the course of the decade. As many as 1.8 million people - almost 40 percent of
everyone aged between 18 and 60 in 1990 - was registered as a jobseeker at some
time", stated the Welfare Commission.

The number of workers on permanent contracts decreased during the 1990s from 3.6
million to just over 3 million, while the number of temporary workers went up from
400,000 to 520,000 (15 percent of the employed). Despite years of economic growth
unemployment stood at 5.6 percent in 1999, compared to 1.7 percent in 1990. Sweden
found itself miles away from the social democrats� old aim of "Jobs for all". In
fact that slogan was dropped at that time. The social democratic government elected
in 1994 went even further than its predecessor made up of the traditional bourgeois
parties.

It made cuts in child allowances - for the first time ever the real value of this
benefit was cut. Unemployment benefits was cut to 75 percent of income in 1996,
down from 90 percent before 1993. However, because of the ceiling that exists in
unemployment insurance - the maximum sum payable - fewer and fewer workers got 75
percent. Due to these changes, in 1992-97 the average unemployment benefit level
fell from 81.3 to 70.5 percent of wages. (After the present governments� cuts in
unemployment benefit in 2006, average benefit level is down to 51 percent).

Moreover, sick pay was cut, it became more difficult to receive housing allowances,
and so on. Every aspect of the social security system was affected. These attacks
provoked the biggest movement of protest for decades. The movement started with
strikes and demonstrations by the school students. The struggle of the school
students was initiated by the Elevkampanjen, a socialist youth movement set up by
young CWI members in 1989-90. 45,000 school students in total, took part in the
demonstrations and day of protest organized by Elevkampanjen in Spring 1995. The
school students� struggles were then followed by workers, unemployed, the sick,
disabled and other groups hit by the government.

"Sweden in revolt", read a headline in one of the biggest newspapers (Expressen) in

1996. At the end of that year, Sweden came close witnessing to a political strike
against the government. Before, many workers thought that maybe the social
democrats had just lost their way; now they realised that the party had entered
upon a completely new capitalist road of dismantling welfare and previous social
gains.

The social democratic Prime Minister even boasted that Sweden was setting a world
record in spending cuts. The social democrats and their policy were praised by the
IMF for example, which in 1999 wrote: "Fiscal adjustment has been dramatic since
the implementation of the consolidation program in 1994. A combination of spending
cuts and tax increases, augmented by reduced interest costs, produced a structural
improvement amounting to 10 percent of GDP and led to a fiscal surplus of 2.2
percent in 1998.... Looking ahead, expenditure control is being reinforced by a
comprehensive reform of the old-age pension system and supplemented by a nascent
program of restructuring and privatizing public-sector enterprises.." (IMF on
Sweden, September 2, 1999).

The proportion of private sector employees involved in - privatised or

subcontracted - municipal services more than doubled during the 1990s and has kept
rising since. The state sector too experienced the same development. The number of
state employees halved - from 400,000 in 1997 to 200,000 20 years later. State
assets worth 116 billion krona (16.4 billion U.S. dollars) were sold by the social
democratic governments that ruled from 1994 to 2006. In many aspects social
democrat-ruled Sweden took the lead in implementing the "market reforms" and neo-
liberal agenda of the European Union (EU).

"Public services �produced� by a non-public actor became increasingly common in

childcare, education, child and youth social services, and care of the elderly. In
1996, Sweden deregulated its electricity sector, allowing private competition in
distribution. Telecommunications, postal services and public transport were also
deregulated. And state companies, including banks nationalised during the 1992-93
crisis were sold off, after their losses had been passed over to the public sector.

"Another area in which Sweden has led the way is in pension reforms... With the
implementation of the premium-reserve pension reform of 1998, a system was created
that indeed is not guaranteed to result in high pensions for pension savers."
(Sweden in Europe, speech deliver by the deputy central bank governor Lars Nyberg
in 2003). This so called pension reform - privatisation of pension savings and
lower pensions - caused revolt in the rest of Europe when those governments were
trying to copy it.

Nor did the social democrats reverse the so-called the school choice system
introduced by their rivals in 1992, which has paved the way for an upsurge in
private schools. In 1991, the share of secondary pupils in privately run schools
was 1.5 percent - today�s figure is 17 percent. In the 1990s, the health sector too
was opened to private alternatives. The taxes paid in Sweden should entitle
citizens to social security, healthcare and so on. But that is only on Paper. In
addition to taxes you must also pay fees when visiting a doctor, for being
hospitalised, and so on - fees that have increased over the years. It now costs 140
krona (20 U.S. dollars) to visit a doctor in Stockholm, and 300 krona (more than 40
U.S. dollars) to see a specialist. A visit to the dentist costs a fortune, usually
more than 600 krona (85 U.S. dollars) for a check up, while a simple filling costs
more. 850,000 Swedes can no longer afford to see a dentist, according to a recent
study.

Thanks to the �lesser evil� factor, the social democrats were able to stay in power
after the elections of 1998 and 2002. Workers voted against the traditional right-
wing parties, rather than in favour of social democracy. The party does not enjoy
the same firm support as before, and its share of votes has been in sharp decline
since 1994. In the last election, in 2006, the party scored its worse result since
1921, the year the right to vote was introduced for both men and women. It was an
electoral disaster forcing the leader, Persson, to resign.

The party changed leadership, but the policy stayed the same. In some respects the
social democrats have moved further to the right since their defeat in 2006, with
the new leaders emphasising the need to win middle-class votes in the big cities.

The present right-wing government, elected in 2006, began its term of office with
drastic cuts in unemployment benefit and social insurance with the aim of creating
a low-paid labour market. This in turn made the situation even worse when the
global capitalist crisis set in. Never in modern history has Sweden entered a
crisis with such gaping holes in its social safety net.

This government also wants to sell out almost all the remaining state-owned
companies and open all public sector activity to "competition" and potential
takeovers by private companies. Because Swedish workers are less protected than
before - more people than ever lack for example unemployment insurance - the
present economic crisis is rapidly turning into a social crisis. Over the last
twelve months unemployment has soared from 5.9 percent to 8.3 percent and is set to
reach 12 percent in 2011.

It is easy in Sweden to dismiss permanent workers. The bosses just have to claim
lack of work to revoke job contracts. This explains why unemployment is rising
faster in Sweden than in many other countries while youth unemployment, close to 30
percent, is amongst the highest in Europe.

The social democrats, Left Party, and the Greens recently formed an alliance called
the Red-Greens, but this alliance is neither red nor green. The social democrats
and the trade union movement in Sweden are facing a historic crisis. They have lost
roots, influence and support, with no prospect of regaining their old ground as
their policy and methods mean further attacks on what is left of the general
welfare system. The social democratic party has become an empty shell. The new
party leader, Mona Sahlin, once said that "Sometimes I fell I�m the youngest
member, and I�m 53".

The task facing genuine socialists in Sweden and other countries as well, is to
rebuild the workers� movement on socialist lines - to build a new mass socialist
workers� party and transform the trade unions into democratic and fighting
organisations. The key lesson that has to be drawn from experiences in Sweden is
that no social gain will last unless capitalism is overthrown. This is even more so
in a period of crisis, when a revolutionary struggle is needed to win even the
smallest concessions from the capitalist class and to save jobs. Therefore, with
the basis for social reforms within capitalism having been eroded, the only way
forward is a struggle for socialism and a democratically planned economy.

Source www.socialistworld.net/doc/375�

In short: even Swedish socialists refuse to call their homeland "socialist state" ,
which only proves that socialism is web of lies.