Sweden in deadlock

Sweden has long been the poster child of the ‘mixed economy’, the social democrat state – where capitalism is ‘moulded’ to provide a welfare state, equality and decent working and living conditions for the majority. The 2018 general election result has put that story to bed.

In yesterday’s election, the Social Democrats, the supposed standard-bearer of the ‘mixed economy’, remained the largest party with just over 28% of the vote.  But this was its lowest share in an election since 1908.  The main pro-business party, the so-called Moderates, also lost votes, coming in with 19.7%.  Cutting through both these parties, who have alternated for decades in controlling government, was the rise of Sweden’s so-called Democrats (an oxymoron), an anti-immigrant party with neo-Nazi roots, which polled 17.7%.  The smaller parties of the centre-right and the left also gained – the Left party jumping to 8%.  The middle-of the road Green party was run over and nearly failed to gain the 4% necessary to enter parliament.  The two alliances of the social democracy and the pro-business parties are virtually tied with 40% of the vote each – leaving the Democrats with the balance of power in the new parliament.  Such is the impasse.

It was an illusion anyway about Sweden being the ‘third way’ between untrammelled free market capitalism and command economy autocratic Communism.  The great gains of the Swedish labour movement in the early 20th century have slowly been reversed.  And the post-war diversion to public services of some of the profits of the Swedish engineering and manufacturing (owned by a handful of families) stopped decades ago.  Just as in other capitalist economies, the polices of neoliberalism – a reversion to free markets, low taxation for the rich and corporations, cuts in the welfare state and in real wages, rising inequality etc – have been operating in Sweden since the mid 1990s.

Why were neo-liberal policies introduced in Sweden? As in other capitalist economies, the profitability of capital fell sharply from the mid-1960s (to the mid-1990s in the case of Sweden).  After a credit boom that went bust and a major banking crisis, Sweden’s famed manufacturing sector took a massive dive.  It was then that Sweden’s major parties, the Social Democrats and Moderates, firmly adopted policies to boost the rate of profit for capital at the expense of the welfare state and public services.

Sweden may still have a more ‘equal’ income and wealth distribution than the US and the UK, but it is still very unequal – and inequality has been rising the fastest since the 1990s of all advanced capitalist economies.  In 2012, the average income of the top 10% of income earners was 6.3 times higher than that of the bottom 10%. This is up from a ratio of around 5.75 to 1 in the 2007 and a ratio of around 4 to 1 during much of the 1990s. Sweden’s richest 1% of earners saw their share of total pre-tax income nearly double, from 4% in 1980 to 7% in 2012. Including capital gains, income shares of the top percentile reached 9% in 2012. During the same time, the top marginal income tax rate dropped from 87% in 1979 to 57% in 2013.

In Sweden, like in most other Nordic countries, tax reforms over the 1990s have decreased the tax burden for wealthier households, e.g. by decreasing capital taxation and lowering or abandoning wealth taxation. At the same time, there have been cuts in welfare benefits for the poor.

What is not often known is that Sweden is no longer an epitome of state provision. The country is one of the world leaders in having public services supplied by the private sector, paid for by the government.  About one-third of all Swedish secondary schools are so-called ‘free schools’, with the majority of them run by for-profit companies, while about 40% of primary healthcare providers are privately owned. Public provision has been outsourced to the detriment of quality.  Sweden’s schools have slipped from being one of the world’s best in international ratings to “one of the most mediocre”.

The rise of the Democrats follows the pattern of so-called populism that we have seen in Germany, France, Italy, Denmark and other EU countries, as well as with Brexit in the UK and Trump in the US.  It is the product of the failure of capitalism to deliver after the end of the Golden Age in the mid-1960s, but particularly after the global financial crash, the Great Recession and the ensuing Long Depression.

Swedish capitalism, somewhat like Germany (only much smaller), has done better than most other capitalist economies since 2008.  But even in Sweden, the rate of economic growth has slowed in the last few decades and particularly since 2008.

Unemployment may be low by EU standards but the official figure hides those on work programmes  (German-style) and those on sick benefits.  As in Germany, many jobs are now ‘precarious’ and low-paid, particularly in the small towns.  And there have been significant public spending cuts on hospitals, schools, housing, pensions and transport.

And then there is immigration. Over 600,000 immigrants from the Middle East have entered the country since the Syrian/Iraq disaster (graph below).  Many immigrants are young single men and they have helped capitalist enterprises and the state sector overcome an acute labour shortage for low skilled work.  But the amount of immigrants per head of population is way more than in any other European economy and it has increased pressure on those public services, already suffering from neo-liberal measures.

There has been a massive housing boom driven by low interest rates and credit.  That has benefited the middle and upper classes but the working class and immigrants struggle for proper housing (graph – waiting list for rented housing in Stockholm).

Sweden is still growing much faster than much of the rest of Europe, but it is highly dependent on the growth of world trade and the strength of economic activity in Europe.  The strong growth has been driven again by a credit-fuelled consumer boom as in the 1980s, as well as from the extra value from immigrant labour.

Stockholm has the second most inflated housing market in the world, while the banking sector booms. The Swedish banks currently have assets that are four times the national GDP, second only to Switzerland.  The 1980s are repeating themselves.

Real GDP growth seems strong at over 3% a year.  But if you strip out the impact of extra immigrant labour, real GDP growth per person is much lower (below 1% in 2017).  Real per capita growth is seen averaging just 1% in the decade through 2026, according to the Swedish National Institute of Economic Research.

The small towns in Sweden have experienced low wages, poorer services and then were faced with an influx of new immigrants.  This was the breeding ground for the Democrats’ racist and nationalist message of ‘Sweden for Swedes’.  The Social Democrats are now paying for their support of capitalism and neo-liberal policies of the last 20 years.

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23 Responses to “Sweden in deadlock”

  1. stephenhinton Says:

    Well I lived through the 80s in Sweden and had the privilege to work with some government agencies and politicians. I can say that they honestly believed in “the good job”. THe unions were not afraid of robots as they put it “robots do not buy cars”.

    The good job was what was going to create equality. The social democratic women believed if they could get out to work they could establish themselves as equals to men.

    At the time, there was a tripartite model of the labour where the labour ministry agency sat on a board with the employers’ organisation and the labour organisation.

    The task was to make sure workers had wages to buy Swedish products, that workers had education and health and public transport so they showed up at work ready to roll and that employers paid taxes in a way that helped run the good job/good worker system whilst ensuring they had money to invest. The cooperation with the union resulted in developing very progressive work environment and safety rules, the safety net meant that people felt OK to be creative at work and outspoken, and the well paid workers meant that the home market demanded quality meaning Swedish products were high quality, made in good environments and were environmentally leading.

    So Sweden was unique in that labour policy was a part of industrial policy not social policy. Unemployed people were seen as resources to retrain to meet changing market needs.

    What happened was globalization. Factories moved abroad because production was cheaper. Never mind workers had no money any more. Markets were elsewhere. The Employers organisation broke off the tripartite cooperation and the Swedish third way ended right there.

    Sweden joined the EU and that started the race to the bottom . The right wing came in with the ambition of demolishing the welfare state as they must have thought that a capitalist society needs neither well educated nor well-paid and healthy workers. That is what we are getting. Spending on mental health is now higher than physical health.

    To take the printing industry for example, EU funds allowed new member countries to set up printing works and the low wages and subsidies meant that it created work there, yes, but stole jobs from Sweden. That continued the race to the bottom.

    Unlike many commentators I will not say that the right wing is using mainly racist arguments even if they are racists. Fitting in in Sweden is really hard. And if you don’t fit in you can’t find a job. Many of the traumatised refugees coming to Sweden remain as outsiders (I know some of them ..and migrants who I have tried to help). The Ultra right are pointing out that you cannot underfund social services and integration (Swedes have no idea how to do that that and have refused to look at lesson from other countries) and expect people from massively different cultures just to “become Swedish”.

    The chummy “we scratch each other’s backs” modus operendi of Swedish Social democracy is a failed model, sadly, because that is what Swedes (IMHO) want. They want Social Democrats to lay out the game plan of … you sell to our people, you use them as workers then these are the rules. They want politicians to push back against capital. Hard but fair (if that is possible).

    Under a series of left and right governments Sweden got into a position where it imports food with practices that had they been in Sweden the farmer would be in prison. The upshot is cheaper food and unemployed farmers. Trust in politicians is at an all time low and no wonder.

    Government companies like the rail system are charged with ridiculous profit demands that open up to competition from global companies on high traffic routes. Making profits even worse.

    The ultra-right is nothing but a product of Social Democracy losing focus and highly funded right wing think tanks. Capitalism messing up in other words.

  2. ucanbpolitical Says:

    It is of course laughable that an economy hailed as the fairest is actually owned by fewer families than in any other capitalist economy.

  3. Sixten Says:

    Good post. I just wanted to point out that you may be confusing some parties with each other. The Democrats (Demokraterna) is a new centrist party local to Gothenburg (mostly a reaction to an unpopular infrastructure project, as well as the failures of the social-democrats there). You might be confusing their name with the Sweden-Democrats (Sverigedemokraterna), which is the reactionary party at 17%. It’s a minor point, but it might be confusing to some.

  4. Mike Ballard Says:

    Thank-you very much for this post, Comrade. I shall use it to illustrate how the ever cheapening effects of buying into the wonders of freely trading commodities under the wage system ensures the continued decline in the standard of living for the working class. Only a working class, consciously striving for its emancipation from the wage system can politically move toward more control and ownership of an ever growing accumulation of wealth, i.e. the social product of labour.

  5. Victor Onrust Says:

    I am no fan of the “populist” strategies in most EU countries because of their nationalist tendencies, overlooking the international capitalist causes of “migration” or, better, population policy. However, generally they are not “racist”, “fascist” or even “ultra-right”, although of course a minority of their following might be. They see correctly that the population policy is against the interests of the working and lower middle class and more broadly are a general threat to the stability of society. They organize resistance against these policies.

    • Wal B. Says:

      In Germany, too, there is much hysteria about the real or alleged problems caused by increased immigration. At first, many leftists closed their eyes to problems and said immigrants do not cause any problem. That’s naive. You say: Immigration causes problems for the working class. That may be right. And you say: nationalistic tendencies are wrong. Here I’m on your side.
      But in your statement, I find two areas that are not right at all.
      First, you speak of a “population policy” as if it were the intention and purpose of the rulers to bring in as many immigrants as possible. This is a kind of “conspiracy policy” that does not agree with the facts.
      Second, you speak out for a “stability of society,” which I believe to be a pious wish.
      I see mass migration as one of the crisis features of capitalism. The warming of our planet is another feature, as well as the economic stagnation in the capitalist core zone. Our society is actually becoming unstable, but not by the “population policy” of our governments, but by the general inability to find appropriate responses to the instability of capitalism.

      • Victor Onrust Says:

        I think a policy is not a conspiracy, it’s not secret, just an agreement in the elite which direction to go. No specific target. It is not “as many immigrants as possible” but much more aspects as to what “quality”, what treatment and who pays. Taken together it is not only about migrants but has consequences for other groups. I agree entirely that it’s certainly not the only factor. But there is a serious relation between the way capitalism is (not) managed and population policy. These should be taken into account for an appropriate “response” to capitalism.

  6. Andrew Francis Oliver Says:

    In re responses to the climate crisis may I remark that I fear fascist responses that let the island climate refugees just drown and selfishly build border walls … Only a live simply so that others can simply live can minimise the surplus heat that black body radiation physics limits on the biosphere coping with excessive electricity and energy use!!

    Which way will the world turn ????

  7. Apocalypsis Says:

    Sorry, but I’ ll be off topic.
    I contact you on behalf a small marxist group in Greece, Kordatos (kordatos.org). We would like with your permission to translate and re-post your article on imperialism ( https://rupturemagazine.org/2018/01/25/imperialism-globalization-and-the-profitability-of-capital/ ) hopefully as part of a series on this topic.
    If you are positively inclined, I would also like to ask your elaboration on what is the global North and South specifically according to you, to be added as footnote or an end-note.
    An avid reader of your blog, Aris DaCounia

    • michael roberts Says:

      Sure, no problem on the article.

      Global south and north is a geographical generalisation suggesting that the major imperialist powers are mostly located north of the equator and the peripheral nation states are mostly located south of the equator. There are exceptions. Some peripheral states are above the equator (Mexico, much of central Asian states, the Middle East etc).

    • Charles Says:

      North and South – a slippery dividing line indeed. For example, John Smith in his book attacking the working class of Europe and the U.S. puts China in the global South, then builds his statistics from there. China, of course, became truly independent of imperialism in 1949 and prepared for industrialization with massive work on agriculture canals and terraces and other infrastructure, with basic education for the great majority of the young, and so on. Then from 1978 the country switched over to capitalist industrialization, enjoying the fruits of all that socialist labor. To put China in with a host of smaller countries still economically tied to western imperialism is ridiculous, but Smith does it.

      • mandm Says:

        I’m replying for myself, and from the US perspective, not for John Smith.

        You’re point about China is well taken, but I wonder whether you will agree with the following:

        1. Chinese labor, in the special industrial zones where western capital determines the conditions of labor, is “super-exploited” relative to both their productivity and their standard of living in absolute terms and relative even to Chinese workers in state enterprises, but especially to those with special technical skills and those who are well-connected to private owners of means of productions. 2.To point out that the present global system is based on the consumption of cheap wage goods, produced by super-exploited labor in (or from) the global south, by workers in the west is not necessarily “attacking the [western] working class”. 3. Nor are we necessarily attacking ourselves (or supporting imperialist immigration policy) when we seek to understand the importance of freeing ourselves of the accumulated ideological inheritance of centuries of normalizing the brutal behavior toward people of color by the agents of colonial/imperial capitalism–especially since the brutality continues…even as we workers at the centers are still being indoctrinated (by left humanitarian interventionists and by right religious or racist political opportunists)…while being economically and politically marginalized, and fleeced.

        It seems to me that Smith is defending Western workers as a viable political force rather than attacking us.

      • Charles Says:

        @mandm:
        1. The dividing line in China between private and state enterprises is blurry. Surplus value exploited from workers in Chinese “private” enterprises is split among state officials, local capitalists and, in the case of joint ventures with foreign firms, foreign capitalists.
        2. You assume the accounting that is at issue and actually fallacious, and the conclusion that most surplus value is produced in the “South.” John Smith certainly attacks the working class in Europe and the U.S.: “the imperialists’ reluctance to reverse the expensive concessions that have helped convert the workers of the ‘Global North’ into passive bystanders, or even accomplices, to their subjugation of the rest of the world.” (p. 313) Talk about concessions has been ridiculous for 40 years and longer.
        3. “freeing ourselves of the accumulated ideological inheritance of”… Be sure to include the illusions of bourgeois democracy, reformism, social mobility, and so on.

      • mandm Says:

        I assume nothing about the arcane accounting processes by which global finance capitalism appropriates surplus value from super-exploited labor, either from its direct or indirect investments in the global south. I refer only to the obvious fact that most of this surplus value is valorized only by the purchase of cheap, useful wage goods by much better paid workers in the West.

        Thanks for reminding me to “be sure to include the illusion of bourgeois democracy, reformism, social mobility, and so on”. …Well those social democratic illusions pandered by social imperialist leaders (better than 100 years of it) are exactly what Smith was referring to in the passage that you quote from his “Conclusions”. He needed no reminding. Gramsci enlightened all of us regarding bourgeois hegemony and the problematics of retaining class consciousness, which is a struggle for all of us.

        A bit later Smith calls attention to the working class as it exists now, after 40 years of neoliberal reforms:

        “The southward shift of the working class, the reinforcement of the working class in imperial countries through migration from oppressed nations, and the influx of women into wage labor in all countries means that the working class now much more closely resembles the face of humanity, greatly strengthening its chances of prevailing in battles to come.” p.314

        …And a bit later: “Together with their sisters and brothers in the imperial countries, workers have the capacity, the mission, and the destiny….to bring an end to what Marx called the “pre-history of human society”. p.315

      • Charles Says:

        @mandm: “the purchase of cheap, useful wage goods by much better paid workers in the West.” Globalization has been a disaster for U.S. workers. Millions of them have lost their jobs to outsourcing. The real wage of the average worker peaked in 1973. Meanwhile, John Smith goes on about “the imperialists’ reluctance to reverse expensive concessions” to these workers! His attack on them cannot be veiled with rhetoric about mission and destiny.

      • mandm Says:

        Again, I cannot speak for John Smith. But for me, his book has to be understood within the contradictions of capitalism’s continuing problem with profitability, which the imperialists have tried to solve with a two pronged, coordinated assault (including violent assault) on labor–at the peripheries and at the imperial centers–while maintaining a steep wage differential between between workers from each sector of what in fact is the same economic realm.

        Yes, outsourcing has been a disaster for Western workers. For example, children of ex-autoworkers who had made $35.00 an hour in the 1980’s, are reported to be “happy” to have a job at the super-exploitative wage of $12.00 an hour at an ex-GM-now-foreign-owned-glass manufacturing plant in Dayton, Ohio. Real prices have doubled in the US since the 80’s, but a $12.00 an hour starvation wage in Ohio is at least 6 times more than the typical worker in the Global South earns for the same job employing the same technology.

        It could be that Smith is referring to the maintenance of the great disparity in wages between the North and South in his remark about the imperialists’ reluctance to reverse the “expensive concessions” to workers at the center..though the “concession” hardly seems “expensive” in regard to the $12 wage of the happy Dayton worker (not to speak of the starvation wages of millions of documented and undocumented foreign workers here who produce cheap (unhealthy) food for the employed and unemployed in Dayton, Ohio.

        Super-exploitation of labor (the ubiquitous “working poor”) represents a sizable percentage of the working population in the US, within which 20 per cent are professional and technocratic wage earners who earn bribery wages that are 6 times higher than that of the “lucky” Dayton glass worker.

        Because of the great disparities in the standard of living between the workers of the world, the chaotic violence with which they have been and are being maintained, and the multicultural, volatile mix of native and foreign workers from the global south at the imperial centers, there has been a gradual but culturally problematic awakening of class consciousness in Europe and the US. That problematic, I think, is the subject of Smith’s book.

    • Wal B. Says:

      Hi Apocalypsis
      In the USA, wage workers generate an annual GDP per capita of around $ 50,000. 65% of it goes to the wage workers. (Wage rate = 65 per cent). Makes $ 32,500 pay per capita per year. So for the capitalists per capita of the US population remain $ 17,500 in added value. However, the capitalists make up only about 2 percent of the population. This 2 percent earns for each of the remaining 98 percent 17,500 dollars.
      How is it in the “South”?
      In the capitalist periphery, the average GDP per capita is $ 5,000. Of these, 42% go to the wage workers. (Wage rate = 42 per cent). Makes 2,100 US dollars. Also goes per capita of the population $ 2,900 to all capitalists.
      You see, the rate of exploitation is higher in the capitalist periphery, but because labor productivity accounts for only 10% of labor productivity in the US, both the peripheral workers and peripheral capitalists have less pay and less added value than in the core zone. The mass of surplus value that falls to the capitalists in the core zone is higher than the mass of surplus value that capitalists of the periphery accumulate, although there the expropriation rate is higher there.
      (All figures from the OECD).

  8. vk Says:

    Sweden’s case is illuatrative as to why post-war social-democracy isn’t socialism: they never intend to take over the means of production.

    In the 19th Century, there was a debate between the social-democrats about what should be the optimum path to socialism: the Germans defended socialism could be reached through reforms within the institutional frame of capitalism. The Russians defended socialism could only be reached through violence (revolution). But both defended socialism should be the final goal. That’s not the case of modern social-democracy, that’s why it can’t be considered, in any way, socialism.

  9. Christopher DeCarlo Says:

    Are you Twitter?

  10. John A Says:

    I also think the assassinations of Social Democrat leaders Olof Palme and Anna Lindh had a big shock doctrine effect on the Social Democrats. Both almost certainly CIA linked, the latter has shades of Sirhan Sirhan – R Kennedy brainwashing. The next generation of leaders were far more compliant with US wishes while Moderaterna leader and sometime Prime Minister Carl Bildt is a proven CIA asset whose snout is now firmly in the Ukraine trough.
    Joining the EU was a disaster for Sweden. Joining NATO will compound that many fold more.

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