Swedish Industrial Society 1890-1930 Flashcards
Background
- Agricultural revolution
- Population growth
- Early industrialization
- From 1850s (and even more so from
1870s) – rising real wages - Institutional reforms
Institutional reforms
- Education act 1842
- Dismantling of guild system 1846
- Companies Act 1848 creates joint stock companies
- Bank act 1864
- Diet replaced by two-chamber parliament in 1866
- Repeal of internal passports and vagrancy law (in 1860s and 1880s)
- Workers savety act 1889
- Bank of Sweden gets sole right to issue banknotes 1903
- Universal suffrage 1919
Sweden in the international economy
- From mid 1800s – Sweden part of the international
economic system, regular occurrence of crises and
upswings - Economic cycles:
- Rural, self-sufficient society: balances between cultivated land and population
- Industrial capitalist society: capital flows and markets to
distribute labor and capital
Development blocks
Transformation: Change and renewal. Diffusion of innovations, reorganisations, new production methods and institutions
Rationalisation: Adaption of innovations leads to increased productivitz within new frameworks. But also increased competition
Crisis: Company closures and worker layoffs when oppertunities for further expansion are exhausted
Development block 1850s-90s
* Transformation (from the 1850s)
Innovations of the first industrial revolution became
more widespread, e.g. railway, innovations in textile
industry, factory organisation
*** Rationalisation **(Late 1870s)
Increased competition from abroad, falling prices
* Crisis ( 1880s”Great depression” 1873–1896)
falling demand, esp export businesses, layoffs
Development block from 1980s until WWII
*** Transformation **in the 1890s Development block around electric power and combustion engine
* Rationalisation
Ways to increase efficency: Vertical & horizontal
integration. Economies of scale & scope. Cartel agreements
* Crisis in the 1920s and 1930s
The second industrial revolution (Characteristics)
Characteristics:
* Based on new technology and applied science.
* Growth of large, multidivisional corporations
* Trusts, monopolies and cartels
* Cheaper and better communications, drastic decline in
freight costs
* Globalization and free trade (but also protectionism),
substantial intercontinental factor flows (capital and labor)
* International monetary system based on the gold standard
The role of the banking sector
- To industrialize, capital was needed
- The birth of commercial banks from mid 1800s
– Stockholms Enskilda Bank (1856), Skandinavisk Kredit AB
(1864), Handelsbanken (1871) - Increased influence of the banks on Swedish companies and
industrialization (e.g. Stockholms Enskilda Bank on ASEA, or
Handelsbanken on brewing companies) - Creation of investment companies
- The government repeatedly intervened and “saved” banks in times of economic turmoil (e.g. in 1870s and 1920s)
Bank of Sweden (Riksbanken)
- Monetary policy to control the economy
- Controlling inflation
- A bank amongst others in the 19th century
- Monopoly on bank note-issuing from 1903
- Growing influence on commercial banks
Government economic policy
- nicht Laissez-faire
- “national-liberal” economic policy
– Create preconditions for markets
* Invest in infrastructure and education
* Intervene if “vital interests where threatened”, e.g. bank failures
**The term “organized” capitalism: **
“In principle, liberal economy combined with a growing sphere of mutual interest
to industry and government. The result is liberal-democratic interventionism
organized by government bureaucracy.”
Government social policy
- The “social question”, social security in modern
capitalist industrial society- Occupational safety (1889), health insurance (1891),
universal pension (1913), working regulations for better
environment, protective legislation for women and child
labour
- Occupational safety (1889), health insurance (1891),
- Increased public spending
Organized interests
- New social organizations, ”the people’s movements”
- Organized labor market interests
– Swedish Trade Union Confederation (LO, Landsorganisationen i Sverige),1898
– Swedish Employers’ Association in 1902 (SAF, Svenska
Arbetsgivareföreningen) - Legitimate interests on both sides, which paved the way for the future
The turbulent interwar period
- Breakdown of the international economic system in
1914 - In Sweden: mixed picture of the war years,
economic boom but also food shortage, inflation - 1920s: deep but short-lived crises followed by
recovery, further rationalizations in industry - 1930s: the Great Depression (1929), the Kreuger
crash (1932)
– Fall in industrial activity and rise in unemployment,
Sweden left the gold standard in 1931
How to deal with the crisis of the 1930s ?
- To what extent could neoclassical economic theory provide answers and guide policy?
- Emergence of ”Stockholm school” of economists
(e.g. Bertil Ohlin, Gunnar Myrdal) and ”Keynesianism”
– Stimulate the economy in periods of economic
depression by public investments
– Increased focus on employment policy - Start of a period when fiscal policy became more
accepted as a key tool to control the business
cycle – continued also in the postwar period - Not very important for getting out of the crisis
late 1930s
- By the late 1930s, Sweden had seen economic growth and
industrialization, income had risen for large parts of the
population - How can we explain this development? Key factors include:
– Institutional reforms
– Investments and improvements of productivity
– New technology and innovations
