The welfare state and the Swedish model

Question 1

The postwar international context

Answer 1

• USA the undisputed military and economic leader in the West, start of the Cold War
• A new international system in the West:
  – The Marshall plan, free trade agreements and the Bretton Woods system
  – Predecessor to the EU (the Coal and Steel Community in 1951)
• “Record years”: Strong economic growth in the West until mid 1970s
• The crisis of the 1970s: stagflation (inflation and unemployment)
• From 1980s: neoliberal policies, deregulations

Question 2

The WW2 and its immediate aftermath (Nachwehen) in Sweden

Answer 2

• Fears for what would happen when the war ended
  – Would the difficulties after WWI be repeated?
• During the war the economy was extremely regulated
  – Private enterprise feared a continuation of the state’s
  interference in business
• Initial problems to adjust industry and production, but
  rapid growth particularly from early 1950s
• Regulations in many spheres continued to be in place
  into the 1950s

Question 3

A new development block

Answer 3

• Transformation at the time of WWII
  New innovations stimulated by military technology, e.g.
  aviation, electronics industry, chemistry (e.g. plastics),
  consumer durables
• Rationalization in 1960s
  Increased international competition, further push to
  rationalize and make production more efficient
• Crisis in the 1970s
  Oil chock and stagflation

Question 4

The post-war Swedish economy

Answer 4

• Strong economic growth until mid 1970s
• Agriculture’s part of GDP continued to decline
• Growth of white collar workers and service industry
• Differences between industrial sectors:
  – Engineering industry was the winner during the period while e.g. food and textile industries saw slow growth
• Shift towards more high-value added production for export
• Mix of traditional export products (e.g. pulp and iron ore) and
  advanced technical products (e.g. machinery, cars)
• A regulated, mixed economy with strong corporatist aspects

Question 5

The Swedish model and its background

Answer 5

A concept with many meanings:
* Labor market relations with coordinated, peak-level
collective bargaining
* Class compromise between capital and labor
* The universal welfare state

Background:
* The idea of the People’s Home (Folkhemmet), Per Albin Hansson in 1928
* The ”horse trade” (kohandeln) between SAP and the Agrarian party in 1933
* The Saltjsöbaden agreement in 1938

Question 6

The Rehn-Meidner model

Answer 6

• Developed by economist at LO
• Centralized bargaining (Verhandlungen) SAF-LO 1951/52, 1955-1982
• The Rehn-Meidner model’s economic policy goals:
  – Low inflation
  – Full employment
  – High levels of growth
  – Equal wage distribution
• Based on solidaristic wage policy
• Strong pressures for rationalizations
• Need for active labor market policy

Question 7

The social Democrats and the welfare state

Answer 7

• In power from 1932 until 1976 (with some eceptions)
• “Three dilemmas”: “quest for power, pursuit of equality and
  need for economic efficiency”
• Focus on “productivistic” welfare policies – investments
  in employment, job mobility, training, prevention of illness, family policy
  – A positive sum solution to the equality/efficiency dilemma

Question 8

Different forms fo the social democratic welfare state

Answer 8

• Prelude, from early 1900s
  – SAP willing to compromise to gain power, no interest in
  revolution
• The “people’s home” welfare state
  – From 1930s until mid-1960s, general equality schemes
  that could appeal to a broad base of unprivileged people
• The “middle class” welfare state
  – From mid-1960s until mid-1970s, widening base of voters
  including a growing middle class of white collar workers
• Since 1970s?
  – SAP’s hegemony over, more of a party among others?

Question 9

Expansion of universal welfare

Answer 9

• Universal child benefits in 1947
• Universal health insurance 1955
• Nine-year compulsory school in 1962
• 1970s: expanded health insurance, paid parental leave
• Between 1950 and 1980, the share of society’s income
  spent on public consumption rose threefold, from 11 to
  34 percent

Question 10

Gender and the welfare state

Answer 10

• From breadwinner/homemaker to dual income households
  – Growing public sector
  – Economic efficiency
  – Ideological shifts
• Security through public welfare, rather than family
• End of joint taxation 1971
• Expansion of subsidized public daycare
  – Women became service
  providers and consumers of the
  same service

Question 11

The end of the Swedish model ?

Answer 11

• Oil- and structural crisis in the 1970s, decline of industries
• A period of ideological change:
  – More radical demands changes political discourse, e.g.
  Codetermination Act, Employment Protection Act, Wage
  Earners Fund
  – Start of neoliberal orientation of politics, deregulations, shift to
  more market-based solutions
• Strained relations between LO and SAF from late 1970s,
  SAF withdrew from central negotiations and from boards
  – The wage earner funds
• Coordinated bargaining, but weaker position for unions

Question 12

A new direction of economic and political policy

Answer 12

• Liberalizations from 1980s with deregulations and increase of
  private, market-based solutions
• Dismantling of the welfare state?
• Difference between changes in quantitative or qualitative terms