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Home , Folkhemmet, Johan August Gripenstedt, Nordic model

Sweden’s state; myths and realities: a Marxist analysis of the ‘’

Madeleine Johansson

In the midst of the global economic cri- education with universal grants and free sis and the age of , you sometimes for under 20 year olds. These hear comments about how the ‘Nordic things should not be dismissed for they Model’ is different and is staving make a difference to the living standards off a crisis that seems to be spreading fast and expectations of working class people. throughout the rest of Europe. In Octo- The main aim of this article, however, is ber 2011, the Irish progressive economic not to give a description of the present at- think-tank, TASC, organised a seminar en- tempt by a right-wing coalition to roll back titled ‘The Nordic Models: Resilience in the . Rather, it is to give a Changing Times’ where prominent speak- Marxist perspective on the welfare state as ers discussed the Scandinavian way and it came into existence in Sweden and put how it could be implemented in Ireland. the Nordic model in a historical context. This ’Nordic model’ conjures up a vision of a harmonious , where the madness can be tamed and a wel- Origins of the Welfare State fare state can foster a more equal soci- bourgeois commentators have ety. Many of those advocating this model a tendency to refer to the Nordic model as are genuinely looking for reforms and a owing its existence to the genetic make- better society. But the terminology and up of Nordic people. The Scandinavian rhetoric can also be used, especially by psyche, apparently, prefers equality, har- Government Ministers, in an mony and partnership to class conflict and attempt to delude people that their cut- capitalist greed. There are also those who backs are in reality progressive reforms. point to the period of industrialisation in The reality of the Nordic model in a the late 1800’s as the beginning of the wel- country like Sweden is far from the utopian fare state, with liberals such as vision often presented. In fact, inequality Johan August Gripenstedt who supported is rising, is high (especially general suffrage3. But the most common amongst young people), and poverty is in- perception is that at some point in the creasing. The richest 1% controls 40% of 1930’s, with the arrival of partnership and the , while a quarter of the popula- Social , there was a massive tion have no financial assets whatsoever1. change in Swedish society and the welfare Astonishingly this figure is higher than in state was born. In reality, prior to the Sec- Ireland, and also even than in the US. In ond World War, only minor reforms were 2004 Sweden had the highest CEO salaries granted to working class people. It was in in the EU2. In spite of these inequalities, the 1960’s and 70’s that the welfare state there is some truth to the claim that the became part and parcel of public policy. welfare state there is better, in so far as To understand the emergence of the there are free school meals, free third level Nordic model, it is necessary to give a 1B.Ericson, Den nya ¨overklassen (Fischer & Co, 2010), p.11-12, p.313 2Ibid., p.288 3D. Ankarloo, V¨alf¨ardsmyter (ETC Frlag, , 2010), p.55

47 brief description of the Swedish economy ing the Second World War, but continued and its history. Sweden experienced very once again to trade with both the Allies late industrialisation. In the early to mid- and the Nazis. It is also well known that 19th century, it was an extremely back- the Swedish government allowed goods to ward country with mass poverty and emi- travel across the railroads in Sweden, dur- gration. After the years of famine in 1848, ing the Nazi occupation of and it is estimated that between the 1860’s and . 1920, a million people emigrated from Swe- Before he died, in 1940, the Russian den to America in search of a better life. revolutionary, Leon Trotsky, described the These were mostly poor peasants from the economic crisis of the 1930’s and the war Southern countryside, along with religious as the ‘death agony of ’, from refugees and vagrants. which the system would not be able to re- Towards the late 1800’s, the export in- cover. But the economic boom that fol- dustry started to flourish, with the main lowed the war, which lasted for almost 30 exports being iron ore and forestry. The years, disproved Trotsky’s diagnosis. Cap- raw materials mainly went to the more in- italism grew enormously and it is in this dustrially advanced countries like Britain period of growth that we must place the and Germany, who needed good quality emergence of the welfare state. iron and wood for thousands of miles of railroads and for factory machinery. An- The Golden Years of other use for iron ore was for the new military weaponry in the expanding arma- Capitalism- the post war boom ments industry. The growth of the export Between 1945 and 1973 the capitalist sys- market helped to speed up industrial de- tem expanded massively. Average global velopment in Sweden. growth has been calculated at 4.8% annu- During the First World War Sweden ally during this period4. There was record officially stayed neutral, but it continued low unemployment in the US and Western to export raw materials for arms manufac- Europe. It seemed as if Marx had been turing abroad. Whilst millions of working wrong and the boom-bust cycle had come class men died in the trenches in the hor- to an end. So how did capitalism recover rific war, Swedish capitalists profited from from the greatest crisis in its history? the sales of iron ore and other materials. Firstly, the destruction and widespread The Wall Street crash of 1929 had a bombing of cities that took place during devastating effect on Swedish . The the Second World War meant that it was vast empire of businessman and financier, necessary for the countries of Western Eu- Ivar Kreuger, collapsed, and he committed rope to re-build again. The state and suicide in Paris. This added to the cri- private invested in new infras- sis in the Swedish and the US economies tructure, factories, machinery and homes. and class conflict escalated. In 1938, part- Secondly, there was a significant growth nership between the employers, the state in state spending everywhere, both during and the unions was first established, and the war and after. In the US in 1945 to some small reforms were granted during the end of the war, military spending ac- this period. Sweden stayed ‘neutral’ dur- counted for a massive 42% of GDP5 . In a 4Stephen A. Marglin, Juliet B. Schor. The Golden Age of Capitalism. (Google Books. Retrieved 2009-03-12) 5http://www.usgovernmentspending.com/past_spending, (Retrieved 2012-08-22)

48 war economy, the state drives investment The next section will examine why the rul- even though profit rates are very low, while ing class didn’t just keep these extra profits normally investment would slow down dur- to themselves but supported the creation ing a depression or . After the of the welfare state. war, in order to carry out the necessary re- construction, the high level of state spend- ing continued. The Working Class Thirdly, military spending continued to There is one element of society that I have be high even in the post war era. In 1953, not yet discussed, and that is the class eight years after the end of the war, US struggle. There would never have been a 6 arms spending amounted to 15% of GDP welfare state were it not for the strength . As part of the arms race, huge amounts of the Swedish working class. Rather than of continued to be spent on mili- being a peaceful place, Sweden has always tary purposes throughout the pe- been a hothouse for class struggle. With riod. Chris Harman explains how military the massive expansion of industry in the spending can counteract the tendency of late 1800’s there was a movement of poor, the rate of profit to fall, by diverting in- landless farmhands from the countryside to vestment from fixed capital to destructive the industrial towns and cities. During the investment. The combination of the de- 19th century, Sweden experienced many struction of fixed capital in the war and revolts and riots. In the 1860’s, groups afterwards, the growth in state spending of workers broke into upper class parties and the permanent arms economy created and demanded bread, justice, a republic a boom that lasted until 1973. and freedom in response to famine and op- The question is how countries like Swe- pression7. In the early 1900’s, the working den, which was not directly involved in the class movement and the trade unions grew war in terms of the destructive element or in strength and staged two general strikes, the permanent arms economy, could ben- one in 1902 demanding the right to vote efit from this. To answer this, we need to and the second in 1909. look at the system as a whole. Capitalism With Russia so close, the revolutions is a global system which can benefit some of 1905, and later in 1917, were a source capitalists and destroy others. Some are of inspiration to Swedish workers, but ex- able to benefit from the new markets cre- tremely worrying for the ruling class. In ated by other capitalists. But the presence 1905, Norway declared itself independent of intense also means that, at from Sweden and the Swedish authori- the same time, some capitalists find their ties prepared a military attack against the profit rates falling and they go to the wall. Norwegians. However, the young social- In the case of Sweden, in the post war pe- ists spread anti-war propaganda amongst riod it was actually in a better position working class soldiers and forced the ruling than countries directly involved in the war. class, who were wary of a Russian situation Precisely because there was no destruction spreading, to accept Norwegian indepen- and no re-building there was an even larger dence8. During the Great Depression of amount of extra surplus available. the 1930s, as capitalists tried to keep their 6Ibid. 7H. Blomqvist, http://www.marxists.org/history/international/social-democracy/sweden/ red-thread.htm 8ibid.

49 profit levels, working class struggles broke home’ but the term used for the welfare out again, primarily over defending wages state) was developed during the 60’s and and organising themselves into unions. In 70’s with the introduction of public health 1931, there was a wave of strikes in the care, education and the construction of one shipyards and on the rivers. In the village million homes for the working class. Liv- of Adalen,˚ strike breakers were brought ing standards for working class people rose in and there was a mass mobilisation of rapidly, and there was some workers and the local community. The due to the increased educational opportu- army blocked the road to the scabs’ camp nities. and, when the workers’ march continued towards its destination, the soldiers opened fire on the protesters. They shot dead five people and injured dozens of others. The incident caused uproar amongst the working class all across the country despite the mainstream media’s attempt to blame ‘communist radicals’ for the violence. This period of class struggle eventu- ally led to the partnership agreement be- tween employers and unions which was signed in Saltsj¨obaden in 1938. In order Workers in the mining district on strike in to buy off the trade unions, some reforms 1971 were given in return for industrial peace. With the Social Democrats in power, re- strictions on strike action were conceded As the golden years came to an end by LO (Landsorganisationen- Congress of in the early 1970s, the class struggle re- trade unions) in return for the promise of turned. In 1971 alone wild strikes involved industrial growth. The following period more than 16 000 workers out of more was marked by the decline of the class than 90 000 taking strike action that year. struggle while the Social Democrats were There were over 800 000 strike days in in Government continuously from 1932 un- 1971. Industrial peace had allowed a mas- til 1976. sive increase in while wages Following the Second World War, the had been kept down by the collaboration economic boom led to full of the bureaucracy with the which, in turn, strengthened the working bosses. Following the global radicalisation class. With the extra ac- of 1968, workers began rebelling against cumulated throughout the war and in the partnership and the trade union bureau- post-war boom, the ruling class was con- crats, most of whom were also members of tent to give major reforms for the work- the ruling . The ing class in return for continued partner- radical left grew in the 1970’s, but con- ship. Industrial peace, paid for by a share sisted mostly of Stalinists and Maoists, of their profits and reforms were crucial with a small minority of Trotskyist sects. in order to wed the working class to capi- The industrial unrest of the early to mid- talism, and too deter them from following 1970s forced new legislation. The laws on the in the neighbouring Soviet employment protection and inclusive deci- Union. (literally ‘the peoples sion making were designed to quieten down

50 the movement. Once again, the capitalists While the in Sweden were forced to back down to the workers avoided cuts in the 1980s, some neolib- but the laws impacted much less on their eral policies were introduced and the finan- profits than the demands of the workers for cial and banking sectors were deregulated, higher pay and less pressure on productiv- with devastating consequences. With the ity would have done. For the working class changes to the law on loans, financial and to win all of their demands and develop the firms seized the opportunity to struggle from a purely economic to a polit- make millions on commercial and residen- ical one, independent revolutionary organ- tial property. A property bubble devel- isation would have been necessary. Unfor- oped throughout the 1980’s which led to tunately the far left was too small, while a massive collapse and crisis in the early the Stalinist Left Party and the ruling So- 1990’s. Much like the banking crisis in Ire- cial Democrats had enough influence to sell land in 2008-09 the Swedish banks crum- out strikes and ensure struggles didn’t link bled and were bailed out by the taxpay- up with the growing political movements ( ers, to the tune of 67 billion kronor (e6.7 demonstrations against the Vietnam War, billion). The massive banking debts in- student occupations and women’s move- curred by speculators and developers were ment drew large numbers of young peo- transformed into national debt. The prob- ple onto the streets and into struggle, at lems continued with massive the same time that there was working class on the Swedish currency. The crisis led struggles in the factories). to mass unemployment and large scale at- tacks on the public sector and the welfare state. The ruling class used the economic The Attack on the welfare crisis, caused by private financial specula- state: 1991 to the present tion, to cut back on schools, hospitals and welfare, blaming the crisis on a ‘bloated’ As the struggles of the 1970s came to an public sector. The Swedish ruling class had end in the 1980s, became a long wanted to reduce the public sector global ideology and policy led by Margaret and privatise the many state-owned sec- Thatcher in Britain and Ronald Reagan in tors such as energy and telecommunica- the US. However, the Swedish public sec- tions. The crisis gave them a good excuse tor continued to grow during the 1980s and to do this while also disarming the work- the take increased to 51% of GDP, its ing class through fear of unemployment. highest ever in history9. During the 1970s, 90 000 jobs were cut in the public sector with the expansion of the public sector, in the early 1990s10. The collapse of the Sweden became a high tax economy. Many in 1991 also played its part new fell on the working class, such in the new attack on the public sector. As as increased VAT and income taxes, but communism fell, the ‘There Is No Alterna- there was also a squeeze on capital, with tive’ dogma of Margaret Thatcher was the increases in tax and the in- refrain. The fear of revolution or working troduction of an employers’ tax of 35% of class revolt had become history and neolib- the employee’s wage (similar to Employers’ eralism had a free reign. PRSI). This tax still makes up a third of all tax income. Sweden’s economy recovered in the late 9OECD and SCB (Statistiska Centralbyr˚an), www.ekonomifakta.se/printDiagram.aspx?pid= 16031&epslanguage=sv&from16031=&to16031= 10D. Ankarloo, V¨alf¨ardsmyter (ETC Frlag, Stockholm, 2010), p. 120

51 1990s but continued to have relatively high creased, and charges for waste collection, unemployment. One of the reasons for school meals and hospital visits etc. have the recovery following the severe crisis was been introduced. Inequality is quickly ris- that the global economy remained fairly ing and poverty is on the increase12. These stable with the growth of the dotcom bub- measures are not supported by the work- ble. In addition, exports of raw materi- ing class but the lack of a radical left als and means of production to Germany wing alternative has left workers demor- and other countries continued, and in some alised. On the ground, however, resistance cases, even increased. The cutbacks in to the cutbacks has slowly begun. Student the public sector, the lowering of working nurses are campaigning for higher pay, and class living standards and the opening up big protests against changes to the welfare of new markets led the capitalists to invest system have taken place across the coun- again. Important also to the recovery was try but political issues like anti-fascism the fact that many firms were allowed to go and Palestine remain the largest organis- bankrupt and capitalists took major losses ing points, especially for young people. on finance and property. Almost 60 000 small and medium went bust in a couple of years, leading to a higher con- centration of capital11. In terms of the wel- fare state, the cutbacks and privatisations continued despite the economic recovery. With EU membership, secured in 1994 by a narrow vote in a referendum, the Swedish ruling class and Social Demo- cratic government had yet another alibi for continuing down the neoliberal path. 10,000 people protest in Stockholm in New EU on the public sector 2010 against the far-right, racist Swedish and privatisation gave them the excuse Democrats taking seats in parliament to implement their agenda without hav- ing to take responsibility for it. In 2006, the first right-wing coalition government Conclusion was elected since the early 1990s. Since the beginning of their administration they In these times of economic crisis and aus- have continued the work that the Social terity, left and Keynesianism Democrats started but now they imple- are back on the agenda. The rise of ment it more brutally. The state-owned in Greece and M´elenchon of the Front De pharmacies have been sold off and opened Gauche in France opens up a new arena to the market, education and health has of left reformist politics. The analysis of been opened to privatisation and changes in action in the Scandi- to social insurance and welfare schemes are navian countries in the post-war period is inflicting huge suffering on the poorest in becoming increasingly important for rev- society. Corporation tax has been low- olutionaries in the argument against the ered continuously and taxes on wealth and possibility of a Keynesian solution to the property have decreased while VAT has in- economic crisis. This involves placing the 11M. Nyberg, Kapitalet.se (Ordfront, Stockholm, 2001), p.207 12D. Ankarloo, V¨alf¨ardsmyter (ETC Frlag, Stockholm, 2010), p. 61

52 Nordic Model of the welfare state in its its for the creation of the welfare state, but historical context, and understanding that only for as long as they had enough prof- it occurred during a period of capitalist its to sustain it. In the current crisis of boom which was in turn a product of the profitability, the ruling class will continue mass destruction of the Second World War. to attack workers’ wages, rights and the The welfare state cannot simply be recre- welfare state, unless there is a fight- back ated, when the same circumstances do not against the capitalist system. prevail. This is why those who genuinely Sweden and the other Nordic coun- seek to reform the state according to the tries will not stay immune to the economic ideals of the ‘old’ Social Democracy or Left meltdown. As the economy slows down reformism end up implementing austerity globally, exports will decline and when in order to return to a ‘healthy’ capital- the Euro periphery defaults the Nordic ism. It is also forgotten that the wealth countries will be hit as banks in the core of the Swedish state in the 1960s and 70s will take the losses on money lent to relied on exports to a global capitalist these countries. Revolutionaries must fight market which oppressed workers all across against all attacks on the working class in- the world (and still does). Increasingly, cluding the attacks on the welfare state the Swedish economy depends on arms ex- which previous generations struggled hard ports to countries like Saudi Arabia, who to win. In addition, the necessity of mov- use Swedish arms to butcher protesters in ing beyond this system and to Bahrain and oppress their own people13. must not be forgotten. Sweden is a good One of the myths of the welfare state is example of the fact that reforms won by that it is seen as a kind of peaceful part- workers under this system can always be nership between bosses and workers. In re- taken away and that a revolutionary over- ality, it was workers’ struggles that forced throw by the working class is the only so- the capitalists to forfeit some of their prof- lution to crisis and oppression.

13http://www.ofog.org/node/1196, (Retrieved 2012-08-22)

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