What is living and what is dead in Swedish ?

Magnus Ryner

Seeming to confirm that politics proceeds through Third Way par excellence, Anthony Giddens, seeks contradiction, the essentials of a neoliberal project to contribute to resolving the difficulties of the Third – the subordination of the social to market discipline Way articulation by fusing neoliberal with – has been consolidated in Europe by social-democratic more communitarian sentiments that draw on recent governments. As yet another political project which developments in ʻreflexive sociologyʼ. is referred to as ʻthe Third Wayʼ, this articulation of In this article I criticize the trajectory of Giddensʼs social democracy with economic liberalism sets high The Third Way: The Renewal of Social Democracy2 demands on ideology, understood in the Gramscian exactly at the level where Giddens seeks to pitch it: sense as a multi-levelled phenomenon that contains and as a social-scientific/philosophical justification of a fuses a wide range of more or less coherent discursive neoliberalization of social democracy. In this endeav- forms from ʻcommon senseʼ to ʻphilosophyʼ. our, I am joining a growing chorus of Left critics.3 Ideology in this sense is a material practice, with The distinct contribution of my critique is its refer- the function to ʻcementʼ (or, better, interpellate) multi- ence to research on Swedish social democracy and its farious, stratified and antagonistic segments of society crisis in the wake of neoliberal globalization. Such a into a broad political direction. Politicians and mass focus on the ʻSwedish modelʼ can be justified for two parties play a strategic role in this context as ʻorganic reasons. First, the Swedish model was for a long time intellectualsʼ, as it is they who take on the task of a paradigmatic case for the European reformist Left, ensuring this coherence. In this practice they deploy a because of its perceived capacity to integrate economic number of discursive techniques at different levels of and distributive rationality. Whilst there was a lot of civil and political society. These range from ʻspin-doc- simple-minded hubris associated with this, I argue toringʼ to internal party work and policy formulation, that this has now resulted in an equally simple-minded and assume different forms depending on what specific disillusionment. My exposition seeks to demonstrate context of civil/political society they are directed at. In that there are many positive lessons for the Left to terms of content, provided that it is possible to achieve learn from the legacy of the Swedish model, which operational coherence at the policy level, heterogeneity can help meet the urgent need of formulating concrete in ʻthe messageʼ and even factionalism are not neces- alternatives. The second reason for focusing on sarily a weakness, but rather a strength, since this is because a closer reading of The Third Way makes increases the range of interests and identities that can it clear that crucial passages in Giddensʼs dismissal of be integrated into the political project. In other words, what he calls ʻtraditional social democracyʼ rest on a the successful mass party elaborates and mediates dif- faulty interpretation of the crisis of the Swedish model ferent and heterogeneous interpretations of ʻcommon in the 1990s. senseʼ, with a coherent and operational political strat- The thesis I seek to defend is that Giddensʼs attempt egy within the state in a way that is also consistent to reconcile radical democratic principles (ʻno author- with socio-economic developments. In this process, ity without democracyʼ) with neoliberal socio-eco- social scientists and philosophers may under certain nomic discipline (ʻno rights without responsibilitiesʼ) conditions play a crucial role, providing ideological is flawed and cannot escape the essential limitations discourse with a special logical coherence, direction on democratic citizenship exerted by commodification. and authority. The cosmopolitan intellectual1 of the This is masked in the Third Way through a sleight-

Radical Philosophy 117 (January/February 2003) 23 of-hand through which very different types of risk This reading allows him to treat the imperative for – ecological, social and financial risk – are treated as democratic civic involvement in ecological risk- if they were one and the same. This conflation of types management as equivalent and synonymous with the of risk ignores not only that the incidence of risk is risk that the individual faces in the management of systematically unevenly distributed in capitalism, but his or her pension, unemployment and health. In this also that the radical democratic citizenship which the context ecological, social and financial risk are treated challenge of ecological risk requires is undermined as if they had the same ontological quality: taking by the exposure to social and financial risk that the responsibility for the environment and oneʼs mutual institutions of the Third Way imply. In short, radical fund become one and the same. democracy presupposes exactly the decommodification From the point of view of political and ideological strategies and social citizenship which Giddens would practice this conflation is cunning, because it recon- have the Left abandon. ciles within the neoliberal social-democratic project It is for that reason that it is interesting to reconsider conflicting economic demands with demands for legiti- the structural reforms of the welfare state that the macy, social representation and civic participation. As Swedish Left mobilized around, and partly imple- a result it justifies on a philosophical-theoretical level mented, in the 1970s and the 1980s. I argue that these a broad alliance of interests that otherwise would not reforms provide important clues for how one might, be reconcilable. This parallels the practical politics of within the context of post-Fordist forces of production ʻNew Labourʼ in Britain, and its aim to be all-inclusive and late-modern patterns of societalization, plausibly and construct a ʻpolitics without enemiesʼ, but ignores construct a politics of ʻno authority without democracyʼ. real and concrete political cleavages and antagonisms Contrary to what Giddens implies, this Swedish model in an unequal society. did not falter due to economic dysfunctions. Rather, [New Labour] speaks as if there are no longer any the crisis was politically determined: the requisite conflicting interests which cannot be reconciled. It power mobilization on the Left did not materialize therefore envisages a ʻpolitics without adversariesʼ. because of the limitations and contradictions implied This suggests that by some miracle of transcendence in the integration of the organizations of the reform- the interests represented by, say, the ban on tobacco ist Left into the management of the capitalist state. advertising and ʻFormula Oneʼ, … ethical foreign This confirms the continued relevance of Poulantzasʼs policy and the sale of arms to Indonesia, media diversity and the concentrated drive-to-global-power analysis in State, Power, . of Rupert Murdochʼs media empire have been ef- fortlessly ʻharmonisedʼ on a Higher Plane, above The conflation of risk politics.5 I will not argue against Giddensʼs principle of ʻno authority without democracyʼ. The problem is rather Of course, one cannot deny that ʻpositive-sum gamesʼ that it is irreconcilable with ʻno rights without respon- and social compromises are possible. Indeed, it is sibilitiesʼ. Giddens does, to be sure, imply the contrary difficult to envisage any social-democratic politics, and links neoliberal economics with radical partici- past, present or future, without it, and indeed the 6 patory politics. The link is made, via Beck, with ʻFordist compromiseʼ was essentially about this. But reference to a generic conception of ʻriskʼ. such positive-sum games are based on particular con- ditions. Giddensʼs conflation of risk obscures rather Providing citizens with security has long been a than clarifies an analysis of these conditions, and concern of social democrats. The welfare state has pretends that there is scope for positive-sum solutions been seen as the vehicle of social security. One where there is none. It is far-fetched indeed to suggest of the main lessons to be drawn from ecological questions is that just as much attention needs to be that Beckʼs conception of ecological risk is of the given to risk. The new prominence of risk con- same ontological quality as the kind of risk that is nects individual autonomy on the one hand with the associated with the management of financial assets, sweeping influence over scientific and technologi- which so severely constrain welfare states through cal change on the other. Risk draws attention to the globalized financial markets. The same goes for the dangers we face – the most important of which we kind of risk that wage-labour faces on the labour have created for ourselves – but also to the oppor- tunities that go along with them. Risk is not just a market. Furthermore, the ʻhuman energiesʼ required negative phenomenon – something to be avoided in the pursuit of a job and in the choice of a mutual or minimized. It is at the same time the energizing fund, on the one hand, and in civic involvement and principle of a society that has broken away from in the reasonable consideration of our actions in light tradition and nature.4

24 Radical Philosophy 117 (January/February 2003) of ecological risk, on the other hand, are hardly one Giddens sets utterly unreasonable demands on the and the same. In fact one can reasonably follow the citizen. One wonders where one might find Giddensʼs classical works by Marx and Polanyi on the nature of heroic competitive, flexible and mobile individual who alienation in the capitalist wage relation to argue that at the same time is a nurturing parent, rooted in a these ʻhuman energiesʼ stand in a relation of mutual community, in which s/he has time and energy to conflict and contradiction to one another. This is invest civic involvement, and who in this context especially the case for the socially unprotected worker would refrain from engaging in power-charged strate- without ʻhuman capitalʼ, who enters the labour market gic language games driven on by economic interests under subordinate conditions. Moreover, if it is at all imposed by necessities as defined by the terms of possible to reconcile them, it requires a continued market participation. It is as if the entire weight of commitment to the ʻtraditionalʼ social-democratic the social contradictions of modern capitalism is to project of humanization of capitalism – that is, the be borne by the individual, who has no social rights decommodification that Giddens rejects in his moral- at all to claim ʻwithout responsibilitiesʼ. The highly hazard argument. unequally distributed incidence of this weight, which The fundamental point was already made by Aris- stems from the unequal terms on which individuals totle.7 According to him leisure is required for civic participate in the labour and capital markets, is too involvement and ethical deliberation in the polity. This obvious to require further elaboration. means that ʻfree and equalʼ citizens must be certain Symptomatically, it is on issues such as these that that the satisfaction of their basic human needs are Giddens draws back from Habermas and Offe. In con- guaranteed and hence are not dependent upon success trast to Giddens, however, Habermas and Offe continue in the marketplace. But, furthermore, capacities for in this context to be concerned with the dangers of the practical reason, affiliation with fellow human beings, commodity logic of the capitalist economic system and relatedness to nature must also be fully encour- and its ʻcolonizationʼ of these communal networks. aged and nurtured, and the autonomy of humans as In recent work, Offe is particularly concerned with individual must be respected. Only when these needs the threat of social marginalization that is inherent are satisfied can humans leave the ʻrealm of necessityʼ in private insurance. Such insurance gives powerful and enter the ʻrealm of freedomʼ as citizens capable incentives to those with purchasing and market power of civic involvement in a democratic polity. What to exclude others, in order to reduce risks and costs is more, in a democratic society these needs must on premiums. More generally, neoliberal deregulation be secured for all citizens to organize themselves promotes residual measures, where only ʻthose in democratically and ethically in society. In the Eco- needʼ will be protected. This, however, tends to con- nomic and Philosophical Manuscripts of 1844 it was stitute different welfare constituencies as fragmented Marxʼs point exactly that the leisure required, and and marginal groups, who can easily be targeted as these ʻarchitectonic functionsʼ, could not be adequately minority ʻspecial interestsʼ when further cutbacks are produced for the possessive individualist of capitalist called for, or as neoliberal political constituencies call society. Adequate amounts of leisure and ʻsecurityʼ for ʻtax cutsʼ. This perpetuates rather than mitigates are certainly not granted to the wage labourer. Further- the fragmentary tendencies of post-traditional socie- more, though, those who are affluent in capitalist ties.8 Whilst Giddens claims that the ʻThird Wayʼ is society are also constantly compelled to face the risks committed to prevent such social exclusion, he does and competition of the market. As a result, all their not provide any reasonable evidence that it is up to energies have to be concentrated on the reproduction this task. of the conditions necessary for their existence, and the development of the architectonic functions are The Swedish model thus neglected. And, indeed, social welfare reform It is in this context that I make the case for reconsidering constituted exactly a response to this Marxist challenge the legacy of the Swedish model. My argument should to bourgeois society. not be seen as an apologia for postwar Swedish social The problem with Giddensʼs conflated extension of democracy. Sweden has been riddled with the tenden- Beckʼs management of ecological risk to the manage- tial accumulation, rationality and legitimation crises of ment of risk in the labour and financial markets is that Fordist welfare capitalism, and its original foundation the latter type of risk corresponds exactly to the kind in a homogenous industrial working-class project is, as of commodification of human life that undermines Giddens suggests, anachronistic. Nevertheless, as neo- the architectonic functions. The result of this is that institutionalism argues, different welfare state regimes

Radical Philosophy 117 (January/February 2003) 25 do generate different trajectories of socio-political ity growth are rewarded with lower wage increases development and the universal welfare state regime than they would have to pay in a ʻfreeʼ labour market of the Swedish model provides a more propitious at full employment, where the labour supply would framework for realizing a politics of ʻno authority be scarce. The effect of this solidaristic wage policy without democracyʼ than Giddensʼs Third Way.9 More- is a stimulation of the structural transformation of over, contrary to what Giddensʼs and Lindbeckʼs moral the economy and a diffusion of core technologies and hazard thesis suggests, such a reconstitution of the employment. Resources are more rapidly transformed universal welfare state can be made compatible with from the low-productivity firms to the high-productiv- post-Fordist economic rationality. We do not need to ity firms through the ʻtransformation pressureʼ that succumb to ʻno rights without responsibilitiesʼ. When negotiated wages exert.12 The transformation is further considered dialectically, the Swedish model can con- enhanced by public investments in selective labour tinue to serve as a guide for the Left, because within market policy, which ensures that the labour force is it is an immanent logic of decommodification that also trained according to the new labour demand. Grants reflexively considers ex ante the terms of its economic are also provided for the relocation to new jobs. This is reproduction. the ʻsupply sideʼ of the model that minimizes structural Giddensʼs characterization of social democracy as and ʻfrictionalʼ unemployment. On the demand side, having no conception of ʻthe supply sideʼ and productiv- macroeconomic policies are pursued to prevent cycli- ity is a caricature, probably based on the comparatively cal unemployment. When labour demand in industry unsuccessful experience of British Labourism. Social- is saturated because of increased capital intensity, democratic doctrines have indeed emphasized the idea the state expands welfare state services (especially of a progressive humanization of industrial capitalism. in childcare, health care, education and the care of But these doctrines were also simultaneously con- the elderly) and employment. Solidaristic wage policy cerned with the development of the productive forces, and hence with the ʻsupply sideʼ, as well as ʻdemand sideʼ planning measures that would achieve productivity growth and socially reflexive rationalization. This is, for example, the case with the ʻexpansive wage policyʼ of the metalworkersʼ union in .10 The same principle appears in a more developed form in the Swedish ʻRehn–Meidner modelʼ, a theoretical elaboration of thoughts on ʻsolidar- istic wage policyʼ that the Swedish trade union began to develop in the 1930s.11 The Rehn–Meidner model sought to make a ʻhumanizationʼ of capitalism compatible with economic rationalization, through mutually reinforcing policies that modified the capital- ist wage relation. The key ingredient is an unconditional commitment by the government to ensure full employment and universal social programmes based on ʻsocial citizenshipʼ prin- ciples. In this context, trade unions pool their bargaining power in centralized negotiations with employers and seek to maximize the wage share for workers in the economy as a whole. Wage negotiations generate only one central wage bargain for the entire economy, based on the principle ʻequal pay for equal workʼ. This means that low-productivity firms cannot afford the going rates and are forced out of business. But firms with high-productiv-

26 Radical Philosophy 117 (January/February 2003) war politico-economic development, and was remarkably successful in ensuring a combina- tion of economic growth, equality and social security.15 From the economic point of view, the Achil- les heel of the Rehn–Meidner model can be located at the nexus of finance and investment. The imperatives of the moral economy implied a general profits squeeze as wage drift had to be avoided. In this context, there is no guar- antee that capitalists would be motivated to reinvest on a level sufficient to maintain full employment. To redress this problem, the gov- ernment pursued a deliberate low-interest-rate policy, which in the context of a full-employ- ment economy in the postwar period required heavy controls and regulation on the financial and foreign exchange market. As a result of increased concentration of capital, internation- alization of production, and increased demand for finance in the twilight of the Fordist period, between the public and private sectors and increased incentives and capacities to evade capital con- taxes then partially take over the function of exerting trols and find alternative investment opportunities transformation pressure. Alternatively (or in combina- correspondingly increased. As a result, Swedish trade tion with the latter) work-time is reduced: ʻsolidaristic unions demanded a progressive socialization of the 13 work policyʼ. finance and investment function. Apart from this rationale for productivity, the First, this took the form of publicly managed Rehn–Meidner model also implies a rationale of pension funds, financed by surcharges on capital. These redistribution and decommodification. This is because pension funds would provide alternative source of work becomes a citizenship right and solidaristic wage finance, alternative to those of banks and shareholders. policy eliminates low-wage and precarious employ- Later, it was argued that a more consistent solution of ment. The conception of ʻequal payʼ is not determined the problem required ʻwage earner fundsʼ. The basic by the market here, but by the subjective conception idea here was that ʻexcessʼ profits that resulted from of a ʻjust wageʼ of the wage-earner collective, as unions not seeking wage increases corresponding to defined and organized from within encompassing trade productivity growth in high-productivity firms would 14 unions. This moral economy defines the terms of be earmarked for the emission, or, in more moderate legitimacy for trade unions in wage bargaining. It versions, purchase, of shares that would become the provides an incentive for unions to set the macro-wage property of wage earners via trade unions. Hence, high, so that the room for manoeuvre of market- holding companies (owned by workers) would become determined wages (ʻwage driftʼ) is minimized. As the major investors in the economy and, in the most long as an appropriate macroeconomic stance is kept, consistent applications, the result would be the transi- this is productive because it facilitates transformation tion to market socialism in Sweden.16 The wage-earner- pressure. It should be noted that the model ought to fund proposals were, however, defeated in political be an instance of ʻmoral hazardʼ. Wages are not con- struggle, and the Swedish social-democratic party lost tingent on the performance of individuals. The state is its nerve and retreated from the proposal.17 unconditionally committed to pursue full employment. Underpinning the Rehn–Meidner model and its Should an individual nevertheless not obtain a job, or proposed extensions was a particular ideological–intel- should wage-labour be insufficient to meet the publicly lectual perspective that synthesized insights from defined ʻincome normsʼ (caused by health problems or Marxian and institutionalist political economy in order child-rearing expenses, for example), then universal to redress capitalist ʻmisrationalizationʼ.18 The latter social insurance payments are available. This model notion was coined by Austro-Marxist Otto Bauer, who provided the chief policy paradigm for Swedish post- was invoked in debates on strategy in the Swedish

Radical Philosophy 117 (January/February 2003) 27 labour movement in the 1930s. According to Bauer, with contradictions. Though formally justified in terms misrationalization occurs when there is a discrepancy of ʻindividual freedomʼ, this type of welfare state is between the reduction of private-economic costs gener- by necessity selective and intrusive, as it is forced ated by rationalization in individual enterprises and to economize on scarce welfare state resources and societal costs. The reduction of costs of production to subject its clients to surveillance that restricts and for the individual capitalist is not necessarily the violates their freedom. same as the reduction of costs for society, and in The radical implications of Otto Bauerʼs reformism advanced, functionally differentiated and organically should not be underestimated, because it implies a complex capitalism the tendency is towards increased highly conditional tolerance of capitalist social relations gap between these costs. This tendency is due to wage- and a fundamental challenge to the absolute discretion labour being a commodity in capitalist society, which of private ownership of the means of production. In the capitalist purchases only for the limited duration the Swedish context, capital has continuously fought under which s/he needs it, whilst the reproduction of off the most radical and logically consistent political wage-labour takes place outside this relation. Hence implications of this thinking, as in the case of the capitalists do not incur the costs of this reproduction, wage-earner funds as well as Gunnar Myrdalʼs notions which rather is borne by society as a whole (and in of democratic planning in the immediate postwar the case of laissez faire the cost is distributed to each period. Nevertheless, Swedish social democrats in the individual wage-labouring household). The discrep- postwar period were sufficiently strong to maintain ancy between private and social rationalization can the integral welfare state principle in the form of the only be bridged when economic production and social Rehn–Meidner model. In other countries, this control reproduction are unified within the same organizational of the ʻsupply sideʼ has been weaker – particularly meta-principle, with increasingly socialist traits. in Britain, where Labour in the end only came to In this ideological conception, rationalization as a subscribe to a vulgar variant of demand-side Keyne- principle is affirmed. However, the naive equation of sianism, without any elements of integral planning. rationalization with the unleashing of market forces is But this ʻretreat to the demand sideʼ was not due to profoundly problematized. What Swedish social demo- a lack of an integral perspective in other countries. crats took from Bauer as a guiding principle in their It rather expressed a compromise from the position pragmatic search for appropriate welfare state mechan- of political weakness. What Giddens characterizes as isms was the idea that economic and social rationaliz- the essence of ʻtraditional social democracyʼ is, then, ation had to be viewed from an integral perspective no such thing. It is the dilution of social democracy and that a common organizational meta-principle was in its postwar compromise with economic liberalism. needed (ʻplanningʼ). This required an integral welfare His remedy for the crisis of this hybrid form is further state that had at its regulatory core institutions that hybridity. could promote economic rationalization at the same I would maintain that the integral welfare state time as this rationalization was checked for social perspective, which centres on a decommodification of concerns. Viewed from this perspective, Giddens does the wage-labour relation, is as relevant as it ever was. not so much infuse Left discourse with a conception of If we accept Giddensʼs contention of a more pluralist, rationalization on the ʻsupply sideʼ, which previously heterogeneous and ʻdenaturalizedʼ society in which was absent; rather, he loses the important distinction social policy becomes more complex and difficult between private–individual and social rationalization to implement, because norms must be discursively and embraces the simple-minded and narrow market established, then it is more universal programmes and conception of rationalization. In contrast to an integral entitlements that are needed, combined with regulatory welfare state perspective, this results in a ʻresidualʼ policies that prevent capitalist misrationalization ex welfare state perspective. Here, the market mecha- ante.20 It is a fallacy to think that cultural hetero- nism is not modified ex ante but is construed as the geneity is antithetical to universalism. Only if social basic mechanism of social organization. Welfare state entitlements are formulated on a universal level can measures are merely used as ʻcorrectivesʼ ex post when they be sufficiently abstract to include a multifari- people cannot for ʻvalid reasonsʼ manage to make ends ous range of identities and interests.21 Only through meet through market participation. This is the welfare abstract social policy norms can the welfare state state type that has characterized especially Anglo- ʻdo its jobʼ without refraining from the impositional Saxon societies.19 If anything, Giddens has merely encoding of ʻcorrect livingʼ on social groups. Such advocated a purer type of residualism, which is riddled general norms are also necessary in order to allow the

28 Radical Philosophy 117 (January/February 2003) state to devolve the implementation of welfare policy would have become yet stronger. In terms of social to different groups, so that they can gear the general provisions, ambitious proposals were put forward in the entitlements towards their particular needs and situa- early 1980s to decentralize the administration of social tion. Moreover, such a universal–abstract conception of services and to grant local clients influence over their social citizenship is needed to prevent social divisions administration. If they had been successfully combined and distributive conflicts between different groups.22 It with the co-determination reforms, this could have is only through decommodification and this broader resulted in the freeing up of leisure time (through, for conception of social citizenship that one can envis- example, fully compensated reductions of the working age adequate architectonic capacities emerging, which week, and work sabbaticals), which would have resulted would allow citizens to cope, for example, with the in real democratization of welfare state provision. environmental risks that Giddens raises by invoking In short, these reforms would have gone a long way Beck.23 But to be meaningful at all in this context, towards realizing the principle of ʻno authority without universal entitlements need to be set at high levels, democracyʼ.27 and services need to be of a high quality. This means that they are costly and that they require higher tax Viability and moral hazard rates and rates of public consumption than Giddens is If we accept that the Swedish model provided an willing to contemplate.24 Universalism, as opposed to adequate mode of economic regulation in the Fordist redistribution through means-testing, also means that period, does it provide the basis for a viable mode in the prevention of poverty is best resolved ex ante at a ʻpost-Fordistʼ era where the terms of global capitalist the level of the wage relation. Qua the Rehn–Meidner competition have intensified, where there is less scope model, this requires a tight discipline on capital and to tolerate ʻmoral hazardʼ? The answer is yes.28 First, in its most consistent application implies a socializa- Giddensʼs and Lindbeckʼs claims notwithstanding, tion of finance and market socialism. In other words, there is no problem of ʻmoral hazardʼ. If there were, social wage relations need to be modified before the then we would expect Sweden to have had a higher capitalist labour market generates its external effects number of vacancies (unfilled jobs) at a given rate on the lifeworld. of economic activity and unemployment than other This is why the Swedish New Left did not oppose advanced capitalist countries in the 1970s and 1980s. the universal welfare state so much as seek to extend According to OECD statistics, the exact opposite is it in the 1970s and 1980s and to fill it with democratic the case.29 Second, a modified Rehn–Meidner model content, through reforms in the areas of workplace demonstrably provides an appropriate framework for a democracy and social service delivery. This project progressive post-Fordism. As regulation theorists have rested on a broad-based ʻwage-earner allianceʼ which argued, post-Fordism does not inherently require a encompassed blue- and white-collar workers, and an ʻnumerically flexibleʼ and commodified labour market. increasingly heterogeneous welfare state constituency ʻNegotiated involvementʼ constitutes an alternative that nevertheless remained committed to universalism.25 post-Fordist trajectory. Here co-determination for The workplace reforms centred on the Work Envi- labour on the shop floor, operating in tandem with ronment and Co-determination Acts, which extended a solidaristic wage policy and active labour market considerable powers to local trade unions and shop policy à la Rehn–Meidner model, provides an alterna- stewards to shape workplace organization. Work-safety tive form for functional flexibility.30 This was verified representatives were, for example, given authority to in Swedish industrial experiments of the 1980s.31 This shut down unsafe work, and it was employers that in turn can underwrite high wage employment in a carried the burden of proof in tripartite tribunals to public social-service sector, which provides use values show that work was safe and could be recommenced. for social reproduction.32 Hence, this model does not The relatively strong language of this legislation and presuppose ʻthe male-breadwinner modelʼ that Giddens of the Work Safety Laws, along with the strong local attributes to ʻtraditional social democracyʼ. and central position of Swedish trade unions (with What, then, was the problem? Clearly there was a unionization rate well above 80 per cent) and full one, because events between 1989 and 1994 shattered employment, ensured that these local provisions indeed the Swedish model as a paradigm. They started with translated into real power to shape working life, at accelerating inflation 1989–90, fuelled by strikes and least to a degree, in terms of the adaptation of new wage rivalry between different unions that fragmented technology and the organization of work time.26 If wage bargaining coordination. This, in turn, led to a wage-earner funds had been implemented, this power run on the Swedish currency, which compelled the

Radical Philosophy 117 (January/February 2003) 29 government, for the first time since the budget of 1932, ʻresponsibleʼ coordinated bargaining was severely to give up its full-employment commitment in favour limited. At the same time, employers had in the 1980s of price stability. The austerity measures that ensued adopted a neoliberal ideological orientation. Hence dovetailed with the world recession and a crisis of they had deliberately begun to insist on a decentral- the financial system as borrowers defaulted on debt ization of bargaining, and they resisted any attempt to en masse. This exacerbated currency collapse further maintain a solidaristic wage policy. Increasingly they and forced overnight interest rates up to the unbeliev- took the view that wages should be a tool of individual able level of 500 per cent in late 1992. Subsequently, managers. As a result, they used the increased struc- Sweden experienced negative growth rates through tural power that transnational production implied and 1994. Whilst the economy recovered in the late 1990s, increased divisions within the wage-earner collective the policy routines of the Swedish model were aban- generated by procyclical economic policy and the doned: unemployment remained high, social insur- ensuing wage drift to decentralize bargaining. This ance replacement ratios were reduced, and collective was the determining factor behind the unravelling bargaining was decentralized along sectoral lines. of the public and private and white- and blue-collar Swedenʼs post-Fordist development shifted towards a factions of the wage-earner alliance.35 neoliberal trajectory. Nothing symbolized this more But these structural developments of ʻglobalizationʼ than the shutdown of the Kalmar and Uddevalla plants and the deliberate actions of business must be actively in 1994, as Volvo eliminated spare capacity during the constituted and enabled through the state. Here we deep recession. find the most interesting part of the story of Swedish But, as argued above, contrary to the neoliberal neoliberalism in the 1990s: the remarkable ease with thesis, the causes of the crisis cannot be reduced to which the Swedish social-democratic personnel in the microeconomic dysfunctions and moral hazard on Finance Ministry and Central Bank not only acted to the labour market. Rather, the propitious tendencies pre-empt the implementation of wage-earner funds, towards a progressive post-Fordism were not realized but also deregulated financial markets and, especially, because of the failure to institutionalize a support- deliberately destabilized the terms of solidaristic wage ing mode of regulation based on the reforms of the policy through a monetary and borrowing policy that 1970s discussed in the previous section. This failure deliberately increased the sensitivity of Swedish interest was, in turn, an outcome of social struggle, where rates to global financial markets.35 The broader purpose the wage-earner alliance associated with the latter of this so-called ʻnorms-basedʼ monetary policy was reforms was divided and defeated by forces led by to contain inflation by exerting market discipline on transnationally mobile Swedish capital. This resulted collective actors, such as unions and social-service in a hybridic, unstable and contradictory regulation, agencies in wage and budget bargaining.36 This is with a crisis logic that progressively tended towards clearly a variant of ʻdisciplinary neoliberalismʼ,37 and ever more neoliberal solutions. Critical in this context it represents a redefinition by the Ministry of Finance was the interpellation of strategically important state and the Central Bank of the patterns of social repre- apparatuses and social-democratic personnel into the sentation in the state. In effect, the Ministry of Finance neoliberal hegemonic project – especially those located abandoned its support of solidaristic wage policy. The in the Ministry of Finance and the Central Bank. This tendencies towards deeper commodification of the pre-empted the progressive project primarily organized wage relation were thus enforced. around the trade unions, the social policy complex The structural power mobilized by this form of rule and the Ministry of Labour. It would be overly vol- was effectively used to create a ʻcrisis consciousnessʼ untarist merely to conclude that ʻthe leaders betrayed at strategic junctures. Previously inconceivable deci- usʼ. Rather, it underlines the importance of structural sions ʻto calm the marketʼ were taken in the context features of social relations of capitalist accumulation, of rapid capital flight, including the decision formally including those of the state. to abandon the full-employment commitment in 1990. Increasing internationalization of production, the The basic fallacy was that disciplinary neo-liberalism collapse of Bretton Woods, and the globalization of would enhance incomes policy. Short-termism and finance conspired to undermine the precarious relations the speculative nature of international financial flows, between finance and investment that the Rehn–Meidner however, totally undermined any predictability for model presupposed.33 This undermined the prospects bargaining in the late 1980s. Apart from the effect to determine ʻjust wagesʼ in accordance to the trade- of economic overheating resulting from procyclical union ʻmoral economyʼ. As a result the scope for policy, the defensive distributive struggles of increas-

30 Radical Philosophy 117 (January/February 2003) ingly fragmented trade unions generated wage-push As the implausibility of Giddensʼs discussion of risk inflation, which exacerbated the problem. Of course, shows, the politics without enemies ʻbeyondʼ left and this provided the basis for blaming the trade unions right is a mirage. At best, and disregarding the threat for the crisis, and it is in this context that one should of the extreme Right, we are faced with a struggle consider Lindbeckʼs moral hazard argument. However, between capitalism and commodification on the one the largest source also of this conjunctural instability hand, and democracy and decommodification on the can be traced to financial capital. Bank lending was other, where the former has the upper hand. But this overextended as a result of deregulation. This resulted is not because of objective and intransitive realities. in bad loans and defaults in the deep recession of the Pluralist and democratic market socialism is possible, early 1990s. Capital deregulation and the strategy to and the Left does not have to reinvent the wheel in increase Swedenʼs interest rate sensitivity thus seri- this endeavour. ously backfired. The Swedish experience does, however, underline The policy of the Ministry of Finance is so anti- the difficulty of engaging in a war of position in the thetical to our understanding of Swedish social-demo- capitalist state. In my critique of Giddens I argued cratic economic rationality that it is tempting to invoke that when the real causes of the crisis of the Swedish the term ʻfalse consciousnessʼ. The policy clearly con- model were understood, his argument amounted to a tradicted the terms of solidaristic wage policy, which tautology: neoliberalism is necessary because of neo- also has been critical to the continued electoral hegem- liberalism. This points to a powerful dialectic within ony of Swedish social democracy, based as it is on a the capitalist state: when the labour movement and the ʻwage-earner allianceʼ.38 The reasonable interpretation Left have managed to achieve a degree of decommodi- is that the Ministry of Finance acted according to its fication and generated hybridic forms of regulation, ideational convictions; this, then, would be a case of ʻscientificʼ analysis in the state finds ways arbitrarily the permeation of transnational neoliberal hegemony in to blame and purge the element of decommodification the practice of Swedish social-democratic elites. in moments of crisis. We can see this in the fact But why did social democrats at the ʻcommanding that the Left has been blamed for the crisis of the heightsʼ of economic regulation become neoliberals? I weak ʻdemand-sideʼ variants of Keynesianism, when have argued at greater length elsewhere that this recep- these were in fact creations of the Right. But we tiveness to neoliberalism was generated as a result can also see it in the way that the economic elites of of ideational developments within social-democratic the comparatively strong Swedish labour movement circles during the golden age of Fordism itself.39 Under were progressively interpellated by the institutional the surface of policy continuity, the way of arguing materiality of the capitalist state and rejected their and justifying the mode of regulation changed. It own creation. changed from the Marxian–institutionalist conception to a piecemeal social engineering conception. As a Notes result of this, the crisis of the 1970s was not, as in the I thank Mark Neocleous for comments on previous drafts. trade unions, interpreted as a crisis of capitalism, but 1. Pace Gramsci, Selections from the Prison Notebooks, as a falsification of Keynesian ideas, which verified trans. and ed. Q, Hoare and G. Nowell-Smith, Inter- national Publishers, New York, 1971, pp. 56n and 374. the ʻnull hypothesisʼ of monetarism. This shift in 2. Anthony Giddens, The Third Way: The Renewal of So- the epistemic form of economic policy discourse, as cial Democracy, Polity Press, Cambridge, 1998 (hence- opposed to content, corresponds to the period in which forth TW). the Swedish social democrats established themselves 3. E.g. Stuart Hall, ʻThe Great Moving Nowhere Showʼ, Marxism Today, Special Issue, November/December as the managerial cadre of the capitalist state. 1998; Chantal Mouffe, ʻThe Radical Centre: Politics Thus there was an impasse in the traditional social- without Adversaryʼ, Soundings 9, 1998; Nikolas Rose, democratic project in Sweden. But the impasse does ʻInventiveness in Politicsʼ, Economy and Society, vol. not pertain to the policy of decommodification, as 28, no. 3, 1999; Riccardo Petrella, ʻMan nannte es den dritten Wegʼ, Le Monde Diplomatique (German-language Giddens suggests. Their decommodification strategies version), 6 October 1999; Alex Callinicos, Against the remain the lasting contributions of Swedish social Third Way, Polity Press, Cambridge, 2001. democrats to socialist thought. It rather pertains, as 4. TW, pp. 62–3. 5. Hall, ʻThe Great Moving Nowhere Showʼ, p. 10. See Poulantzas suggests, to the ʻinstitutional materialityʼ also Mouffe, ʻThe Radical Centreʼ. of the capitalist state sui generis and its attendant 6. E.g. Michel Aglietta, A Theory of Capitalist Regulation, discourses, which tends to capture the reformist labour New Left Books, London, 1979. movement.40 7. Martha Nussbaum, ʻAristotelean Social Democracyʼ, in B.R. Douglas et al., Liberalism and the Good, Routledge,

Radical Philosophy 117 (January/February 2003) 31 London, 1990, be maintained, these problems can be redressed. See, 8. Claus Offe, Modernity and the State, Polity Press, Cam- inter alia, Just Institutions Matter, and ʻSocial Capital bridge, 1996, pp. 105–20; 147–200. in the Social Democratic Welfare State: The Swedish 9. See especially Ulf Himmelstrand et al. Beyond the Wel- Model and Civil Societyʼ, Paper Presented at the 11th fare State, Heineman, London, 1981. International Conference of Europeanists, Baltimore, 26 10. See Peter Swenson, Fair Shares: Unions, Pay and Poli- February–1 March 1998. tics in Sweden and West Germany, Cornell University 28. See Ryner Capitalist Restructuring, ch. 2, for further Press, Ithaca, 1989. elaboration. 11. Anders L. Johansson, Tillväxt och klass-samarbete, 29. OECD Employment Outlook, OECD, Paris, 1992, Tiden, Stockholm, 1989; Gösta Rehn, ʻEkonomisk poli- pp. 62–6, cited in Bertil Holmlund, ʻArbetslösheten tik vid full sysselsättningʼ, Tiden 3, 1948; Rudolf Mei- – konjunkturfenomen eller systemfel?ʼ, Swedish Min- dner, ʻLönepolitikens dilemma vid full sysselsättningʼ, istry of Finance, Nya villkor för ekonomi och politik, Tiden 9, 1948; LO, Fackföreningsrörelsen och den fulla SOU 1993:16 bilaga 1, pp. 419–21. sysselsättningen, LO, Stockholm, 1951. 30. Daniélle Leborgne and Alain Lipietz, ʻNew Tech- 12. Lennart Erixon, ʻRehn-Meidnermodellen: En tredje väg i nologies, New Modes of Regulation: Some Spatial Im- den ekonomiska politikenʼ, Arbetslivscentrum. Research plicationsʼ, Environment and Planning D: Society and Report 4, 1994. Space 6, 1988. 13. Anna Hedborg and Rudolf Meidner, Folkhemsmodellen, 31. Especially noteworthy are the Kalmar and Uddevalla Rabén & Sjögren, Stockholm, 1984; Wallace Clement plants of Volvo, to which Leborgne and Lipietz also and Rianne Mahon, eds, Swedish Social Democracy, refer. These plants combined a remarkable departure Canadian Scholarsʼ Press, Toronto, 1994. from conveyor belt technology, returned considerable 14. Swenson, Fair Shares. elements of crafts production and decision making to in- 15. Sven E. Olsson, ʻSwedenʼ, in Peter Flora, ed., Growth dividual workers in a framework of strong union negoti- to Limits, De Greuyter, , 1987. ating power on the labour process and work environ- 16. Rudolf Meidner, ʻOur Concept of the Third Way: Some ment, with exceptional productivity growth and high Remarks on the Socio-Political Tenets of the Swedish quality output. As similar experiences in other sectors Labour Movementʼ, Economic and Industrial Demo- show, these kind of experiments are not only viable in cracy, vol. 1, no, 1, 1980; Jonas Pontusson, The Limits the automobile sector. of Social Democracy, Cornell University Press, Ithaca, 32. See Esping-Andersen, The Three Worlds of Welfare 1992. Capitalism. Esping-Andersen has recently abandoned this position, but he does so on the basis of the faulty 17. Jonas Pontusson, ʻRadicalization and Retreat in Swedish argument of ʻmoral hazardʼ which has been criticized Social Democracyʼ, New Left Review 165, 1987. here. See, for example, Welfare States in Transition, 18. For an elaboration, see Magnus Ryner, Capitalist Re- SAGE, London, 1996. structuring, Globalisation and the Third Way, Routledge, 33. Internationalization of production undermined the London, 2002, chs 3 and 7. relationship between wage moderation in high pro- 19. Gosta Esping-Andersen, The Three Worlds of Welfare ductivity sectors and future domestic investments. The Capitalism, Cambridge, Polity Press, 1990. breakdown of Bretton Woods undermined the precari- 20. Offe, Modernity and the State. ous balance between international demand and domestic 21. Bo Rothstein, Just Institutions Matter, Cambridge Uni- macroeconomic balance. In particular, globalization of versity Press, Cambridge, 1997. finance imposed higher, and above all more unstable, 22. On the integrative qualities of welfare universalism and unpredictable interest and exchange rates. the gender nexus, see Diane Sainsbury, Gender, Equal- 34. See especially my ʻEconomic Policy in the 1980sʼ, in ity and the Welfare State, Cambridge University Press, Clement and Mahon, Swedish Social Democracy. Cambridge, 1996. I have advanced similar arguments 35. Together with a vow not to devalue again, the govern- pertaining to the welfare state and immigration, based ment declared it would no longer borrow abroad di- on the research by Keith Banting. See inter alia Ryner, rectly to finance the debt or cover balance-of-payments ʻEuropean Welfare State Transformation and Migrationʼ; deficits, but would instead only borrow on the domestic and Keith Banting, ʻLooking in Three Directions: Mi- market (i.e. only issue bonds in Swedish crowns). This gration and the European Welfare Stateʼ, in Michael meant that in order to maintain a balance of payments, Bommes and Andrew Geddes, eds, Immigration and the Swedish interest rate would have to increase to a Welfare: Challenging the Borders of the Welfare State, level where private agents would hold bonds or other Routledge, London, 2000. debt in Swedish crowns, despite the devaluation risk. 23. Offe, Modernity and the State. 36. Swedish Ministry of Finance, Valutautflödena 1985 och 24. Rothstein, Just Institutions Matter. den ekonomiska politiken, Ds.Fi. 1985: 16. 25. Himmelstrand et al., Beyond the Welfare State. 37. Stephen Gill, ʻReflections on Global Order and Socio- 26. Guy Standing, Unemployment and Labour Market Flex- historical Timeʼ, Alternatives 16, 1991. ibility: Sweden, ILO, Geneva, 1988. 38. Andrew Martin, Wage Bargaining and Swedish Politics: 27. There are, of course many potential pitfalls here and The Political Implications of the End of Central Negotia- ʻdevil in the detailʼ that go beyond what is possible to tions, FIEF, Stockholm, 1993. discuss here. Especially recommended on this is the 39. Capitalist Restructuring, ch. 7. work of Bo Rothstein, whose overall conclusion is that 40. Nicos Poulantzas, State, Power, Socialism, New Left as long as universalism and decommodification can Books, London, 1978.

32 Radical Philosophy 117 (January/February 2003) Centre for Research in EVENTS Modern European Philosophy Jan-March 2003

Capitalism and Philosophy Lab Research Seminars 7th Annual Conference

Saturday 25 January, 2–6pm Questioning, Critique, Construction: ʻStructure and Dialecticʼ 6 February, 6–8 pm Aspects of Philosophy Jason Barker, Ray Brassier, ʻHow the West was One: Christian Kerslake Heidegger and the Greek Modern European Philosophy Origins of Continental Phil- encompasses a diverse as- The start of a regular workshop on sortment of traditions, osophyʼ approaches and concerns. approaches to capitalism in French Stella Sandford This conference will consider philosophy since the 1960s, placing what is at stake in the differ- Althusserianism back into its proper 20 February, 6–8 pm ences between three of its philosophical context. main tendencies today. MMMarx’Hegel s Logic and Marx s Future topics will include: ʻ ʼ ʼ Saturday 15 March, Technoscience and capital, Capital: The Logic of Capi- 10 am–6 pm Capitalism and nihilism, talʼ Capitalism and psychotherapy, Rep- Christopher J. Arthur Speakers include: etition and history Jay Bernstein (New School for Social Research) Saturday 29 March, 2–6 pm Rudi Visker (University of Leuven) ʻMilitant Subjectivityʼ Speakers: to be confirmed £25 waged, £12 unwaged

Attendance by arrangement. Contact: Dr Ray Brassier ([email protected]) Research Associate, Centre for Research in Modern European Philosophy, Middlesex University, White Hart Lane, London N17 8HR, Tel. 020-8411-6220

Radical Philosophy 117 (January/February 2003) 33