Sweden's welfare state; myths and realities: a Marxist analysis of the `Nordic Model' Madeleine Johansson In the midst of the global economic cri- education with universal grants and free sis and the age of austerity, you sometimes health care for under 20 year olds. These hear comments about how the `Nordic things should not be dismissed for they Model' is different and Sweden 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 welfare state. 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 capitalist state, where the market madness can be tamed and a wel- Origins of the Welfare State fare state can foster a more equal soci- Mainstream 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- Labour Party 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 free trade liberals such as vision often presented. In fact, inequality Johan August Gripenstedt who supported is rising, unemployment 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 wealth, while a quarter of the popula- Social Democracy, 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, Stockholm, 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 Norway and it is estimated that between the 1860's and Denmark. 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 capitalism', 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 capital. 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 companies 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 recession. 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 money continued to be spent on mili- being a peaceful place, Sweden has always tary purposes throughout the Cold war 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.