Sweden Reappraised

Sweden is among the most prosperous nations in Europe, while Italy trails far behind: the differences between Scandinavian and Mediterranean social-democracy.

Sweden's capital city

Sweden is among the most prosperous nations in Europe, while Italy trails far behind: the differences between Scandinavian and Mediterranean social democracy.

Sweden has been receiving much attention of late in view of it being perceived as an “outlier” among European nations for its comparatively measured response to the Covid-19 pandemic. By deciding against placing its citizens under a forced lockdown, thus avoiding bringing its economy to a halt and inflicting serious damage for the foreseeable future, it has become an object both of praise and soft denunciation throughout much of the mainstream European press.

The main target of these attitudes has been Dr. Anders Tegnell, the country’s chief epidemiologist. Some have tattooed his face on their arms for being the lone soldier facing down the armies of tyranny. Others see him as a dangerously irresponsible individual who has condemned many of his fellow countrymen to death. But these mutually fanatical positions are perhaps both symptoms of a much subtler feeling of envy towards the country beyond the Baltic Sea.

This would, after all, be understandable. Sweden has emerged from the crisis with fewer total deaths per million than locked down countries: a forecasted collapse in GDP of 6,1 per cent compared to the 7,4 per cent European average; a public health-care system no more strained than elsewhere; and its civil liberties and liberal tradition still intact. Furthermore, Prime Minister Stefan Löfven’s reliance on civic responsibility and individual maturity over state coercion has allowed Swedes to retain a certain degree of dignity. By comparison, the situation in countries such as Italy, Spain or France, where strict shutdowns have been kept in place for long periods, is economically dismal and psychologically dispiriting. Yet this isn’t the only instance where Sweden has shown itself to be somewhat of a different society; a source of envy and admiration for its European neighbours.

Some decades ago, for example, it was claimed by social scientists and physicians that for the first time in history, one could not tell the social class of a Swedish child by examining its health profile and speed of growth. This is a modest but significant achievement, and one that is distinctly socialist in character. Sweden, together with its Scandinavian neighbours, is in fact credited with having achieved a flourishing synthesis between socialism and free-market capitalism — what is commonly referred to as the Nordic model.

The Nordic model traces its foundation to the “grand compromise” between capital and labor which was spearheaded by farmer and worker parties in the 1930s. Following a long period of economic crisis and class struggle, the deal served as the foundation for the post-war Nordic system of welfare and labor market organization. The key characteristics were the centralized coordination of wage negotiation between employers and labor organizations — termed social partnership — which provided a peaceful means to address class conflict between capital and labor.

In the 1950s, Olof Palme and Prime Minister Tage Erlanger formulated the basis of Swedish social democracy and of what became known as the “Swedish model,” drawing inspiration not from reformist socialism, but from the American economist John Kenneth Galbraith and the liberal ideas he articulated in The Affluent Society. The ideological basis of the Swedish “affluent society” rested on a universal welfare state providing citizens with economic security whilst simultaneously promoting social solidarity — a task no doubt made easier by a culturally homogenous population. The model was characterized by a strong labor movement as well as publicly-funded and administered welfare institutions.

By the early 1980s, the Swedish model began to suffer from international imbalances, declining competitiveness and capital flight. Two opposite propositions emerged to restructure the economy: either a transition to socialism through the nationalization of industry, or a turn to neoliberalism to promote capital accumulation. The Meidner Plan of 1976, promoted by the Swedish Trade Union Confederation, aimed at the gradual nationalization of Swedish companies through laborer funds. This proposal was supported by Olof Palme and the Social Democratic Party leadership, but it did not gain enough support when Palme was assassinated in 1986. 

Upon returning to power in 1982, the Social Democratic party inherited a slowing economy resulting from the end of the post-war boom. The Social Democrats adopted monetarist and neoliberal policies, deregulating the banking industry and liberalizing currency in the 1980s. The economic crisis of the 1990s saw greater austerity measures, deregulation and the privatization of public services. 

Today, this system possesses some particular traits that are worth highlighting, especially when compared with those of the Italian one. The following data is mostly taken from a very interesting research paper called The Nordic Model: Embracing globalization and sharing risks, by Torben M. Andersen and others.

  • An elaborate social safety net, in addition to public services such as free education and universal healthcare in a largely tax-funded system.
  • Strong property rights and contract enforcement.
  • Public pension plans.
  • Low levels of corruption. In Transparency International’s 2015 Corruption Perceptions Index, Denmark, Finland, Norway and Sweden were ranked among the top 10 least corrupt of the 167 countries evaluated.
  • High percentage of workers belonging to a labor union
  • A partnership between employers, trade unions and the government, whereby these social partners negotiate the terms to regulating the workplace among themselves, rather than the terms being imposed by law.
  • The Nordic countries in general received the highest ranking for protecting workers rights on the International Trade Union Confederation’s 2014 Global Rights Index, with Denmark being the only nation to receive a perfect score.
  • A 56.6% of GDP invested in public spending. One key reason for public spending is the large number of public employees. These employees work in various fields including education, healthcare and government itself. They often have greater job security and make up around a third of the workforce. Public spending in social transfers such as unemployment benefits and early-retirement programmes is high. The unemployed were also able to receive benefits several years before reductions, compared to quick benefit reduction in other countries.
  • Public expenditure for health and education is significantly higher in Denmark, Norway and Sweden in comparison to the OECD average.
  • Overall tax burdens (as a percentage of GDP) are high, with Denmark at 45.9% and both Finland and Sweden at 44.1%. The Nordic countries have relatively flat tax rates, meaning that even those with medium and low incomes are taxed at relatively high levels.

Italy has much to learn from Sweden. Though the two countries are both social democratic and corporatist, the Italian state has always been more of an impediment to production than a stimulant. Heavy bureaucracy, inefficient (and sometimes non-existent) public services like transport and infrastructure, high taxes without the consequent redistribution, corruption and unemployment. We have witnessed these problems come to the fore during the Covid-19 crisis, when insufficient intensive care units, inefficient furloughing schemes and retarded government benefits have gravely exacerbated the problem.

Dr. Michael Ryan, the executive director of the Health Emergencies Programme at the WHO, indicated that Sweden should be seen as a model for other nations in its handling of the Covid-19 crisis, in particular for being unafraid of relying on civil responsibility to ward off the virus. Many have said that this mentality is inapplicable to Italians, because they are irresponsible and lack a sense of civic duty. This may in part be true, but during the shutdown we saw that Italians were no less responsible than the Swedes, as only 3,9 % of those checked were reported by the police. There is no reason why Italy couldn’t be more like Sweden in other spheres as well, and a place to start would be the upper echelon of our political class.

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