Sweden

DURING THE 20th century, Sweden was regarded as the archetype of the progressive industrialized country. Managing to find a true third way between capitalism and socialism, Sweden developed one of the world's highest standards of livings, while at the same time achieving a relatively high degree of egalitarianism among its population. The main means of achieving this was a cooperative nature among Swedes and the Social Democratic Party, which has ruled the country from 1932 to date in 2004, with the exception of the periods from 1976 to 1982 and 1991 to 1994.

Sweden is a constitutional monarchy and an ethnically homogeneous state that has produced public policy that seems to depend on certain commonly held values. As Donald Hancock notes, a large majority of Swedes appear to have a high level of respect for constitutionalism and law, veneration for established political institutions, receptivity to institutional and policy reform, and shared values of moderation and pragmatism. The 20th century was a tumultuous period in Europe, with ideologies like fascism and state socialism and everything in between competing for adherents, but none of these movements disrupted the Swedish consensus.

As Henry Milner has argued, social democracy is a distinctive system of human relations, different in degree from “competitive capitalism,” exemplified by the United States, and “state socialism,” still found in countries such as Cuba, North Korea, and a few others. As such, in Sweden it has been based on the principles of economic well-being, the importance of work, social solidarity, democracy, participation, and access to information.

Sweden's great achievement has been to implement a generous welfare state, based on high rates of taxation, and yet preserve a dynamic capitalist economy. Sweden's very existence and success seem to fly in the face of Anglo-American received wisdom regarding the desirability of a limited role for government along with an unregulated market economy. Of course, Sweden developed all of the usual welfare state policies in the 20th century, including “free” elementary, secondary, and post-secondary education, publicly funded healthcare, family support programs, public pensions, worker's compensation, and so on.

But perhaps Sweden's real success has been in its fully developed welfare state instead of the half-measures often found elsewhere in the world's economically advanced countries. Sweden has, for decades, had a high-wage policy, based on the idea that as a country of 8.8 million people, Sweden would drive up wages and minimize low-wage jobs, as a basis for building a wealthy society. To do this, the country would be highly engaged in the world economy as a trading partner. Sweden also developed an active labor market policy rather than the more passive ones found elsewhere in much of Europe and North America. This meant that when a traditional industry declined and people were thrown out of work, the state would not just settle for paying unemployment benefits or social assistance (passive support). Rather, the state would spend more money, not just to cushion the family that had lost work, but to retrain the worker so that she could find work in a “sunrise industry.” With a high degree of social solidarity, the idea that a certain percentage of the population would be “written off” as unemployable or useless was simply not acceptable. Unlike many other countries, Swedish policies encourage work and do not provide perverse incentives to inactivity.

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