Swedish Socialism

Swedish Socialism

[Case Study 14]

1.

Sweden A blend of Public and Private Enterprise in a democracy. The government has left the production of goods to the market place. The state has influence over the allocation of these goods.

2.

a) Private Ownership – Agriculture – private – Private industry – employs 90% of all industrial workers and they produce 95% of the the country’s manufactured goods. b) Public Ownership – natural resources, transportation, Energy – The country’s desire is to maintain high employment. – Profits will be directed to the common good • The government has exerted strong influence over the economy through fiscal and monetary policies and by direct intervention. c) Government Planning (Indicative Planning) ∗∗ – Five year plans to communicate to private firms the government’s projections and forecasts. – They do not fix production goals like communism – They use what is referred to as indicative planning. d) Social Welfare – direct government planning – confined only to social concerns – Main Goals  full employment  freedom of poverty – State will provide – medical care, maternity care, education, housing, and an assortment of jobs. • The government assumes the position of supervisor of all significant aspects of life. e) Union Participation – 80% of workforce is unionized – purpose is to abolish the negative aspects of capitalism The Co-determination Act of 1977 gave trade unions a voice in the day to day operation of Sweden’s industries. (ie. Hiring, firing, job placement.) Essentially they became shareholders in Private Business.

3.

Economic Crisis – increased inflation, increased unemployment, increased national deficit (stagflation) Plan of the Social Democratic Party a) Devalue Krona to 50% value of the American dollar – to make exports attractive b) save income from exports c) Produce more goods per person d) Invest surplus cash in Swedish economy e) Create low interest rates f) Reduce overall spending g) Not support ailing firms with subsidies h) Encourage businesses to be more innovative and competitive with the rest of the world i) Reduced government regulations and privatize some businesses • Economy boomed and a surplus was created

4. Political climate in Sweden was one of cooperation to improve the nations economic wealth. 5.

Welfare Policies with the financial burden of high taxes on the Swedish people and a sudden downturn in the nation’s economy was devastating. A change was necessary as many people were leaving the country (Wealthy) • The government began to emphasize self–reliance. This promoted more private enterprise. • Swedish optimism was broken in 1990 and a Keynesian Economic policy was adopted to reduce unemployment. • Result of this was an increased government deficit and a growing national debt. • Industrial production decreased by 18%. • GNP / capita decreased from 22 270 to 20 550 Why? 1) Too generous of a Welfare State 2) An absence of competition • People wanted a cradle to grave welfare system and as a result voted in the Social Democrats again. Result: increased government spending left Sweden with one of the highest debts of the developed countries in the world.