How socialist is Sweden?

Anna Rantakari, Wellington College, United Kingdom

Second Prize for the 2020 Junior Prize ​| 8 min read 

Socialism can refer to many things. It can refer to an ideology that values equality, community, and solidarity. It can refer to an economic and political system where wealth is distributed by the government to ensure everybody’s needs are met. It can also refer to a social protest movement in which socialism is romanticized to oppose and antagonize capitalism. At first glance, claiming Sweden is socialist may seem valid, however, this is incorrect and frequently due to inconsistent definitions of socialism combined with difficulty distinguishing between the socio-economic system and the strong welfare state. This essay will argue Sweden is a capitalist country despite being closer to achieving ideals of socialism than many other countries. Firstly, it will examine Sweden’s economic and political systems in the past, focusing on what impact it has had on the current situation. Secondly, it will analyze Sweden’s economy and how it conforms to characteristics that tend to be most prevalent within a capitalist market. Thirdly, it will explore Sweden’s political system and class politics to demonstrate the lacking presence of key features of a socialist country’s political system outlined by the Marxist-Leninist model. Fourthly, the aspects of Sweden’s economy considered socialist, like the highly equitable share of wealth, will be evaluated and discussed in depth. Finally, it will critique the importance of Sweden achieving socialist ideals in debating how socialist is Sweden.

Sweden’s current socioeconomic status is a product of wealth gained during the Post-World War II Economic Expansion and the social reforms implemented in the 1970s. Sweden’s economy benefited heavily from the Post-War Economic Expansion as they had stayed neutral during the conflict and consequently had not been economically devastated like many other nations. This allowed Sweden to climb to be fourth in the OECD rankings of GNP per capita, by the 1970s, as a result of sustained economic growth and high employment rates (Heyman, Norbäck, & Persson, 2019). This is significant because economic growth combined with industrialization acted as a foundation for Sweden to become a Fordist welfare society (Östberg, 2019) of which we can still see much resemblance to in modern-day Sweden. For example, some key characteristics of Fordism include wage compression and a universalistic welfare state (Viktorov, 2005) both of which are still highly valued in Sweden and maintained by key organizations such as the Swedish Trade Union Confederation and the Swedish Government. Although Sweden is no longer considered Fordist, the economic growth, industrialization, and establishment of an active welfare state, that resulted from the employment of the ideology of advanced capitalism, have had lasting effects such as creating a foundation for a capitalist economy.

As mentioned previously, the social reforms implemented in the 1970s by the social-democratic prime minister, Olof Palme, led to what many call ‘Sweden’s Socialist Experiment’ (Norberg, 2020). Before the Swedish social democrats implemented extensive reforms, Sweden had grown their economy by maintaining ‘highly competitive market-based policies’ (Fernandez-Villaverde & Ohanian, 2019) as is demonstrated by Sweden achieving one of the highest per capita incomes in the world (Östberg, 2019). However, in the early 1970s, the Social democrats raised taxes and heavily regulated businesses and the labor market, hence crippling the economy, and causing many businesses and entrepreneurs to leave. During these 10 years, the public sector’s share of GNP increased by a staggering 50% (Östberg, 2019) which is illustrative of the radical approach of the reforms. The reforms caused extensive damage forcing the government to turn to a market-oriented approach effectively reversing the social reforms: privatizing parts of the health-care system, reducing welfare benefits, deregulating industries, and cutting corporate tax rates (Fernandez-Villaverde & Ohanian, 2019). This demonstrates how socialist policies, in the past, have had negative impacts causing Swedes to shift in favor of capitalist policies and how Sweden is still working to reverse and recover from the failed socialist experiment. Nonetheless, although Sweden now pursues competitive market-policies and is still decreasing corporate tax rates, some aspects of the socialist reforms are still visible, such as being one of the strongest welfare states, misleading people to think Sweden still primarily employs socialist policies.

One of the most defining factors in determining whether Sweden is socialist is its economy. Sweden is a free-market economy consisting of profit-driven privatized corporations similar to other capitalist countries such as Singapore. A free market is an economic system where there is an absence of or little interference from the government meaning individuals make economic decisions. According to Statista’s Index of Economic Freedom (2020), Sweden was 74.9% economically free ranking 22nd overall indicating there is minimal regulation on business and lack of government-imposed tariffs which are currently just 1.69% (Macrotrends, 2020). Moreover, private property rights in Sweden are some of the highest in Europe scoring 89 on the Property Rights Index (The Heritage Foundation, 2020) further emphasizing Sweden’s high levels of economic freedom typically characteristic of a capitalist economy. Capitalism is also based upon the principle that competition and profit drive business. With Sweden’s highly competitive market, this is absolutely the case. Sweden ranks 8th out of 140 countries in terms of competitiveness (World Economic Forum, 2018). Many companies are based in Sweden due to the tax incentives implemented with the goal of reattracting companies to Sweden’s market after social reforms in the 1970s drove them away. For instance, the corporate tax has decreased drastically and is scheduled to decline to 20.4% by 2021 (Fernandez-Villaverde & Ohanian, 2019) in turn acting as a stimulus for domestic businesses to stay in Sweden and international corporations to come to Sweden. These economic reforms have allowed Sweden to recover from the damage caused by the socialist experiment of the 1970s as is apparent from Sweden having a high GDP per capita of $51,610 (World Bank, 2019). Clearly, Sweden’s economy corresponds to many factors of a capitalist economy. On the contrary, if Sweden were in fact socialist, their economy would look vastly different. The economy would be entirely state-controlled, there would be collective ownership of over means of production, and goods would be produced for usage value rather than for profit determined through laws of supply and demand.

A common misconception is that a socialist government always equates to an authoritarian or communist government. This stems from the fact that many countries considered socialist, based their government systems on the Marxism-Leninism model and therefore have political systems that share attributes with communism rather than democracy. Some of these countries include the People’s Republic of China and the Republic of Cuba, both of which have social economies under communist party control. Contrarily, Sweden has a capitalist economy and is a constitutional monarchy paired with a parliamentary democracy. A socialist government could favor democracy, like Sweden, because a priority of a socialist nation is equality and the empowerment of the people, however, Sweden is democratic as the government and parliament strongly value peoples’ freedoms while a socialist system would prioritize equality over individual liberty. In the most recent elections in 2018, 87.2% of the population eligible to vote voted (Statistics Sweden, 2018) suggesting that the people of Sweden value democracy as much as the government. This also implies that voters understand and practice one of Sweden’s fundamental freedoms, the freedom of speech as is outlined in the Constitution (Riksdag, 2018). The Constitution also expresses other freedoms Swedish citizens are entitled to including, but not limited to, freedom of the press, freedom of expression, and freedom of information (Sweden.se, 2020). These freedoms play a role of paramount importance in Swedish society taking precedence over all other laws which would be uncharacteristic in a socialist society where the end goal of essentially eliminating social classes and achieving an egalitarian society would surpass all other matters.

 

Having discussed how Sweden became a capitalist nation and how capitalism is at the core of Sweden’s economy and political system, this essay will now critique and invalidate the importance of arguments often made when defending the stance that Sweden is socialist, primarily focusing on aspects of Sweden’s economy deemed socialist such as high taxes, redistribution of wealth, and the ‘safety-net’ provided to citizens in the form of a strong welfare state. Furthermore, the importance of achieving socialist ideals such as equality and advanced workers’ rights protection will be discussed.

Although many features of Sweden’s economy and market are considered capitalist like the minimal government interference in business and the highly competitive market, some aspects of the economy are products of and still reflect the social reforms from the 1970s. Firstly, someone could claim Sweden should be considered socialist because they have extremely high taxes. This is not true. Swedes pay fewer taxes than many other European countries. France’s tax revenue is 46.2% of the GDP compared to Sweden’s is 43.9% (OECD, 2019). This demonstrates how taxing and redistribution of wealth are socialist methods however they do not define a country as socialist as it is a single factor of many that are considered. Even countries traditionally considered capitalists have relatively high tax revenues as a percentage of the GDP. For instance, Germany’s tax revenue is 38.2% of the GDP which is above the OECD average of 34.3% (OECD, 2019). Taxing is a method of redistribution of wealth which is often associated with and utilized by socialist countries to create a more equitable society, but Sweden is surprisingly unequal in terms of income and this inequality is still growing. Sweden has a low Gini coefficient of 0.28 (OECD, 2017) which would influence one to assume Sweden is economically equal. However, the top 1% richest in Sweden own 25-40% of total wealth which is level with the 35% of total wealth that the top 1% richest in the capitalist country of the United States of America possesses (Cowen, 2014). This demonstrates how Sweden is unequal in terms of income despite often being falsely idealized as a model socialist nation with little inequality.

Sweden’s welfare state is often misinterpreted as socialism. Socialism strives for a system that ensures everyone’s needs are met which is also the role of the welfare ‘safety net’ Sweden has created for its citizens. The welfare system encompasses many things: childcare, education, medical care, unemployment benefits, pensions, and many more. Both the high taxing and the welfare state are products of the socialist reforms from the 1970s, yet they both actively enable a highly competitive economy. University tuition is free, making it more accessible hence creating more highly skilled workers; childcare pricing is based on income ensuring parents can afford to have their child or children cared for while at work; unemployment benefits are generous but given on conditions that encourage people to find jobs, leading to less unemployment and poverty. Similar ‘socialist’ systems that prioritize citizens’ welfare can be seen in other capitalist countries as well. For example, the NHS, in the United Kingdom, is a publicly funded healthcare system. Another example, the United States of America’s government finances public schools with taxpayers’ money.

Lastly, Sweden is highly unionized. According to the OECD’s latest report on trade union density around 65% of workers were in labor unions (2018) which is harmonious with socialist beliefs of protecting and empowering the working class as well as class solidarity. However, the argument is to be made that labor unions protect human rights and ensure humane working conditions making them human rights organizations rather than socialist organizations. This furthers the idea that Sweden identifies its citizens’ freedoms and rights as being of utmost importance.

There is no single term to describe Sweden’s socio-economic and political system as no country is solely socialist or exclusively capitalist. Each nation takes ideas from a wide array of ideologies and systems to create a unique, complex web of concepts woven together to create a structure that helps society develop and thrive. Sweden is unlike any other country as its history, values, and people cooperate to construct a holistic system in which a capitalist free-market economy, democratic government, and a strong welfare state coincide to complement each other.

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