The Mirage of Swedish Socialism: The Economic History of a Welfare State
17 August 2023
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https://iea.org.uk/wp-content/uploads/2023/12/mirage-of-swedish-socialism-economic-history-of-welfare-state_0.pdf
The Mirage of Swedish Socialism: The Economic History of a Welfare State details what Sweden is—and more importantly what it is not—when it comes to its economic system and history. Despite the mischaracterizations of the country, after experimenting with socialist policies in the 1970s and 1980s (with disastrous results) Sweden actually has a long history of being a free, open and competitive economy.
This chapter documents Sweden’s economic history from the mid-1800s through to 1970, including its exceptional century of growth from 1870 to 1970, when under the Gripenstedt System, Sweden went from being one of Western Europe’s poorest countries to the fourth-richest on earth.
In the 1970s and 1980s, Sweden began experimenting with socialist policies, including higher government spending, higher taxation, increased regulations, and price controls, which resulted in stagnating economic and productivity growth, ballooning government debt and an exodus of businesses and entrepreneurs. In the early 1990s, an economic and financial crisis forced the government to retreat from its socialist experiment. It reduced government spending, lowered taxes and liberalized markets, and Sweden once again embraced open and competitive markets.
This chapter documents how the country that, at one time, held a worldwide record for high taxes and government spending and with unsustainable debt levels turned itself into a fairly normal European country, with fiscal rules and debt levels that are in many ways exemplary.
Sweden’s social policy stands out internationally for two reasons: First, social services and income supports are extensive and mostly universal, which explains the size of the Swedish welfare state since the 1970s. Second, since the 1990s, Sweden has become a pioneer in privatizing social services, giving private providers the freedom to compete with public ones on similar terms and funding, and giving citizens the freedom to choose between different providers, including from among for-profit businesses.
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Johan Norberg is a Swedish-born author, lecturer, and documentary filmmaker. He is a Senior Fellow at the Cato Institute in Washington DC and received his MA in the History of Ideas from the University of Stockholm.
The Realities of Socialism is a multimedia project—a collaboration between organizations in Canada, Australia, the United States and United Kingdom—to educate people about the experiences of socialism that was imposed on tens of millions of people across the world throughout the 20th century. Here you will find data-driven videos, infographics, short videos and informative studies about socialism’s history in Poland and Estonia, Sweden and Denmark’s short experiment with socialism, and Singapore’s unique approach. Find out more here.
Introduction
The Mirage of Swedish Socialism: The Economic History of a Welfare State details what Sweden is—and more importantly what it is not—when it comes to its economic system and history. Despite the mischaracterizations of the country, after experimenting with socialist policies in the 1970s and 1980s (with disastrous results) Sweden actually has a long history of being a free, open and competitive economy.
Chapters
Part 1 From Rags to Riches
This chapter documents Sweden’s economic history from the mid-1800s through to 1970, including its exceptional century of growth from 1870 to 1970, when under the Gripenstedt System, Sweden went from being one of Western Europe’s poorest countries to the fourth-richest on earth.
Part 2 The Rise and Decline of Socialism
In the 1970s and 1980s, Sweden began experimenting with socialist policies, including higher government spending, higher taxation, increased regulations, and price controls, which resulted in stagnating economic and productivity growth, ballooning government debt and an exodus of businesses and entrepreneurs. In the early 1990s, an economic and financial crisis forced the government to retreat from its socialist experiment. It reduced government spending, lowered taxes and liberalized markets, and Sweden once again embraced open and competitive markets.
Part 3 The Evolution of Sweden’s Fiscal Policy
This chapter documents how the country that, at one time, held a worldwide record for high taxes and government spending and with unsustainable debt levels turned itself into a fairly normal European country, with fiscal rules and debt levels that are in many ways exemplary.
Part 4 The Evolution of Sweden’s Social Policy
Sweden’s social policy stands out internationally for two reasons: First, social services and income supports are extensive and mostly universal, which explains the size of the Swedish welfare state since the 1970s. Second, since the 1990s, Sweden has become a pioneer in privatizing social services, giving private providers the freedom to compete with public ones on similar terms and funding, and giving citizens the freedom to choose between different providers, including from among for-profit businesses.
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About the Author
Johan Norberg is a Swedish-born author, lecturer, and documentary filmmaker. He is a Senior Fellow at the Cato Institute in Washington DC and received his MA in the History of Ideas from the University of Stockholm.
Realities of Socialism
The Realities of Socialism is a multimedia project—a collaboration between organizations in Canada, Australia, the United States and United Kingdom—to educate people about the experiences of socialism that was imposed on tens of millions of people across the world throughout the 20th century. Here you will find data-driven videos, infographics, short videos and informative studies about socialism’s history in Poland and Estonia, Sweden and Denmark’s short experiment with socialism, and Singapore’s unique approach. Find out more here.
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