The rise and fall of the Swedish model - interview with Swedish economist Rudolf Meidner - Interview

Challenge, Jan-Feb, 1998 by Bertram Silverman

Q. So the tension between full employment and inflation continued even though the model worked more or less during this period.

A. We used to say that the government did not follow the model. As I indicated before, it is much more difficult politically to introduce restrictive economic policies when you have a flourishing economy. It is much easier to fight unemployment because there is more agreement about expanding an economy in times of a weak labor market.

Q Let me turn to the second objective of the model. What role does the goal of equality play in the Swedish model?

A. Equality; like the goal of full employment, has been much more clearly defined in the Swedish model than in that of many other countries. You can promote equality in two ways. The first way is through a very large public sector that offers public services. Our public sector has always been larger than that of many other countries. The second method is through the implementation of a solidaristic wage policy. This is also part of the model as we define it. The union movement was responsible for developing the solidaristic wage policy. Under such a program, wages are determined by the kind of work one does and not by the profitability of the firm. In promoting this policy, Sweden, I think, is a special case. The wage policy of solidarity has been at the heart of the Swedish union movement for a long time. It is not simply the innovation of some elder economists. Far from it. The solidaristic wage policy originated at an LO congress in 1936. Ten years before, the LO created its own research department. The wage policy was introduced by the metal workers, which is still a leading labor union. Originally it was called a socialist wage policy The term was changed from socialist to solidaristic in 1938 when the editor of an LO journal wrote a short article entitled "Wage Policy of Solidarity." That was the origin of the term.

Q. Do you need special kinds of institutional arrangements to implement such a policy?

A. Yes, it presupposes a very strong national confederation of unions. In 1936 the LO congress decided to investigate the role that the LO as a central organization should play in setting wage policy. As a consequence of those investigations by what was called the "committee of fifteen," the 1941 congress of the LO gave much more power to the central trade union to set wage policy. Centralization of wage policy is not an easy thing to do. The LO needed to coordinate the claims of about thirty affiliated unions. But that was not enough to implement centralized bargaining. The LO's counterpart, the Swedish Employers' Organization (SAF), practically forced the LO to accept central wage negotiation in the mid-1950s. Clearly, centralized bargaining was in the interest of both employers and unions. Through centralized bargaining, the unions have been able to pursue a wage policy of solidarity by giving a little more to the lower-paid workers - to the young, to women, and to the unskilled and inexperienced.