The end of the middle road: what happened to the Swedish model?

Monthly Review, March, 1993 by Kenneth Hermele

As long as the expansion of the Swedish transnationals abroad also generated employment at home, the objectives of the two sides of the alliance were not contradictory. But once the transnationals defined their interests as being truly international or even global, then the alliance was at stake. This happened more or less simultaneously with a weakening of the political base of Social Democracy, as the voting pattern in Sweden changed. From the early 1980s, if not earlier, Social Democracy lost influence in the working class while conservative parties gained an unprecedented weight, even in traditional labor strongholds. At the same time, the working class itself was also growing smaller as industrial employment gave way to the service sector. Thus, Social Democracy lost influence with its traditional base, a sector of Swedish society which by itself was becoming of less importance, and was also confronting difficulties in assuring continued benefits for that constituency.

The Concentration of Wealth and Power

The economic and political alliance that was the essence of the Swedish model led to an unusual concentration of economic power in the hands of a small number of private owners, a concentration which has grown ever stronger over the years. The richest 2 percent of households own 62 percent of the shares on the Stockholm stock exchange. A corollary to this is that the major owners concentrate ever more influence in their hands. The five biggest owners in each of the fifty most important companies on the stock market increased their control of the voting power from 47 percent to 61 percent in the 1978-1988 period.

Likewise, the policy of concentration has enabled a small number of firms to establish themselves as crucial for what is normally called Swedish economic interests. The top twenty industrial transnational corporations account for two thirds of Sweden's industrial exports and almost half of its total exports, they pay for 60 percent of the global industrial outlays on research and development, and they employ 85 percent of all people employed by Swedish transnationals abroad.

The contradictions caused by this concentration of wealth and power are reflected in the differences between classes and social groups which can be found in practically all spheres of life: work conditions, education, cultural activities, food consumption patterns, political participation, etc. Although some of the class-based differences have diminished-- e.g. higher education, housing standards--the general pattern is that they remain as strong as ever, with some of them growing even wider in the 1980s. This is particularly so for the wealth distribution, where the richest 2 percent of the households account for 23 percent of the wealth. In fact, the average household grew poorer from 1978-1988, whereas the richest 450 households doubled their assets. Hence, by any standard, Sweden is a monopolized society with the economic power centralized in the hands of a few giant firms and their owners.