Meu primeiro artigo escrito para a School of Politics da Universidade de Nottingham versou sobre a persistência de características Social-Democráticas na Suécia pós crise ecónómica de 1991-1994. Andreas Bieler, o "Senior Lecturer" da cadeira "Impact of Globalisation" atribuiu-me B+.
Aqui está o texto integral do artigo:
Aqui está o texto integral do artigo:
Doctor Andreas Bieler
University of Nottingham
December 2006
Introduction
The main purpose of this study is to assess to what extent are either true or misleading the assumptions made by many authors that the time of the Swedish Model is gone and neo liberal transition is an undergoing process.
It has been pointed out that since Sweden’s trade unions political defeats in the 1980’s and the 1991-1994 economic crisis that the Swedish model had reached its last stage of demise. From that moment it would have to accept the idea that high taxes, generous welfare and numerous public jobs were not compatible with the environment of international competition. Labour market deregulation and cutbacks in its extensive welfare programmes should be conducted hastily. Therefore, in this point of view, Sweden would be subject to the same labour displacement, unemployment and inequality problems as the rest of advanced economies in the western hemisphere.
However, the neo-liberal shift happened slightly through cutbacks and adjustments in public employment and welfare benefits in order to get the national finances back in order and adjust fiscal policy to national Transnational Corporation’s interests. Despite these somewhat substantial actions, Sweden is still home of the highest compared public expenditure and of one of the most generous social revenue redistribution systems while keeping unemployment and inflation rates much below EU average.
The Swedish Model is therefore in many ways alive today, and it shows that “generous welfare states still are economically viable if they keep their finances in order.”[1], the social equality over economic efficiency aims are arguably still the main national policy.
The evolution of the Swedish Model
The vague term “Swedish Model” appears to have been an invention of an admirer of Swedish achievements, as if it had developed an approach to economic policy for others to copy.
The Swedish labour-capital model is one of a high compromise aimed at, pragmatically, combine high employment and low inflation rates. Such arrangements cannot achieve a natural balance; therefore, the system had frequent central intervention in order reach this artificial equality.
The year 1870 has been said to be the turning point of Sweden towards transformation from its days as a poor and barely industrialized country to the emergence of an export oriented production economy. As Vylder[2] says “in 1870, Sweden’s per capita income was less than half of Britain’s, and well below the average of northern and western Europe. Over three quarters of the population eked in a meagre existence from semi-arctic agriculture.”
The 1870-1970 period for Sweden was its golden age. Being the fastest growing economy in the world, it showed its sustained development also through its remarks as of being the least gender and wage unequal country in the world, one of the most literate populations in the world, top-five life expectancy and in purchase power per capita.
What was known as the Swedish Model had its roots in the Social Democratic (which has been an unofficial party of government) policies intended to curb the 1930’s Great Depression’s financial crisis effects. The 1930’s were then the beginning of the coming welfare system as the country was able to recover rapidly from the stigma of the Great Depression as the GDP levels rapidly surpassed those of before recession and unemployment was nearly inexistent by 1935. The 1938 Saltsjöbaden agreement between the employers' association SAF and LO was the milestone of the Swedish consensus over economic policy.
The unions would help enterprises through wage moderation and recognition of the private ownership of the production means (which was challenged in many other countries and led to nationalisations), and aid on companies’ international competitiveness aims. The employers’ associations, most remarkably SAF, would concede higher wage levels and unseen welfare programs.
The objectives of the Swedish social partners came to a halt during the Second World War as military expenditure relocated state expenditure directed to welfare. Nevertheless, Sweden was unharmed in its production structure due to its neutrality and Sweden had a head start in the international post war economic boom.
Hence, the 1950’s brought the policy makers the question of how to achieve full employment and minimize inflation. The option “was incomes policy, a direct intervention into the process of wage formation by the government, or a voluntary policy of moderation exercised by the labour market parties.”[3] This was the beginning of the Rehn-Meidner Model of central wage bargaining, setting aside wage increases proportional to companies’ revenue growth, the LO took inflation surveillance and full employment aims as prioritary. This episode of Swedish political life showed clearly the mutual commitment undertaken by the social partners.
With centralised wage settlement the most successful firms could extract better profit while the less competitive simply had to go bankrupt in the absence of labour cost flexibility. This feature meant a powerful structural transformation on firm management, only the efficient firms were allowed to survive. The sectors with contractionary revenues therefore created the unemployment which was addressed by the government’s encouragement and funding of labour mobility and training programmes.
As the employers were at that time supportive of the coordination in wage settlement because it reduced the rivalry between unions and helped stabilizing costs. Although, there were wage drifts, which were a tool of safety for the enterprises to further remunerate employees who would qualify for bonuses. This was the initial answer to the challenge of keeping workers motivated in an environment of solidaristic arrangements, and has been widely accepted in Scandinavian countries.
Furthermore, the central bargaining model was only partly so. At the central level the social partners would usually agree in overall increases intentionally inferior to the definitive and de facto increases, leaving to the local structures a role in local bargaining. In this way, Sweden, throughout the time of its centralised wage settling days was fairly less strict than other countries such as Germany or Finland.
At this point, broadly through the 1960’s, the microeconomic salary differentials were tightened (also due to the effect of the progressive income tax heightened to a maximum of 85 percent) and overall purchase power kept on growing at a level slightly superior to that of the OECD. As for the Macroeconomic level, unemployment was impressively low and, arguably, too low to keep off of the NAIRU (non-accelerating rate of unemployment), but such was also a common feature amongst the other booming small and open economies such as Switzerland or Finland.
Having attained the proposed objectives of a more egalitarian distribution of high-growth in Sweden’s wealth by the 1960’s, though, throughout the 1970’s, the trade unions championed “radical” shift capital labour relations. The solidaristic wage policy objective was transformed from the “same pay for similar work” across all parts of the country to “same pay for all work”.[4] Beyond this, the LO and the Social Democratic Party launched the EIF (wage earner funds initiative) which proposed the replacement of a part of the wage increases by shares in the companies. This would allow labour to achieve over 50 percent of the voting rights in a company after 25 years of the programme. These initiatives were able to mobilize Sweden’s employers and right wing at an unprecedented level as it “did not only threaten particular capitalist interests, it threatened capitalism and its prerogative over investment and management decisions as such.”[5]
Such radical solidarism had then pushed the employers to reject central wage bargaining and, at a broader scale, the weight of the LO in the political and economic life of the country. The SAF then pursued an agenda of a more visible role in policy making and in propagation of the Neo Liberal point of view. The SAF introduced then the Neo Liberal discourse over social economic reality aimed at transforming Swedish entrenched views of social ownership of the enterprises. Deregulation of financial markets, labour market, and specifically to block EIF initiative and further evening of wages were the main immediate goals. This can also be understood within the international environment where Thatcherist TINA (There Is No Alternative) model gaining prominence. Unprecedented deregulation and public spending cuts were taking place in the United Kingdom and it served as a role model for the SAF supported Centre-Right coalition’s government from 1976 to 1982.
This set of events, and particularly “the issue of the EIF led to an increased class conflict and started the process toward the eventual breakup of the Swedish Model”[6] as the unions and the shareholders antagonized. In fact, the most remarkable effects of the 1976-1982 and 1991-1994 right wing alliance governments and the Neo Liberal trend in the Social Democratic Party after 1982 seems to be the of the deepening of the income inequality. In 1980 the ratio of the 20% highest to the 20% lowest wage earners in Sweden as in 1993 it was already of 6.4, an increase of over 25 percent in inequality in a period of only 13 years.[7] Although, it still stands as a top 5 most even countries n the world.
The Swedish growth in inequality was not only due to governments’ policies such as “rationalisation” of the welfare programs and lowering income tax from its peak at 85 percent to 50 percent (the top income taxes were subject of many changes throughout the years but one can nevertheless observe a general trend of tax cuts to the highest income earners). The international trend of deregulation and privatisation, as said above, was to deliver more to the interests of the entrepreneurial class.
In 1982 the Social Democrats were once again government and took back the EIF initiative, but in a milder formula which was not as appealing for the unions interests as the previous. As for the complete wage evening agenda of the LO, as we have seen, was not enforced by the government and the wage differences eventually stretched. Another measure to stimulate the economy was a 16 percent devaluation on the Swedish Crown followed by more deregulation of the Swedish financial market in 1985.
Meanwhile, the private and public sector wage increases were de-linking and in 1983 the Metal industry’s employers association was the first to defy the LO and conclude a separate agreement with its workers. A death blow to solidaristic and centralised wage setting was delivered, which was one of the symbols of the model, while the government sat back in its non intervention in bargaining tradition.
The Social Democrats were by then, with the influential finance minister Kjell Olaf Feldt, in the process of embracing a new point of view, the Swedish “Third Way”. A significant number of studies demonstrated the negative effects of the progressive tax system with high marginal taxes. In an interview he stated: “This was supposed to bring about a just and equal society. But I eventually came to the opinion that it simply didn’t work out that way. These taxes created instead a society of wranglers, cheaters, peculiar manipulations.”[8]
Nevertheless, the new tax policy which abolished effective taxes for most of the population came only when the Centre – Right took power although being a product of the new consensus within the Social Democrats.
In the turning to the 1990’s economic growth became inexistent and recession eventually struck between 1991 and 1994 as the world markets was less keen on Swedish products at the time. This happened on the aftermath of the tax reform that took place; cuts were made on housing subsidies while the house market was booming, setting the construction sector on a free-fall. With the economy facing deflation, only one in five of the big banks survived bankruptcy, unemployment grew from just above 1 percent to over 8 percent and the formerly healthy budget became one of the largest indebted in the OECD as well as the public debt went far above 100 percent GDP.
Although, what many authors failed to realise was that Sweden was by the beginning of the 1990’s suffering the downturn economic cycle due to the accelerating inflation fuelled by very low unemployment, which “took place later than in other countries, but, once it had happened, unemployment rose to normal European levels”[9]. It was then easy to precociously assume that it was a structural failure and shifting completely towards neo-liberalism would be the answer to curb economic depression.
The most immediate consequence was the ascension of centre-right coalition led by Carl Bildt which replaced the Social Democrats for the first time since 1976 which, again, happened in a bad macroeconomic environment (in the mid 1970’s had been the “petroleum shock” crisis).
The new government engaged on classic right wing policies set to curb the sluggish growth in the economy through cuts in the progressive tax system. The tax reform instead of bringing back revenue through taxation of on a more dynamic private demand worsened the public debt as the shifts in the reform were underfinanced. Second, the Bildt government pursued a strategy of further opening to foreign capital for which it had to end foreign exchange controls, therefore devaluating the currency in the negative outlook that it had. This meant huge capital transfers to safer currencies and further contraction of Sweden’s own.
As the downturn continued, “unemployment increased to double digits, whereas had never before in post war history exceeded 4 percent”[10]. The centre-right government was then facing the worst possible scenery of economic disaster when it had, in face of the crisis, no support to cut on welfare. Eventually it was breaking public spending records as budget deficit reached double digit figures.
From 1995 to 2006 the Social Democratic party came back to power and effectively halted public sector growth and spending (although still at the highest level in the world) while pushing further to make it more efficient through the introduction of profitability criteria. The election year was also marked by the EU accession, which was subject of another divide by the national and transnational oriented labour (like the Norwegian fishermen, also the Swedish farmers pressed for non accession) although, following the TNC’s pro accession campaign, the electorate voted favourably.
After all, these companies are crucial as they employ just above one third of the working force and their interest in foreign markets expansion is well shown by Sweden’s Foreign Direct Investment huge growth, especially towards EU member states. EU membership’s advantages eventually helped giving these companies record profits and the consequent economic growth observed in the country, 5.6 percent in 2006’s second quarter. As for economic policy in times of surpluses, the Social Democratic government has been more keen to redistribute wealth through more aid to the poor than cut taxes on capital mobility to elsewhere.
Conclusion
The ideological background of the Swedish Model is a good tool to evaluate whether if its core lingers or not. The initial objective of the commitment between the main actors SAF, Social Democratic Party and LO, was the achievement of a society characterized by equality and high standards of living through the merger of “the best” of both capitalism and socialism as it was argued in Marquis W. Child’s book Sweden: The Middle Way, (or Third Way) as an example of a democratic alternative to capitalism, communism and fascism, through cooperation between socialists, capitalisms and the monarchy.
The specific aims were set at the creation of full employment, world-class competitor enterprises, high growth, generous social benefits through a high tax burden, low inflation and often wage moderation policies for which the eminent Social Democratic party governments share credits with the social partners, most notably Gosta Rehn’s LO.
Therefore, looking to today’s situation and the similarities with the past, the labour market continues highly regulated and inefficient, (Denmark’s Flexicurity is arguably the most admired particular Nordic model of the moment), TNC’s still account for an unusually high share of the production, and welfare redistribution, though reshaped, is still the most generous there is, and, as for central bargaining, which is rejected by the individual unions, the Social Democrats, LO and employers have been keen on bringing back wage coordination to avoid strong wage and national inflation which is widely believed to undermine national competitiveness, employment and well being of the economy.
Although, a wide-spread perception persists that the Swedish model collapsed in the 1990s, as a result of the breakdown of many solidaristic and centralised features of the economic policies. Nevertheless, one who is familiar with the ideological discourse in Swedish society will think that this is hardly so obvious. The centre right New Moderate Party led by Mr. Reinfeldt won the September 2006 elections with an electoral programme of cutting down payroll taxes at the bottom and not at the top, create a working tax credit being, therefore; both policies focused on the creation of jobs and, not surprisingly for a Swede, the government will pay for it as the new prime minister claims to be the leader of a new “workers party”[11].
After all, “an attack on social democracy risks, on other words, being an attack on Sweden itself”[12] and, although much of the model has been reformed during the past two decades, that was arguably to adapt to its transnationalised sectors’ interests and rationalise the welfare and public sector spending.
Bibliography
Bieler, A. (2004) “The “Demise” of the Swedish Model: Globalisation, the Rise of Neo-Liberalism, and the Demise of the Swedish Model: An Analysis of Class Struggle”, In B. Moss (ed.) Monetary Union in Crisis: The European Union as a Neo-Liberal Construction, London: Palgrave, pp. 266-80
Meidner, R, (1974) “Co-ordination and solidarity : an approach to wages policy”, Stockholm, Prisma
Saxonberg, S, “the Swedish Model is doing well despite Neo-Liberal attacks”, http://www.martinpotucek.cz/download/esp/00_esp_swedish_model.pdf , (05-12-2006)
Sjosberg, T (1999) “Intervjun: Kjell Olof Feldt” Playboy Scandinavia, 5: 37
Statistics of Sweden: Statistics Messages BE 21 SM 8701, Stockholm 1987
Statistics of Sweden: Statistical Messages BE 21 SM 9501, Stockholm 1995
Steinmo, Sven, (2005), The Evolution of the Swedish Model, Internalizing Globalization: The Rise of Neoliberalism and the Decline of National Varieties of Capitalism. Ed. Soederberg, S et al, Palgrave, pp160.
The Economist, (September 9th 2006), “Special Report on the Swedish Model”
The Economist, (September 23rd 2006), “Reinfeldt explained”
Vartiananen, J, (1998), “Understanding Swedish Social Democracy: Victims of Success?”, Oxford Review of Economic Policy, Vol.14, No1, Oxford University Press
Vylder, S, (1996) “The rise and fall of the Swedish model”, hdr.undp.org/docs/publications/ocasional_papers/oc26a.htm, (14-11-2006)
[1] Saxonberg, S, “the Swedish Model is doing well despite Neo-Liberal attacks”, http://www.martinpotucek.cz/download/esp/00_esp_swedish_model.pdf , 05-12-2006
[2] Vylder, Stefan, “The rise and fall of the Swedish model”, hdr.undp.org/docs/publications/ocasional_papers/oc26a.htm,
2006, (9-10-2006 23:00)
[3] Vartiananen, J, 1998, “Understanding Swedish Social Democracy: Victims of Success?”, Oxford Review of Economic Policy, Vol.14, No1, Oxford University Press pp.24
[4] Meidner, R, (1974) “Co-ordination and solidarity : an approach to wages policy”, Stockholm, Prisma
[5]Bieler, A, “The “Demise” of the Swedish Model: Globalisation, the Rise of Neo-Liberalism, and the Demise of the Swedish Model: An Analysis of Class Struggle”, In B. Moss (ed.) Monetary Union in Crisis: The European Union as a Neo-Liberal Construction, London: Palgrave, pp 277
[6] Bieler, A, “The “Demise” of the Swedish Model: Globalisation, the Rise of Neo-Liberalism, and the Demise of the Swedish Model: An Analysis of Class Struggle”, In B. Moss (ed.) Monetary Union in Crisis: The European Union as a Neo-Liberal Construction, London: Palgrave, pp 277
[7] Based on the “Statistics of Sweden: Statistics Messages BE 21 SM 8701”, Stockholm 1987 and “Statistical Messages BE 21 SM 9501”, Stockholm 1995
[8] Sjosberg, T (1999) “Intervjun: Kjell Olof Feldt” Playboy Scandinavia, 5: 37-44
[9] Vartiananen, J, 1998, “Understanding Swedish Social Democracy: Victims of Success?”, Oxford Review of Economic Policy, Vol.14, No1, Oxford University Press
[10] Steinmo, Sven, 2005, The Evolution of the Swedish Model, Internalizing Globalization: The Rise of Neoliberalism and the Decline of National Varieties of Capitalism. Ed. Soederberg, Susan et al, Palgrave, pp160.
[11] The Economist, (September 23rd 2006), “Reinfeldt explained”, pp.43
[12] The Economist, (September 9th 2006), “Special Report on the Swedish Model”, pp.31
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