Trouble in Paradise

Sweden is often praised as one of the, if not the, most successful welfare states in the world. Many progressives around the world take the country´s strong welfare system, pared with a healthy economy, as an example. According to a recent survey by World Economic Forum Sweden stands out as the best country in the world to live in, with top rankings in areas like gender equality and business climate. But something in this does not seem to translate into reality. Polls suggest that many Swedes do not think that their country is heading in the right direction, and the political situation is becoming more and more uneasy with minority governments and threats of snap elections. The Social Democrats, often attributed for Sweden’s success, seem to be heading for one of their worst election results ever, just around 30%. And how could a populist right wing party, that has its roots in 80s neo-nazism, become the third largest party and parliamentary kingmaker in the world’s most successful welfare state?

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It is important to understand the historical context in which the Swedish welfare state arose. By making concessions to both sides, Sweden stayed mostly neutral during the Second World War. This left the country in a unique position after the war, as its industries had not been war-ravaged while most of Europe was screaming for industrial produce. This coupled with the general global economic boom led by the US, made the Swedish economy grow exponentially. The Social Democrats won election after election, with consistent results of over 45% of the vote in Parliament, and in partial cooperation with the liberal parties they pushed through large welfare expansions like the public pensions and social security systems, financed with progressive taxes. What has come to be known as the Swedish model now seriously started to take shape; the companies and unions negotiated without the direct and legislative involvement of the state, while the state made sure to create the conditions for business to thrive in exchange for tax money that could be used to build a welfare state that gave labourers access to a strong and reliable welfare. In exchange they had to accept the need for the companies to run a profit. To satisfy an ever-increasing labour demand, Sweden also started to take in substantial amounts of migrants. In short, this was the foundation of the modern Swedish welfare state; an economic boom equally shared via the probably most successful post-war settlement between labour and capital.

During the 70s and onward this settlement started to crumble, just like the wealth it was built upon. The general global economic boom started to slow down, and new industrial competitors like Japan started to arise. This was troubling news for the Swedish economy and its companies, that were heavily dependent on export to large foreign markets like Germany. Coupled with, and to a large part because of this, Sweden was also slowly but surely hit by the same neoliberal wave that hit the rest if the western world. The then largest parties within Sweden´s right, the social liberal Centre Party and Popular Party, started drifting to the right. The powerful Sveriges Arbetsgivarförening, or SAF, Sweden’s Employers Union, advocated for deregulation and privatisation while the economic field started to swing over from Keynesianism to marketism and fiscal conservatism. Meanwhile the Social Democrats were at a loss in how to respond to the rapidly changing conditions for a working welfare state. In 1976, the Social Democrats lost their first election since 1928, and the Conservatives became the largest right-wing party since 1928. The Social Democratic Party thus also started to cater more and more to the neoliberal pressure. Reforms like the deregulation of monetary market was put in place, with a following easing of capital flows.

In 1990, the by then deregulated credit market that had been boosted by rising housing prices collapsed, and with it the financial institutions and banks. In the middle of this financial crisis, the welfare state was badly hit, both by liberal and social democratic governments.

Although a liberal and conservative shift had slowly been driven through in the previous decades, with a weakened and battered labour movement and an ever more powerful and globalised liberal economic and political class, the welfare state and its principles had by this point become popularised amongst the Swedish population. The idea that everyone should be given access to a decent life had become a staple within Swedish culture and politics. This meant and still means that no political force could or can mount a successful and total campaign against it. Thanks to its values being well established, the Swedish welfare state and its principles has been preserved in its core, but mostly scaled off, privatised and downsized. These political, economic and social developments have in turn shaped Sweden to what it is today. The country is in many aspects as beset as the rest of the world by unstable vulture capitalism, while simultaneously maintaining a relatively strong welfare and labour movement with high unionisation.

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In preparation of the general elections in 2006, the liberal and conservative parties formed a common block, The Alliance. They took power in 2006 and kept it after the 2010 election, on a platform that appealed to the middle class due to tax and welfare cuts. Sweden was, as many other countries, hit hard by the financial crisis in 2008, which the Alliance handled with a combination of austerity measures and a reliance on previously stable state finances. The crisis increased unemployment from 6.2 percent to a peak of 8.6 percent in 2010, hitting young people the hardest, and it has not reached below pre-crisis levels since then. From the 90s and onwards there has been a rapid surge in income inequality, and between 1985 and the 2010s Sweden has had the largest increase in inequality of all OECD countries, while still maintaining a below average inequality. A thorough privatisation of basic welfare services such as education has led to more market based orientation, where profitability is more important than actual service. Simultaneously a new public pension system, introduced in 2004 and a lot less generous than the last one, risks to condemn thousands of people with long working lives behind them into poverty. Although the Social Democrats have been critical of the increasing inequality and privatisations, they have often been driving or complacent to these changes, and have failed to present a real alternative to the Alliance.

Another problem also has started to brew on the horizon, that is the problem of segregation, security and integration. Many of the migrants and refugees arriving in Sweden during the latest couple of decades were poor, and have therefore been concentrated to neglected suburbs around Sweden’s three main cities, Stockholm, Malmo and Gothenburg. This has created segregated areas consisting of a new underclass where unemployment is high, prospects of social mobility is low and violent gangs have been gaining ground. These suburbs have seen several violent riots over the years, and according to many they are breeding ground for radical islamists, as disillusioned young men become easy targets for jihadi-recruiters. Although the severity of this situation is often overblown, it has led to increasing security anxiety amongst Swedes, especially after a failed suicide bombing in 2010 and the recent terrorist attack which leaved 4 people dead and several injured in Stockholm. This has resulted in the questions of security and immigration becoming more and more prioritised amongst the Swedish population, only amplified by the arrival of over 160,000 refugees and migrants in 2016.

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Brewing discontent over this general situation, consisting mostly of issues not included in the liberal World Economic Forum’s survey, led to the right-wing Sweden Democrats entering the Swedish parliament in 2010 with over 5%. They then become the third largest party in Sweden with almost 13% of the vote in the 2014 election, a surge almost unheard of in Swedish political history. The Alliance lost power in 2014 and a minority government consisting of the Social Democrats and Greens, supported by the Left Party, took power. Although they have been taking measures against issues like segregation and invested in social programs, the government remains silent about issues like increasing wealth concentration and powerful monetized interests lobbying in their own narrow interests. They also have not been able to introduce any larger new reforms, and instead built upon old ones. And even if they wanted they cannot advance any bold new reforms, since the The Alliance and Sweden Democrats together can overthrow any proposals in Parliament, as happened with the government’s autumn budget in 2014.

It is in these troubling times that the Social Democrats recently held their national congress, in which the party’s line on pressing issues is supposed to be established and innovative ideas are supposed to be introduced from the grassroots. Although several conflicts were expected between the party establishment and the grassroots over issues like for-profit businesses in the welfare sector and the government’s harder stance on immigration, it was one of the calmest congresses in a long time. But this might not be a good sign. It rather sends signals of a tired and weakened party, with dwindling grassroots and run dry of any ground-breaking politics for a new time. With slogans like “Security in a new time” and tougher takes on crime, the party establishment hopes to address the feeling of insecurity that haunts the Swedes. Although this is understandable, it leaves the party on the defensive rather than the offensive, handling questions where conservatives generally have a larger public confidence and simultaneously taking away attention from welfare questions where the Social Democrats dominate.

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This never-ending carousel where the party has run dry of visions and grassroots, which in turns leads to worse or stagnating election results and even more lack of confidence, is worrisome indeed. Especially since the Social Democrats are the only party in a position to actually solve the social insecurity and economic instability that haunts the country and brings it ever closer to an authoritarian and conservative future, where even the welfare state might not be secure.

Melker Akerlind is a 2016 Graduate of Democracy and member of the Swedish Social Democratic Party and its youth wing.

Disclaimer: This Post reflects solely the author opinion it does not represent the whole platform

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