Sweden: No Model for Eastern Europe; E. Brolin

Swedisheconomy,whichcombinesprivateowner shipof the meansof productionwith an elaborate welfare system,be appropriate for the formerly Communistcountries?Let us take a closerlookat the Swedishexperimentin socialism. Swedishsocialismhad its originsin the 1880s, when an egalitarian movement led by August Palm,a formertailor,gavebirthto Swedishunion ismandthe SocialDemocraticParty.Socialistpro grams, particularly the "reformed Marxism" of Eduard Bernstein,wereimportedfrom Germany. By 1932the SocialDemocratshad gainedmajori ties in both houses of Parliament. (Swedennow has a unicameralparliamentwith349 seats.) Professor Brodin, a native ofSweden, is Director of The Foundation for International Studies, Buies Creek, North Carolina. Withthe SocialDemocratsin power,the paceof socializationaccelerated.Most welfaremeasures were passedwith the cooperationof the two cen trist parties, the Liberals (Folkpartiet) and the Center (formerly Agrarians). Other measures could be passedonly with the cooperationof the small Communist Party. Swedish industry was prettymuchleftaloneso that itcouldpaythe taxes needed to financethe welfaresystem.The Social Democratshavemaintainedpoliticalhegemonyin Swedensince 1932,with the exceptionof a coali tion governmentin WorldWar II and an interreg num of the three non-socialistoppositionparties (1976-1982),duringwhich no important plank of the welfarestate was removed.

Gunnar Myrdaland his wife Alva playedlead ing rolesin the developmentof Sweden'swelfare state. Gunnar Myrdalwon a Nobel Prize in Eco nomics in 1974, and Alva Myrdal won a Nobel PeacePrizein 1982.Convenientlyforgottentoday is their admiration of the eugenicsprinciplesof Nazi Germany. The Myrdals believed that only such drastic measures would assure that the Swedishstock would be the best for the coming welfarecollective. During the next decades the Swedishwelfare state expandedintomoreand moreareasofsocial lifein an attemptto eradicatethebourgeoisnature of the traditionalSwedishfamily.The government on all levelsbeganto assumea paterfamiliasrole. Allan Carlson, writingin the May 1990 issue of Chronicles,quotes one Swedishofficialassaying, "I shouldlike to abolishthe family as a means of earning a livelihood,let adults be economically independentof eachother and givesocietya large share of responsibility for its children." Carlson explores this development at length in Th e Swedish Experiment in Family Politics: The Myrdals and the Interwar Population Crisis (Transaction Books, 1990).

A "BoldExperiment" thatFailedthe Family Socialist programs would have a grave impact on Swedish family life. Sweden now has the world's lowest first-marriage rate and one of the lowest birthrates. Half the children are born out of wedlock. Yet the authors of the Swedish welfare state always believed that their course was right. Alva Myrdal in her book NationandFamily(MIT Press, 1941, p. 11) said: "The Scandinavian coun tries, and particularly Sweden, by historical acci dent are given the most advantageous set of pre requisites for a bold experiment in social democracy. If it cannot successfully be developed in Scandinavia, given by historical chance excep tionally advantageous conditions, it would proba bly not work out anywhere else." Among those "exceptionally advantageous con ditions" were some that were specifically Swedish. The Swedish population is small; it just passed 8.5 million. It is remarkably homogeneous, having only the Lapps of the north as a minority, and in the 1970sand 1980sa foreign work force of several hundred thousand. Furthermore, Sweden escaped the horrors of war for more than 175years and was able to convert its munitions plants into factories for producing housing materials after World War II. It has thus been able to grow wealthy in a Europe that, for the most part, had been adversely affected by the war. Sweden also escaped the social displacement and ills that often follow wartime defeats, and the resultant social disintegration.

With the Social Democratic Party in firm control from 1932 to 1976,and the acquiescence of the two centrist parties, Sweden erected a panoply of welfare measures unprecedented anywhere in the world. Contributing to the system's apparent stability was the cooperation between the central Labor Organization and the Swedish Central Em ployers' Organization. The welfare state seemed to be a viable system. But in the 1970s, things began to fall apart. Restive labor unions who saw their members' salaries eaten up by inflation, and employers who 427 saw their share of social costs rise to 40 percent of workers' salaries, began to chafe at the tax burden. Unprecedented absenteeism by workers who col lected 90 percent of their salaries from their first day off (without the need for medical certification) priced Swedish exports out of world markets. High taxes, and the breakdown of many of the social services which these taxes were supposed to finance, have caused a tear in Sweden's body politic. Inflation rose, and the formerly harmo nious collective bargaining sessions between the Labor Organization and the Swedish Central Employers' Organization have turned into hostile confrontations. When the self-employed author Astrid Lindgren received a tax bill of 102 percent, she wrote a stinging story, along the lines of Alice in Wonderland,that was one of the leading factors in bringing down the Social Democratic Party in 1976.

Swedish industry found itself with falling profit margins; many firms established subsidiaries out side of Sweden where workers were more produc tive and taxes were lower. The Meidner Funds, which had taken a portion of Swedish industries' profits and deposited them in funds run by unions, were the last straw. They will, in all likelihood, be terminated, but they have placed a huge burden on Swedish companies. One of Sweden's most astute economists, Pro fessor Assar Lindbeck, writing in Sweden's leading daily DagensNyheter(December 22, 1988), per ceptively noted, "The high marginal taxes and the production of public services cause the family to more and more focus on the 'care' of objects, while public institutions, to an increasing extent, take over the care of people, an occupation earlier regarded as the specific duty of the family.In a wel fare state of the Swedish type it is not the corpora tions that are socialized, but the family, or more correctly, many of the traditional functions of the family. One could probably say that while classic socialism meant socialization of industry, a welfare state of the Swedish type means socializing the households' traditional care and support for fellow citizens."

The Swedish welfare state has reached a crisis state outlined by the East German Marxist theo retician Jtirgen Habermas in his Legitimations problemin Spiitkapitalismus: "The division of labor between the state and the private sector that forms the basis of the Swedish 428 THE FREEMAN • NOVEMBER 1990 model requires that a continually increasing share of the national product be transferred to the public sector. Technical and economic changes must be accompanied by an enormous public investment to assure the stability of society. There is a point where the dislocation in the social structure becomes so great that people are no longer willing to pay the price of the necessary remedies. The demand for security remains, but the desire of each person to contribute to the cost of this secu rity diminishes. The welfare society then faces a crisis of confidence." A SystemthatDoesn'tWork As the standard of livinghas fallen over the past ten years, it has· become evident to almost all observers that the Swedish system no longer works. Hakan Gergils, a member of the Swedish Civil Rights Movement and an adviser to Swedish industry, noted in Economic Affairs (October/ November 1989) that "This development has cre ated a new class of poor people. The number of Swedes in this category increased to 600,000 last year, which means that around 10 percent of the adult population in Sweden cannot earn their liv ing by working. They have to rely on public sup port for housing, food, clothing, etc. The most astonishing thing is that the new class includes a large number of well-educated people. A great number of full-time working men and women with, under normal circumstances, an acceptable income, have been trapped into dependency by the progressive tax system."

Another eyewitness account came from Jacob Arfwedsson, who left Sweden to pursue a doctor ate in political science at the Catholic University of Paris. While doing specialized studies under Pro fessor Claes Ryn (another Swedish-born intellec tual of rare ability) at the Catholic University of America, Arfwedsson pointed out to this writer in April 1990 that the whole complex of social services in Sweden is falling apart. The Social Demo cratic government had to renege on its promise to provide care for all children by 1991; desperately ill people have to go abroad because the waiting lists for hospital care in Sweden·are years long. To this crisis-ridden welfare state many in East ern and Central Europe now look for solutions to their own crises. Yet these nations have no real chance to replicate even the more successful as pects of Sweden's cradle-to-grave welfare provi sions. A welfare state must be wealthy in order to provide for the creature comforts and exigencies of a population. And after decades of command economies, these nations are close to economic collapse.

The WallStreetJournal(February 22,1990) edi torializes: ."The reality of today's Sweden is the lingering myth of a cradle-to-the-grave Welfare Paradise. The myth is based on an enormous sys tem of subsidies~from food consumption to hav ing children and even reaching old age. Savings are nonexistent and investments are flowing abroad. That the gravy train is sputtering can be seen in the degradation of services, particularly medical care, and increasing poverty. Conditions in Sweden, of course, are still a far cry from those in Eastern Europe. But since the economic prob lems of both arise from the same socialist theory, countries trying to escape the grips of a statist nightmare have little reason to emulate Sweden's welfare system." As one whose life has been rather evenly divid ed between his native Sweden and his new home land, the United States, it is sad to see the glitter flaking and the glamour fading from the nation that gave him birth. But socialism, whether of the Marxist, democratic, or nationalist kind, is bound to fail.It is, in its various forms, a system of institu tionalized envy.Ifthe failure of the Swedish exper iment in cradle-to-grave welfarism serves as an eye-opener to those who would imitate it, then it will have served an important purpose. D 429 The Two-Edged Sword of Chaos by Gary McGath I n any debate, it's a great temptation to refute the other person on his own terms. Some times this is the right approach; if you and your opponent agree on a basic premise and dis agree only on how to implement it, then it makes sense to show that your proposals are better by his standards. But if the disagreement is one of basic principles, and if beating your opponent on his own ground entails adopting his frame of refer ence, your victory may well be Pyrrhic. Even if you adopt his premise just for the purpose of showing his inconsistency, you've allowed the debate to be conducted on his terms, and you can easily lose sight of what you should really be proving: that he's wrong not just in particulars, but in his basic approach.