Sveriges ekonomiska utveckling 1850-2010

UnderlagSjögren (2008),”Welfare capitalism: the Swedish economy". Pdf-fil på kurshemsidan

• The evolution of Swedish welfare system and the “Swedish Model”.

• Country-specific characteristics and the role of business in the transformation of the economy.

• Reflection: is there a “Nordic model” or not?

Four periods

• Four periods of economic transformation:

1.1850-1890

2.1890-1935

3.1935-1975

4.1975-2005

Formative phases (20-25 years)

Periodisation problems

• Historical layers: path depedency in combination with change of institutional and techno-economic regimes. Three strong waves.

• Industrial revolutions: 1780s-, 1880s-, 1970s-

• Waves of globalisation

Four periods in Swedish economic history

• Liberalism and early industrialisation within agriculture society 1850-1890 – the foundation era

• Industrial society and financial capitalism 1890-1935

• The Swedish model, mature industries and welfare economy 1935-1975

• Neo-liberalism and internationalisation within the service society 1975-2005

Natural resource-based industry and mining, export of iron, timber and saw products, railway companies, strong mechanisation, factories, merchant houses.

Liberal, company act (joint stock banks), capital import, infrastructural projects, tension in the parliament between represents for agriculture and industry.

Institutional reforms, formalisation of the system, joint stock banks, Scandinavian Monetary Union 1873, central banking.

Compulsary six years schooling from 1842,technical training,import of foreign skills.

Custom-based, free setting of wage rates, urbanisation, working class, emigration (1.15 million people 1850-1930 with a peak in the 1880s).

Labour market

Company

State

Education & training

Financial system

Period 1850-1890

Lars Magnus Ericsson, 1846-1926

Engineering culture, inventions, cartels, strong growth in energy, pulp and paper, then electronics, chemical-technical and building and construction, from the 1920s strong rationalisation and structural transformation

Promoting growth, technological procurement, coordination of large investments, launching of social reforms.

Corporate finance (universal banks), growing stock market, deflation crisis 1920-21, mergers, Kreuger crash 1932, new banking law 1934

Special institutes for technical and commercial education, taylorism, professionalisation processes

First unions and employers’ confederations (LO 1898 and SAF 1902), collective agreements, industrial cities

Labour market

Company

State

Education & training

Financial system

Period 1890-1935

Sector 1890 1930 Absolute change 1890-

1930

1.Agriculture & related

activities

58 34 - 165,000

2. Industry and craft 17 26 + 400,000

3.Building& construction 7 9 + 120,000

4.Transport& communication 3 6 + 110,000

5. Private services 11 19 + 290,000

6. Public services 5 6 + 70,000

Total employment 100 100 + 825,000

Shares of employment in various sectors and change in absolute numbers.

Mature multinationals, consumer-related innovations, industrial society with a growing service sector, golden age 1950s and 1960s, many successful multinational firms

Re-distributive, Swedish model, growth of public sector, regulatory regimes and support of various favoured sectors (mainly housing, infrastructure), higher taxes.

Regulated credit-based system, stock market low importance, large bond market

Senior high school, expansion in educational system, advanced technology, training programs

Saltsjöbadsavtalen, solidaristic wage policy, Swedish Labour Market Authority and Swedish Labour Market Board, increasing women participation.

Labour market

Company

State

Education & training

Financial system

Period 1935-1975

Sector 1931/35 1951/55 1971/75

Agriculture and

related activities

34.2 18.6 6.8

Industry and craft 26.2 34.6 29.4

Building/construct. 8.1 8.4 8.6

Transport and

communication

5.8 7.5 7.5

Private services 18.9 20.4 23.9

Public services 6.7 10.5 23.7

Total employment 100 100 100

Shares of employment in various sectors 1931-35, 1951-55 and 1971-75. Per cent.

Marcus ”Dodde” Wallenberg, 1899-1982

Structural crisis and creative destruction from the mid 1970s, growth in services, increase in outward and inward foreign direct investment and M&A from the 1980s and onwards, increasing R&D, ICT-sector, biotech, change of corporate governance 21st C.

Increasing state debt and budget deficits leading to substantial depreciations 1976-1982, neo-liberalistic policies, joining the European union in 1995, EU-reforms, privatisation programs.

Market-orientation and reregulation, financial crisis 1991-1993, growing stock market, markets for venture capital.

Vocational training, mass university and regional university colleges, science, innovation and technology policies.

Structural crisis, activated labour authorities, labour market education system reorganised in 1986, high unemployment rate (early 1990s), then more fragmentation and differentiated wages, foreign labour, shorter labour contracts.

Labour market

Company

State

Education & training

Financial system

Period 1975-2005

Sector 1971-75 1991-95

Agriculture and related

activities

7.1 3.9

Industry 28.5 20.5

Building and construction 8.6 6.1

Transport/communication 6.6 7.0

Trade 15.5 15.3

Private services 9.7 13.8

Public services 24.0 33.4

Total employment 100 100

Shares of employment in various sectors 1971-75, 1991-1995. Per cent.

Cristina Mayville Stenbeck, 1977-

Annual growth

1800-1850 0.4

1850-1890 1.5

1890-1930

1930-1975

2.1

3.2

1975-1995

1800-1995

1.3

1.8

Annual growth in GDP/capita 1800-1995 in Sweden. Per cent and fixed prices.

Distribution of Business Sector Employment by Enterprise Size, 1991. Per Cent.

1-19 20-199 200-499 500- Total

Sweden 18 17 7 58 100

France 29 21 16 34 100

Germany 26 19 18 37 100

United Kingdom

33 16 17 34 100

Is there still a Swedish Model? Definition 1

• Solidaristic Wage Policy, central negotiations (Saltsjöbaden Agreement 1938-, Rehn-Meidner

Wage Bargaining Model, EFO-model)Break up in the 1970s

2007-2009 unsuccesful re-start of Saltsjöbaden Agreement

Result: No Swedish Model today

The core economic goals of the Swedish model, 1950s and 1960s

Full employment, the unemployment rate varying between 1.5 and 2.5 per cent

Low inflation – about 3 per cent High degree of cyclical stability No balance of payment troubles

No visible structural imbalances between various economic sectors

Rate of growth of total output about 4 per cent

Definition 2

• Welfare state, certain range and size of the public sector

The People´s Home 1930s, housing and infrastructure programmes, unemployed and women access to the labour market 1940s-, re-distribution of income, transferring system, high taxes, the state plays an active role, state ownership in the business sector, public expenditure/GDP 31%-62% 1960-80.

Definition 3• Mental modes, compromise thinking, egalitarian

spirit, corporatism

State is centralized but openBureaucracy professional but not authoritarianPolicies differentiated but have a central

coordinationLow level of corruption Close links between interest groups, trade unions,

business leaders and the stateTo reach consensus in the parliament

Is there a Nordic Model or not?

• Can we talk about a Nordic model of capitalism/Nordic business system?

• Or are there two, or even four separate models?

• Or, the other way round: is the Nordic model only a variation of models in other European countries?

• Can we talk about a Nordic model of capitalism: in what way has such a model differed from models adopted in other European countries and other parts of the world?

YES, there is a Nordic model of capitalism.

But clear variations between the countries exist: – An ’eastern’ and ’western’ dimension: Sweden-

Finland vs. Norway-Denmark– Or regional: southern Sweden and Denmark

similar, as, Ostrobothnia in Finland and Northern part of Sweden.

– But also a forerunner vs. latecomer: dimension Sweden-Denmark vs. Norway-Finland

A Nordic Model

• The Nordic countries have had and still have a lot in common, culturally, politically and economically.

• Swedish Model – definition 2 and 3 embedded in a Nordic Model.

• Nordic Model of welfare capitalism has been challenged by globalisation, EU-reforms - weakened the power of the national states.