Transcript Welfare capitalism: the Swedish economy 1850-2005

Sveriges ekonomiska
utveckling 1850-2010
Underlag
Sjögren (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 18901935
• The Swedish model, mature industries and
welfare economy 1935-1975
• Neo-liberalism and internationalisation within
the service society 1975-2005
State
Liberal, company act (joint
stock banks), capital
import, infrastructural
projects, tension in the
parliament between
represents for agriculture
and industry.
Financial
system
Institutional reforms,
formalisation of the
system, joint stock
banks, Scandinavian
Monetary Union
1873, central
banking.
Company
Natural resource-based
industry and mining,
export of iron, timber
and saw products,
railway companies,
strong mechanisation,
factories, merchant
houses.
Labour market
Custom-based, free setting of
wage rates, urbanisation, working
class, emigration (1.15 million
people 1850-1930 with a peak in
the 1880s).
Period 1850-1890
Education &
training
Compulsary six years
schooling from 1842,
technical training,
import of foreign skills.
Lars Magnus
Ericsson, 18461926
State
Promoting growth,
technological procurement,
coordination of large
investments, launching of
social reforms.
Financial
system
Corporate finance
(universal banks),
growing stock
market, deflation
crisis 1920-21,
mergers, Kreuger
crash 1932, new
banking law 1934
Company
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
Labour market
First unions and employers’
confederations (LO 1898 and SAF
1902), collective agreements,
industrial cities
Period 1890-1935
Education &
training
Special institutes for
technical and
commercial education,
taylorism,
professionalisation
processes
Shares of employment in various sectors and change in absolute numbers.
Sector
1890
1930
Absolute change 1890-
1930
1.Agriculture
&
related 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
activities
State
Re-distributive, Swedish
model, growth of public
sector, regulatory regimes
and support of various
favoured sectors (mainly
housing, infrastructure),
higher taxes.
Financial
system
Regulated creditbased system, stock
market low
importance, large
bond market
Company
Mature multinationals,
consumer-related
innovations, industrial
society with a growing
service sector, golden
age 1950s and 1960s,
many successful
multinational firms
Labour market
Saltsjöbadsavtalen, solidaristic wage
policy, Swedish Labour Market Authority
and Swedish Labour Market Board,
increasing women participation.
Period 1935-1975
Education &
training
Senior high school,
expansion in
educational system,
advanced technology,
training programs
Shares of employment in various sectors 1931-35, 1951-55 and
1971-75. Per cent.
Sector
1931/35
1951/55
1971/75
Agriculture and
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
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
related activities
communication
Marcus ”Dodde”
Wallenberg, 18991982
State
Increasing state debt and budget
deficits leading to substantial
depreciations 1976-1982, neoliberalistic policies, joining the
European union in 1995, EUreforms, privatisation programs.
Financial
system
Company
Market-orientation
and reregulation,
financial crisis 19911993, growing stock
market, markets for
venture capital.
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.
Period 1975-2005
Education &
training
Vocational training, mass
university and regional
university colleges,
science, innovation and
technology policies.
Labour market
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.
Shares of employment in various sectors 1971-75, 1991-1995. Per cent.
Sector
1971-75
1991-95
Agriculture and related
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
activities
Cristina Mayville Stenbeck, 1977-
Annual growth in GDP/capita 1800-1995 in
Sweden. Per cent and fixed prices.
Annual growth
1800-1850
0.4
1850-1890
1.5
1890-1930
2.1
1930-1975
3.2
1975-1995
1.3
1800-1995
1.8
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-, redistribution 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 open
Bureaucracy professional but not authoritarian
Policies differentiated but have a central
coordination
Low level of corruption
Close links between interest groups, trade unions,
business leaders and the state
To 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: SwedenFinland 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.