Understanding Evolution of the Swedish Model: Change or Continuity?

IntroductionFrom the very beginning of its existence, the Swedish welfare state model (in short: the Swedish model) has evolved. For this reason it is easy to understand that some inconsistencies appear in the literature regarding the precise description of what this "Swedish experiment" (as A. Lindbeck calls it; 1997, pp. 7-8) indeed was. The fact of its evolution is not the only reason for these discrepancies - the very idea underlying the Swedish model was broad in its scope. It was not only political or economic concept, but it concerned the society as a whole. Therefore it influenced all aspects of social life and at the same time was under constant pressure from various social groups. It should be remembered that the goal of the interwar generation of Swedish socialdemocrats was to create new, classless society with decent living standards for everybody, which required taking control over the economy and steering the transformation of society. But even this political objective of Swedish Social Democratic Party (Sveriges socialdemokratiska arbetareparti; SAP) was short of visions of social engineers whose utopian schemes appealed to the imagination of ordinary citizens and elites of the country. The transformation of society expected by P.A. Hansson and E. Wigforss was quite modest compared with one envisioned by the Myrdals (see Hirdman 2000, ch. 4, 6). Hence the Swedish model must not be reduced solely to the economic sphere, but it needs acknowledgement of ideas, politics and social preferences of relevant time.Therefrom we argue that it was the relation between economic and social sphere that created the essence of the Swedish model and only through this relation one may understand its evolution. It seems also necessary to extent the study period of the Swedish model to modern times, when neoliberal ideas seem to have won the day and heavily influenced its form. With the Swedish model finding itself on its "deathbed" (Steinmo 2002, p. 851) in the early 90s, to many it was quite obvious that it would soon quietly pass away. In truth, it was a time of tough decisions and choosing new path of development. Thus, we assert that one should distinguish the "classic" Swedish model and the "modern" one with a boundary year of 1990 in which the paradigm of full employment was replaced by the target of price stability. This new path did not imply though that previous social principles and values were abandoned or exchanged for some completely new ideas. We should perceive it as a continuation of the model in the new socioeconomic environment, but definitely not as a departure from it.1. Search for a new society. The "classic" Swedish modelThe idea of new, classless society as a political concept was first presented in public in 1928 when P.A. Hansson, the SAP leader, delivered a speech in which he used a rhetoric of "people's home" (folkhemmet; more on SAP and political issues of this time see Blyth 2002; Berman 2006). However, even though his party formed a government just four years later, it was not until after the second world war that the socioeconomic ground for his ideas was ready for such a change. The next generation of socialdemocrats with the new leader T. Erlander started the implementation of crucial reforms which later became known as the Swedish model. Yet it has to be remembered that the post-war economic situation of Sweden was exceptional. With war-torn Europe full employment existed as a result of high demand for Swedish products and the economy was on the verge of overheating. In this conditions it was possible to conduct more egalitarian and pro-social policies with little risk of constraining economic growth. Although a few social reforms were implemented in late 40s and early 50s, the breakthrough came with the concept produced by union economists G. Rehn and R. Meidner, who in 1951 presented a policy model which aimed for both economic and social goals and gained support of the government in 1955 with new minister of finance G. …