SWEDEN; TOWARD ECONOMIC DEMOCRACY

...These questions are still left open by the Social Democratic party and the trade union movement...

...Differing from the so far largely unsuccessful attempt at economic expansionism in Mitterrand's France, the expansionist policy pursued by Sweden's Social Democrats is attempting to boost the economy by means other than opening the purse to Keynesian increases in consumer demand...

...This resulted in the decision by a parliamen329 tary majority that included the Social Democrats to phase out nuclear power over a 25-year period, while encouraging the development of alternative, renewable sources of energy...

...First, there will be a new round of collective bargaining sessions between labor and capital...

...This we can expect sometime in 1983...

...The firms in Osterby and FlOgsjO were profitable and well-managed but systematically deprived of direct influence over their investments, simply because some investment company or absentee director wanted to "rationalize" and get rid of the firm to place money elsewhere, without considering the cost of capital destruction and the social cost of abandoning a whole community...

...The trade unions' self-discipline in periods of Social Democratic rule is a well-known phenomenon in Sweden...

...Clearly, such shareholders so far are psychologically unprepared to share that power in successive stages with those who actually create a substantial part of it with their work...

...According to how the questions were formulated, unfavorable responses on wage-earners' funds varied from 20 to 70 percent...

...We want to see capital create new assets, and to provide employment and income for the citizens...

...I think these critics are wrong, and I base my opinion not only on this statement by Kjell-Olof Feldt but also on interviews with other leading Social Democrats, and on my knowledge of how the Social Democratic party in the past has managed to pursue crucial and controversial proposals...

...The only decision that will be assigned to the boards of wage-earners' funds, just as in financial banks, is how to place capital...

...Certainly, private capitalism will not be dethroned as a result of the launching of these two stages...

...The two main trade union organizations, LO (the Swedish Confederation of Trade Unions) and TCO (the Central Organization of Salaried Employees) have promised both wage restraint and not to request compensation for the effects of the devaluation...

...A discussion about this fundamental political question has been going on within, the movement for many years...

...but this time such restraint will be conditional...

...While maximum profitability is the main criterion in private capitalist enterprises, with the demands of labor and society acting as constraints on efforts to achieve maximum profitability—it is exactly the other way around for wage-earners' funds...

...They won despite the most costly advertising and mass-media campaign ever launched in Sweden against a political proposal...

...It had been introduced by the trade union movement, but the Social Democrats refused to discuss it in the campaign, and this defensive evasion may well have contributed to their defeat...

...and how to introduce wage-earners' funds...

...We consider this development to be detrimental for our country...

...They also made some very concrete promises—to improve child-care allowances, restore the value of unemployment benefits, and to increase old-age pensions, which had been reduced through a public belt-tightening during the reign of the bourgeois governments of 1977-82...

...He suggests that the boards of wage-earners' funds, probably one in each region, should neither get involved in decisions on general economic policy and structural changes nor in investment decisions that should be made at the level of each firm...

...increasing social costs along with a decreasing capacity for carrying these costs...

...These now are the two key issues, and they are closely related: how to "expand" Sweden out of a crisis that is becoming global, at a time when the French Socialists under Mitterrand have failed in their "expansionist" attempts...

...But will the business community collaborate...

...The situation was very similar 25 years ago, when a Social Democratic government legislated a general pension scheme, which then was portrayed as the imminent threat of "repressive socialism...

...Yet when comparing several national sample surveys (most of them never publicized in this connection because made for other purposes), one might also say that popular opinion on wage-earners' funds was unusually sensitive to the precise phrasing of the survey questions...

...What Feldt said on this matter was clear and succinct: Here are two cases from Swedish reality...

...The employees will thus be able to participate in electing the managing director and the company board...

...Only if provisional wage-earners' funds, in the 331 form of collective profit-sharing with unions, are introduced in companies that have profited greatly from the devaluation can we expect a calm and restrained round of bargaining in 1983...

...It seems that part of the business community was more impressed by the 16 percent devaluation of the Swedish crown—the new government's first crucial decision—than they had been by the election campaign of the Swedish Employers' Confederation...

...Public opinion polls conducted after the election support this interpretation...

...Olof Palme also warned the electorate that an increased sales tax and a reduction of real wages are necessary to put the house in order again...

...Although the new Social Democratic government may indeed not have to pursue its intention of creating wage-earners' funds against the will of a well-entrenched public majority, as the Swedish Employers' Confederation claims is the case, it certainly cannot count on active and well-informed popular support for its path-breaking proposal...

...Under such new conditions it might be possible once again to achieve another "historical compromise" between labor and capital—a compromise now a bit closer to real "economic democracy...

...About 45.9 percent of Sweden's electorate voted for the Social Democrats...

...Economic democracy must be a multilevel structure...

...There are 333 some less public defections in the ranks of business leaders, but the "individualism" that is hailed as a prime virtue by conservative ideologists is here conspicuously absent...

...From what I know of the debate about these matters within the Swedish labor movement, I expect the argument to run along these lines...

...And they must do so in order to prove that they are the party capable of solving the problems that now confront every "welfare-cum-capitalist" society...

...And so the social costs of ameliorating the damage of such side effects can be reduced...

...In that '76 election wage-earners' funds— although a new campaign issue and a popular punching bag for the nonsocialist parties—did not count as much as the issue of nuclear power...

...The profit shared with labor would not be lost, all the misinformation to the contrary...

...In Sweden the boost presently relies more on the supply side...

...The bourgeois parties and the Employers' Confederation have waged a violent campaign against wage-earners' funds...

...If wage-earners' funds can be introduced and democratized during the 1980s without destructive obstruction from the business community, it could be one of the most important preconditions for a reasonably successful expansionist economic policy...

...A successful launching of this three-stage rocket and its three-level structure, naturally, will require some collaboration from the business community—in addition to the cooperation of legislative powers and of the bargaining power of the best organized trade union movement in the world...

...One finds stagflation and the rupturing of wage/profit trade-offs...

...However, with a dialectical approach to historical development, it is possible to view this kind of capitalism as a step toward some sort of democratic self-managing socialism...

...A broader panorama of this crossroad of social democracy can be found in U. Himmelstrand, G. Ahrne, and L. Lundberg, Beyond Welfare Capitalism: Issues, Actors, and Forces in Societal Change (London: Heinemann, 1981...

...In the "deep structure" underlying several of these contradictions we can discern the larger contradiction between capital and labor, which will yield less and less to resolution by conventional means...

...Only the small Communist party, typically Eurocommunist but untypically concerned with ecological issues, also took this antinuclear stand...

...It surely will take some time before the leading campaigners will change their public posture or are replaced by more progressive and imaginative men and women...

...And surely from the workers' point of view profit should be earned and taken where the work is being done...

...On the other hand, it is clear that unions, workers, and local party organizations in such places as Osterby and HOgsjii are expecting help from wage-earners' funds...

...That profit, of course, would be put back into production, with costs further reduced by wage restraint...

...But that is another story...

...In the 1982 election campaign, the Social Democrats promised not only "supply-side" expansionism (without explicitly using the term...

...an increase in the price of financial capital as demand diminishes through stagnation...

...On the one hand, it has been made abundantly clear by several spokesmen of the Social Democratic party that—in principle— no money from wage-earners' funds should go to aid ailing companies no longer able to produce profits...

...With such criteria it is less likely that an enterprise will be left to deteriorate because of withdrawal of investment simply because profits can be made more "rationally" elsewhere...

...The Stock Exchange indeed continued its positive behavior after the Social Democrats' election victory—despite the impending threat of wage-earners' funds...

...Conventional economic wisdom, of course, will view such criteria for the allocation of capital with alarm...

...Profitability is necessary but is merely a constraint upon the effort to produce what labor and society demand...

...The inhabitants of Osterby have never met Mr...

...By definition, unrestrained mobility of financial capital in response to market forces produces an "optimal" allocation of resources...

...By accumulating money in funds that we all own and jointly control, we can make capital more productive...

...But why could not these General Pension Funds be entrusted with the necessary allocation decisions on a permanent basis...

...Yet we can only move forward if a new accord can be struck between capital and labor...

...Yet wage-earners' funds do not constitute 334 socialism—particularly not anything resembling the existing "socialism" of Eastern Europe...

...To them factories and work places are only figures in ledgers, shares that can be sold for profit...

...Formally speaking, this could be accomplished when employees in a given firm are delegated with authority by the regional wageearners' fund that has bought shares in that firm...

...A number of labor leaders and economists 335 now indicate that the Swedish labor movement's traditional skepticism about workers' participation was largely caused by fears that such participation would involve co-optation and responsibilities while yielding few new substantial rights and benefits...

...Labor's rationality will be more multidimensional...

...They won a convincing victory in the 1982 elections, despite the multimillion-dollar campaign mounted against them by the Swedish Employers Confederation (SAF)—a campaign mainly directed against the wage-earners' funds...

...Still, the Social Democrats won the election with a somewhat larger margin than usual...

...They are a structural "key" to the party's plans for economic expansion and innovation...

...And now the community of Htigsjii with its factory, its houses, its sports field, and its school is being transformed into a so-called profit unit among many other such units of that shareholding concern located in Stockholm...

...In the final television debate between the major party leaders two days before the September '82 election, Kjell-Olof Feldt, now our minister of finance, gave much more time to other matters than to the issue of wage-earners' funds, although both he and Olof Palme were hard-pressed on this point by their bourgeois opponents' allegations that the introduction of such funds would amount to dictatorship, Sovietstyle...

...The discussion will continue, and sooner or later a third government commission may be appointed to explore ways of "democratizing" the system of wage-earners' funds in other ways than by linking them with the General Pension Funds —a tie that by then will be reality...

...What the Stockholm headquarters decide about the HOgsje• factory, with its capital and its employees, couldn't be more difficult to influence for the inhabitants of ElOgsjd if they were living on the moon...

...And experienced Swedish business leaders know that the Swedish labor movement always has been "productivist...

...Whether the government commission already appointed to look into the principles of allocating financial capital from wage-earners' funds actually will argue as here outlined remains to be seen...

...Obviously, enough of the electorate trusted the Social Democrats to be able to do just that...

...One of the previous bourgeois governments, incapable of resolving the issue in regular parliamentary ways, put the question before the Swedish people in a consultative referendum...

...But how can we assume that there is even the possibility that Sweden's business community may be forthcoming with collaboration, or at least a passive and nonobstructive response, to the introduction of wage-earners' funds— when all the bourgeois parties and the Swedish Confederation of Employers have claimed that wage-earners' funds constitute a socialist system...

...332 • The third stage of this "multistage rocket" toward the future concerns the building of "economic democracy...

...The joy of producing something worthwhile and of watching people in useful and creative work is not one of their prime incentives...

...The mix in such "mixed" economies as Sweden's has worked reasonably well in decades that seemed to promise permanent economic growth...

...Political campaigners use words, and public opinion pollsters are interested in how people respond to words with words...

...Edin and Hedborg question this economic wisdom in a fascinating little book whose title The New Challenge—tells us a lot about the attitude of the Swedish labor movement right now...

...First, in the recent political history of Sweden, it has been a recurrent practice of the more conservative wing of Sweden's business community to label as socialist every structural reform proposed by the Social Democrats—often reforms that later became generally accepted...

...In FlOgsjii, in the province of Siirmland, there is a well-managed family firm that for many years has provided employment and income to the inhabitants...

...But a big investment company, Skrinet, has bought a big chunk of shares in the firm...

...The first stage (capital accumulation through collective profitsharing in provisional wage-earners' funds) and the second stage (exploring the criteria for allocating wage-earners' capital) concentrate on questions of accumulation and the use of wage-earners' capital as a supplement to the private capitalism that still is dominant in Sweden...

...Now there is a threat to discontinue production or move the factory elsewhere...

...Yes, objectively speaking, there are plenty of good reasons for managing directors to accept a prompt and well-coordinated introduction of these funds—at all the three stages...

...In conclusion, let us look at the short-term policy of the new Social Democratic government with regard to the present economic crisis...

...Naturally, this may influence the conditions that determine whether or not investments are made in certain firms...

...by '76 Sweden had more nuclear power per capita than any other country...

...On the contrary, an ever growing number of firms in Sweden are governed by forces far away from the toil and the everyday problems of the work place—by investment companies, holding companies, big banks, and private funds...

...It is not yet resolved...

...There are others who speak with money, and respond with money...

...Public and parliamentary support was weak at the time...

...It is well-known that they pioneered applications of Keynesianism in the 1930s, with an added mixture of Marxism, some home-made ingredients, and a big devaluation of the Swedish crown...

...But since it is unlikely that such a system of collective profit-sharing will emerge in the bargaining process itself, it will have to be introduced through legislation initiated by the Social Democratic government...

...Some of the most crucial parameters of economic activity (such as the wage/profit trade-off point) could be changed almost immediately, to the advantage of economic expansion, while others (such as the profit elasticity of investments) might not change for some time...

...330 Obviously, the question of wage-earners' funds is controversial, even among Social Democrats...

...Swedish Stock Exchange started showing positive signs even before the 1982 election, at a time when predictions of a Social Democratic election victory were becoming strong...

...In that election campaign the electorate was concerned with two important new issues that had never before been on the agenda: first, nuclear power, and second, a plan for wage-earners' funds, which would give labor progressively more and more power over investments and the use of capital in general...

...Perhaps the media's utter saturation with negative messages about wage-earners' funds for a whole year has had a reverse effect: surfeit and, finally, boredom...

...Stenbeck and will never meet him, much less talk to him...

...But are there any reasons for business leaders and managing directors to accept such a "socialist" contraption as wage-earners' funds...

...To simplify matters during these first two stages, a well-known and by now generally accepted decision-making apparatus will be utilized to allocate wageearners' capital until a more satisfactory formula has been found—namely, the apparatus of the General Pension Funds...

...Those relatively few big shareholders who are more interested in economic power than in earning dividends may indeed have something to fear from the wage-earners' funds...

...But this is not an unfamiliar problem for the Social Democrats...

...Voters, bored with the campaign and increasingly disenchanted with the performance of bourgeois governments since 1979, but also somewhat suspicious about wage-earners' funds, found it easier to vote Social Democratic in 1982 than in '76 because they were paying far more attention to such other issues as unemployment, inflation, and industrial stagnation...

...Public opinion polls, as publicized in the press toward the end of the 1982 election campaign, showed a diminishing number of Social Democrats voicing a definite yes on the question of wage-earners' funds, an unusually large number of undecided and don't-know replies, and a slight majority of negative over positive opinions...

...Only after labor's political and trade-union branches had achieved a number of other crucial goals, and only when it had achieved a position of strength vis-à-vis the business community (which now is deeply troubled by its inability to deliver economic growth), could these fears of co-optation be dissipated within the labor movement...

...A lot of personal as well as organizational prestige was invested in the campaign against wage-earners' funds by Sweden's business community...

...They say that such funds bring about a concentration of power, and that they threaten our democracy...

...How could the business community ever concur in the building of socialism in Sweden...

...Meanwhile, the Social Democratic government will get the ball rolling...

...If wage-earners' funds and the new accord move ahead and thereby expand Swedish business, that very likely will solidify the value of Swedish shares and stocks...

...In an interview I had with Per-Olov Edin at the Ministry of Finance in December '82, he clarified his point of view...

...Critics from the left have alleged that wage-earners' funds, as conceived by the Social Democratic party, are nothing but a new way of furnishing the same old capitalists with the financial capital they need, disregarding the power of private and corporate capital...

...This is what some leaders of the Social Democratic party and of Sweden's trade-union movement are saying today...

...Since it would take me too far afield to discuss here other, more democratic models of socialism, let me simply emphasize a few important aspects of this whole question...

...Nuclear power no longer is the key issue...

...The decision will be taken by the owner of the factory, Jan Stenbeck...

...That progressive Swedish businessmen and managers might contribute to our taking this step toward socialism in Sweden through implementing the acceptance of wage-earners' funds is no more remarkable an assumption than the fact that capitalism has contributed to and frequently accepted the creation of trade unions and socialist parties, and even has collaborated with them...

...And that, in brief, describes the multilevel structure of this plan for economic democracy...

...And so Center's ThorbjOrn Falldin, a sheep farmer from the north, a shrewd politician and probably sincere in his concern with the dangers of nuclear power, became Sweden's prime minister...

...Yet Olof Palme has continued to assure the other side that his hand will remain stretched out and the door open for serious talks with business leaders about wage-earners' funds...

...If achieved, it would certainly offer Sweden's industry a great comparative advantage...

...So, if one director rules over many workers, that is democracy...

...Nuclear power surely was not an entirely new issue...

...A big devaluation indeed is an important ingredient in the Social Democratic recipe for the mid-'80s...

...The board of a regional wage-earners' fund could be elected either on a separate ticket in connection with regular elections or in a more composite manner, perhaps through a tripartite representation of unions, private capital (as long as it remains a partner), and the general regional electorate...

...If the Social Democrats succeed in remaining in power throughout the '80s and manage to launch all stages and levels of economic democracy, based on a full-fledged system of wage-earners' funds, it will not only be a great accomplishment but also an extremely interesting social experiment with significant implications for political and economic theory...

...But decisions on such matters are and should also be influenced by conditions unique to each firm and should therefore also be made at that level...

...In Osterby, a community in northern Uppland, there is a steel factory...

...By the summer, we may expect the launching of a government bill on this matter—the first stage in what will turn out to be much like a multistage rocket: the building of a system of wage-earners' funds through collective profit-sharing...

...a growing attraction to unproductive speculation in carpets, diamonds, art collections, and so on...

...Edin and Hedborg, however, are not rejecting the role of market forces, which Edin has described as "indispensable...

...Politicians who once fought that pension scheme, calling it a sinister instance of "creeping socialism," now, in the early 1980s, have come around to proposing expansion of the general pension scheme—calling it a better solution to the problems of democratically controlled accumulation and use of capital than the wageearners' funds...

...But dogmatism—"supply-side," Keynesian, or otherwise —is not the style of the Swedish Social Democrats...

...A wellknown Swedish economic historian has suggested that a system based on such funds be called "democratic collective capitalism...

...You will find more individual expression in the debate about wage-earners' funds among spokesmen of labor collectivism—and more collectivist hush-hush and reprisals against independent individuals among ideological individualists in the business community...

...Shareholders also have very little to fear from wage-earners' funds during their lifetime —if their main interest is in substantial dividends rather than economic power...

...Second, from a Marxist point of view it might be more correct to characterize wage-earners' funds as a further refinement of capitalism...

...But he is equally concerned with the question of capital accumulation and the use of capital...

...The closing words of this long quotation make it abundantly clear that our present minister of finance is certainly not neglecting the issue of power in dealing with the question of wage-earners' funds...

...Kjell Olof Feldt thinks that "reason will prevail...

...Democratization of the economy therefore will not imply some kind of centralized governance by democratically elected national and regional political bodies, or by a democratically appointed board of some General Pension Fund...

...The Center party won a great victory in the 1976 elections...

...This is what we are aiming at with our proposal on wageearners' funds...

...Although rather late in accepting ideas of workers' participation and wage-earners' funds when compared with labor movements in other parts of Europe, Swedish labor now is in a better position than most of them to pursue this innovative experiment consistently and intelligently...

...Investment decisions, and other decisions concerning a given firm, should be made in a decentralized manner within the firm...

...They assert that collective labor, with its social repertory of incentives, will respond differently to market conditions than private capital, but certainly not less rationally...

...Although the wage-earners' funds proposed jointly by the party and the trade unions now have been attracting less attention than other matters, the total new Social Democratic approach cannot be understood without a consideration of these funds...

...through the introduction of wage-earners' funds, such decisions will increasingly involve the employees in the firm and their organizations...

...But since most big shareholders in Sweden are organizations and institutions—companies owning other companies—such psychological hangups are probably less important today than they were in the past in determining attitudes toward changing ownership patterns...

...But things now turn out to be highly contradictory...

...yet only a few years later, public opinion polls showed overwhelming support for the scheme...

...As regards decisions on general economic policy and structural changes, which determine the parameters of economic activity at the levels of regions and firms, such overall decisions will be made by the Cabinet and Parliament...

...Now, after six years in opposition—a period that saw four different bourgeois governments in office—the Social Democrats are back in power...

...Put another way, labor and society are obligated to produce commodities and services at reasonable prices, but to do so in a decent working environment, with stable and preferably growing employment, giving full consideration to ecological and social costs...

...But there are other ingredients...

...By considering a wider scope of incentives and interests in deciding on allocation of resources, fewer negative environmental and social side effects should be generated...

...A second stage will begin with the work of another government commission that is to consider the criteria of rational allocation of financial capital accumulating in wage-earners' funds...

...Per-Olof Edin, a trade union economist now working in the Ministry of Finance, and Anna Hedborg, another trade union economist who assisted in writing the first proposal for wageearners' funds, have formulated the criteria for allocation in the following rather abstract but quite illuminating way...

...Osterby and FlOgsjb are not unique cases...

...According to this common approach no proof is necessary and the multidimensional nature of "utility" can be disregarded...

...But new in this regard was the Center party—the renamed version of the old Agrarian party— and its decision to withdraw its earlier support from the Swedish Nuclear Power Program...

...The first stage of building a system of wageearners' funds through a combination of wage restraint and collective profit-sharing would also be the first step toward advancing such accord...

...but it will have to put up with a somewhat different distribution of power over investment decisions...

...This electoral victory cannot simply mean a return to the good old Social Democratic policies of stimulating capitalist economic growth and redistributing a generous slice of the output through taxation and egalitarian welfare measures...

...That factory determines employment, income, and the future for the inhabitants of Osterby...

...The prices of stocks and shares are likely to increase once wage-earners' funds start buying shares with the income from collective profit-sharing...

...and so, with the 5.6 percent polled by the Communists, the Social Democrats have a sound parliamentary majority in virtually all important matters...

...but if many workers rule over one director, that is dictatorship...

...The well-known Swedish labor-market policy of the 1950s and '60s, designed by trade union economists Meidner and Rehn, was essentially an application of what today is called "supply-side economics" —now recommended by neoconservatives...

...The original outline for wage-earners' funds has been described by the main designer, Rudolf Meidner, in his book Employee Investment Funds: An Approach to Collective Capital Formation (London: Allen & Unwin, 1978...

...Supplyside" economics is nothing new in Sweden, and certainly not something adopted in order to appear fashionable...

...336...

...About 55 percent of those who withdrew their support from the Social Democrats voted for the Center party—swayed, it seems, by the issue of nuclear power...

...Yet putting the house in order again will not be an easy task in a world of protracted global recession, and with a foreign debt that has grown from virtually zero in 1976 (before the bourgeois parties took over) to a figure so high in 1983 that it will take plenty of hard work and frugality throughout the '80s to pay it off...

...Mr Stenbeck lives in New York...

...Well aware that the proportion of the population engaged in agriculture was rapidly shrinking, the old Agrarian party had decided to revamp, in order to penetrate urban localities —taking the new name, and endorsing various populist and environmentalist issues, such as the abolition of nuclear power...

...Indeed, there are indications that Sweden's Social Democrats are taking important steps in new directions...

...After all, trade unions and socialist parties also may be steps toward socialism...

...Later on, a government commission that now is looking into some technical details of profit-sharing schemes will submit its proposals...

...And so the new Center party had decided—alone among the larger and more respected parties— to reject nuclear power completely...

...Eyen if the Social Democratic leadership is right in expecting growing support for wageearners' funds in the near future, it will require time as well as tactical, strategic, and educational skills to implement a system of wageearners' funds that will realize its promise...