Can Poland Afford the Swedish Model?
Kowalik, Tadeusz
During the last three years, the ruling elites in the countries of Eastern Europe, especially Poland, have clearly aimed to limit or even liquidate entirely the welfare state. They have...
...Although I agree with the criticisms of Lindbeck and other Swedish liberals, I remain convinced that the Swedish model itself, with its basic components, constitutes an overwhelmingly positive experience, a major historical innovation...
...4. The final conclusion that we can draw from the Swedish experience concerns the need to "de-etatize" the economy in line with the Swedish notion of the (limited) socialization of property or, more generally, the theory of ownership as a cluster of functions—the basis for the theory of functional socialism...
...Workers in enterprises on the verge of collapse did not, then, feel themselves abandoned and left to their own devices...
...This means, among other things, that, in contrast to the West, a far greater role will be played by non-state and non-private forms of property, such as cooperatives and worker-owned companies...
...There is a growing awareness that the fundamental cause of this impasse is the economic collapse brought about largely by the "shock therapy" applied during the last two years in the face of mounting public opposition...
...Such a policy was implemented on a broad scale by West Germany, Austria, and France after the war...
...This approach takes as its starting point the notion that the state has responsibilities and that these include the responsibility to respect the principle of equal opportunity and to mitigate inequalities in income...
...A rapid decline in demand leads to lower prices, and factories that are unable to adapt by lowering production costs through innovation simply go bankrupt and drop out of the market...
...The social contract would have to eliminate a number of barriers to the development of these forms of property...
...This would involve rejecting the notion of unrestricted competition as an overriding value and combining competition with cooperation...
...now it complains that we are all living above our means...
...So far, I have mainly discussed what is desirable...
...On the 92 • DISSENT contrary, there was general acceptance of their argument that unions would thus be rid of their "age-old" dilemma—to struggle for higher wages and thus fuel inflation or to abandon this struggle and thus weaken the union movement...
...Moreover, in Sweden and elsewhere, many of the compromises arrived at by capital and of were intended to limit the functioning of the market or restrict its destructive forces...
...Presumably, those who propound this view think that it is the easiest way to get rid of the problem...
...Both parties to this agreement aimed to exclude politicians from decision making related to the labor market...
...Sweden's socioeconomic system is at least fifty years old...
...In my opinion, there is no ready and obvious answer to this question...
...In my opinion, however, the state has at its disposal all the tools it needs to limit the scale of unemployment...
...Feasibility The four points elaborated above constitute, in my opinion, the basis of the Swedish model and have, generally speaking, worked in practice...
...In this costly and painful manner, economic progress takes place...
...The concept of social liberalism was given theoretical formulation in the mid-1930s by, among others, Bertil Ohlin, who later received the Nobel Prize for economics...
...I would not advise any country to go above such figures—perhaps not even close to them...
...The 94 • DISSENT free-market approach to housing policy was one of the most disastrous aspects of the Balcerowicz program...
...Economic policy...
...It thus deserves thorough examination from the point of view of the changes currently under way in Eastern Europe...
...At the beginning, I criticized the argument that the Swedish experience cannot be repeated by other countries...
...The difficult and controversial issue, of course, is the exact whereabouts of this point, and how to avoid . . . overshooting it...
...In the 1970s, the employers' federation began to boycott the central mechanisms for resolving labor disputes in favor of negotiations at the plant level...
...It is frequently forgotten that Swedish liberals have more in common with the American Democratic party than with the supporters of Thatcherism or the free-market politics currently advocated in Poland...
...Many sociological studies reveal a longing for popular rule...
...Henceforth, the wage level was not to be based on the average wage or, even worse, on wages in the most inefficient firms, but on wages in the most profitable firms that were successful on the world market...
...The second major agreement, concluded in 1938 in Saltsjobaden between the most powerful trade union federation (LO) and the most powerful employers' organization (SAF), probably constituted the decisive turning point in the formation of the Swedish model...
...1. The first and most fundamental conclusion is that we should aim for the broadest possible social participation...
...Somewhat later, Gunnar and Alva Myrdal showed that social reforms to improve family living conditions could counteract the dramatic decline in population...
...In recent months it has been publicly stated with increasing frequency that the majority of the population is opposed to the reforms, opposed to the capitalist system that has been constructed, and that the political elite is now aiming to implement the reform program against the will of the majority...
...Everyone knows how financially profitable divorce is for a woman with three children...
...One result is that it is extremely difficult to form a ruling majority...
...He warns those countries now setting out to create a welfare state against the tendency to perceive certain social and political processes as irreversible...
...It is possible, then, that former centralizing tendencies have become so strong within the state apparatus that powerful vested interests now prevent the state from effectively steering social processes...
...2 David Levin and Laura Tyson, "Participation, Productivity, and the Firm Environment," in Alan Blinder, ed., Paying for Productivity (Washington, D.C.: The Brookings Institution, 1990...
...And the problem is simply this: is it possible, at the end of the twentieth century, to repeat the primitive accumulation of capital with its drastic extremes in income distribution, including the absence of all responsibility on the part of the state for employment, education, housing for the poor, and so on...
...Contemporary theories of economic development are highly critical of development models implemented during the 1960s, which involved the imposition from above of economic programs thought up by experts—usually Western experts...
...In other words, we should advocate a moderate egalitarianism that will reduce the scale of inequality...
...2 It would also involve reaching agreement on the reduction of drastic income differentials which would otherwise undermine the development of cooperatives, ESOPs, and so on...
...This Social Contract covers both the direction and content of socioeconomic policy and the mechanisms for 90 • DISSENT resolving conflicts and arriving at key decisions...
...In order, however, to perceive the historical significance of the Swedish experience, we need to shift our focus away from its current problems, which are caused only in part by systemic factors...
...In this respect, too, our political elite fails to take note of the historical experience of modernization and the most recent theories of socioeconomic development based on the experience of the Third World...
...It is assumed (and sometimes stated outright) that Poland now has to go through the stage of "primitive accumulation of capital," just as the developed countries of the West did in the nineteenth century...
...In Poland the most popular argument of those who reject the Swedish model is that we simply can't afford it because the Polish economy is at a significantly lower level of development...
...Contemporary theories of economic development, which are largely based on the experience of the Third World, indicate—and this is borne out by empirical data' —that expenditure on education, health, and other components of the social infrastructure is a major factor in increasing labor productivity at the macro level even though, from the micro-economic point of view, they appear to be only a current cost in the form of high taxes...
...In order to play this role again, however, it would have to abandon its recent tendencies toward the clericalization of sociopolitical life, which are increasingly depriving it of support among the most enlightened sections of society...
...Two leading members of the SAP in particular, Minister of Finance Ernest Wigforss and Minister of Labor Gustav Moeller, played a major role in the formation of the Swedish system...
...It should be remembered that every system has its high and low points, every system can be reduced to absurdities, can be distorted or corrupted...
...Thus, a rather equal distribution of income may not by itself be unfavorable for economic efficiency, to the extent that it is the result of an even distribution of human and financial capital...
...35 (1991...
...After all, despite Poland's traditions, two great social contracts (the August Agreements of 1980 and the Round Table of 1989) have proved possible...
...One frequently gets the impression that undermining the credibility of the Swedish 88 • DISSENT model constitutes part of a strategic propaganda campaign...
...Our economic modernization and sociocultural development will inevitably have to take place in the framework of a welfare state, albeit one that is far poorer and more modest than Sweden's...
...As many historians have shown, during the 1920s and 1930s there were numerous strikes and lockouts...
...Rehn and Meidner did not encounter significant opposition to the idea of centralized negotiation and setting of wage rates...
...He showed that wages must be treated not only as a cost factor, but also as an integral part of global demand...
...The policy of folkhem, initially launched by a group of progressive intellectuals, resulted in Sweden's having the highest turnout in elections and the highest percentage of the work force in trade unions, a powerful consumer movement, and a strong environmental movement...
...Is it realistic to attempt to imitate the Swedish model in such radically different circumstances...
...From the 1930s onward, Sweden implemented an increasingly successful antirecessionary policy while adhering to a policy of neutrality in its international relations...
...Japanese competition...
...All these factors mean that a primitive accumulation of capital is no longer possible...
...It grew out of cooperation with numerous professional and social organizations, above all the trade unions and employers' federations...
...But the alternative is an ever deepening crisis, growing feelings of hopelessness, and slumpflation— all of which may . provide fertile soil for dictatorship...
...This derived from the policy of full employment, which was already in effect and showing some results, and from the existence of an efficient administration that worked closely with the unions...
...In this situation, the only possible outcome is increasingly painful stagnation, a continuing decline in living standards, and deepening chaos...
...After the dramatic experience of the Great Depression and what appeared at that time to be spectacularly successful planning in the Soviet Union, the atmosphere in many countries was so imbued with the mythology of "planning" that even free marketeers declared that "these days, we're all planners...
...Their acceptance by the architects of Poland's systemic transformation is, above all, a question of a choice of values and thus a question of the social movement that will dominate the process of change...
...Yet another difficult question is whether it is possible to imagine in Poland social forces sufficiently organized to carry through a social contract...
...Swedish Critics of the Model A sensible evaluation of the Swedish model, must acknowledge that the weaknesses and defects—perhaps not so much in the model itself as in the way it has been implemented— are real problems and have not been simply invented by its critics...
...These included not only those institutions that came out of the Saltsjobaden Agreement but also a whole administrative-organizational system that emerged during the years of wartime mobilization of the economy (neutral Sweden prepared for war in the event of any infringement of its neutrality) and which was purposely retained after the war...
...public sector expenditure should be expanded cautiously...
...Lindbeck is thoughtful and cautious in his approach to the major features of the Swedish model: the policy of full employment, the pension system, and so on...
...It is possible, then, that a social contract could provide a mechanism whereby society regains control over the state...
...I have written about this in detail elsewhere, and I do not wish to return to the issue here, except to point out the following: Poland is now in the process of de-etatizing its economy, and privatization of a substantial proportion of the state sector is one of the main ways in which this is to be achieved...
...According to Lindbeck, the Swedish experience shows that It seems possible to combine the traditional "liberal" model with quite ambitious programs of income transfer, social security systems, and welfare state services to households—up to a point...
...The notion of folkhemmet essentially signified that it was precisely the state that was to constitute a "home for all citizens...
...One of these was a growing feeling of security on the part of workers and the union movement...
...This so-called Basic Agreement established the Labor Market Council, which was to resolve management-labor disputes through negotiations...
...Sweden is taken as the ideal model of the welfare state, although it is well known that the "welfare state" is a phenomenon that encompasses much more than this one—in many respects unique—Scandinavian country...
...Probably the most serious and best-known critic of the Swedish model is Assar Lindbeck, Stockholm University professor and president of the European Economic Association...
...The younger generation may find it hard to realize how great was the temptation during the postwar years to replace the market with planned investment and far-reaching state intervention in technological development...
...Here, I want to examine the Swedish experience as the starting point for systemic change in Poland, because it seems to me that, for Poland (and perhaps for other postcommunist countries), what is most important are those features of the Swedish model that distinguish it from other forms of the welfare state...
...Lindbeck has doubts, however, as to whether this consensus within what he calls the "political class" is itself sufficient to ensure that these extremes will be abandoned...
...An alternative model, based on widespread participation in both the formation and implementation of modernization programs, is gaining credence...
...In fact, there are some striking similarities between Sweden and Poland...
...Of course, the implementation of this proposal was made possible only thanks to several favorable circumstances...
...What is important, though, is the fact that for several decades there was a group of intellectuals, politicians, and social activists who believed in a social contract...
...At the same time, many periods of Poland's history have been characterized by a weak state...
...It has been pointed out that, in many countries, these economic cycles have found a substitute in war, which has "liberated" the economy from its out-of-date productive apparatus...
...Swedish Social Liberals and Polish Conservatives It is obvious that neither now nor in the foreseeable future can we afford to transfer Sweden's level of welfare to Poland...
...The example of Sweden also shows that a reduction in inequality is not simply a question of income redistribution, that it is possible to design a wage structure in which differences in initial income are less than they are in many other capitalist countries...
...Unfortunately, Lindbeck does not elaborate on what needs to be done in order to ensure this WINTER • 1993 • 89 even distribution of human and financial capital, although elsewhere he criticizes Rudolf Meidner's concept of investment on the part of workers' funds...
...Society has no possibility of exercising a positive influence over the course of events...
...The agreement also established proceWINTER • 1993 • 91 dures for worker layoffs and principles governing negotiations (including limitations on strikes and protest actions while negotiations were taking place...
...Poland's current political landscape, with its numerous political parties (over one hundred all together, twenty-nine in parliament) is well known...
...One can also find plenty to support this conclusion in the wide-ranging Western debate about the totally unjustified and exorbitant privileges of top management in large corporations...
...There is a grain of truth to this argument, which takes as its basis the peasant origins of Swedish society...
...By this I mean that we should aim not only to assist the poorest or neediest groups in our society but we should institute genuine industrial democracy and, even more important, involve people in creating social and political institutions...
...Rejection of the welfare state has become the basic goal of leading conservative politicians...
...At a 1990 OECD conference dealing with the transition to the market, Lindbeck gave a speech essentially addressed to politicians and economists in East-Central Europe...
...the Social Democrats would support higher prices for agricultural produce in exchange for the Agrarian party's support for public works and unemployment benefits...
...Nor should the capital market be entirely free of state intervention...
...Some observers argue that the ease with which the Swedes arrive at agreement and their ability to arrive at enduring compromises constitute a national characteristic that, by definition, cannot be emulated by other societies...
...In any case, Rehn and Meidner proposed an expansion of programs to combat unemployment...
...The first major agreement was concluded in 1933, on the initiative of the Social-Democratic party, which had recently won the largest number of seats in the lower house of parliament, although not an absolute majority...
...This complaint is accompanied by attacks on the "dictatorship of the trade unions...
...For many years (even decades) to come, the state should follow a two-track housing policy...
...Sweden has shown that unemployment does not have to be viewed as an indispensable mechanism with which to discipline the work force...
...Although the liberals rarely formed part of the governing coalition, many of the reforms that came to constitute the Swedish model were made possible by their openmindedness...
...Nor can we afford today to try to imitate Sweden's distribution of national income, the proportion of resources allocated to social security and social services...
...WINTER • 1993 • 93 On the Polish Road to Prosperity and Justice In my opinion, Sweden's experience suggests a number of conclusions and provides a basis for a number of demands that the Polish left ought now to put forward...
...The fact is, however, that no one has advocated this...
...Not so long ago the democratic opposition was complaining about the government's deliberate low-wage policy...
...Of course we need drastic reforms, but reforms within the framework of the welfare state...
...Its basic components have been formed in the course of a rich and complex historical process...
...The new "bourgeois" government, like its social-democratic predecessors, considers active struggle against unemployment (and not only through overcoming the recession) one of its major tasks...
...This approach leads us to reverse the argument of Poland's conservatives: Poland simply cannot afford to abandon the welfare state...
...The country could not, then, count on the "beneficial" effects of either recession or war...
...In the traditional Western democracies, voter turnout is low and generally declining, and unions and other social organizations are declining in strength...
...I believe that this is no longer possible in light of the significantly higher level of education and political experience on the part of the work force, the demands of modern technology, and the level of expectations that have been formed by, among other things, the "demonstration effect" of Western living standards...
...This temptation must have been all the greater among trade-union activists, by nature mistrustful of market institutions...
...On the other hand, the history of Sweden in the early twentieth century does not bear out such an idyllic portrait...
...It will be many years before Poland can afford the Swedish model, and its implementation has led to an excessive decline in responsibility on the part of the individual and the family and has hindered economic growth...
...The sooner the political class realizes this, the less likely that it will face disaster...
...The novelty—and strength—of this party, which worked closely with the trade unions, was its program to overcome the Great Depression...
...Neither Syryjczyk nor anybody else close to the leadership bothers to ask whether it is possible that, in the twentieth century, the welfare state has become a precondition for the successful implementation of these great civilizational changes...
...Now we have only three national union organizations: Solidarity, Solidarity 80, and the All-Poland Trade Union Coalition...
...Still in place is the extensive and experienced labor-market administration, which implements this policy...
...Even during the Stalin era, the Polish state was weaker than the states of neighboring countries...
...What has negative consequences for economic efficiency (and economic growth) is marginal wedges between factor incomes and disposable income and hence between the social and private return on effort...
...In other words, we need to create conditions for mass participation in the conscious creation of the new social order...
...2. The second conclusion from the Swedish experience is that we should reject the thesis that egalitarianism conflicts with efficiency, that economic growth is best served if income levels are determined by spontaneous market forces, and that any intervention in the workings of the market constitutes a "cost" to society...
...Swedish social democracy inherited a tradition of a strong state...
...At the same time, many people argue that the economic difficulties of the Western countries are a direct result of the excesses of the welfare state...
...Some other kind of mechanism had to be found to eliminate out-of-date plants and technology in the conditions of balanced growth that Sweden enjoyed until the oil crisis of the 1970s...
...Critics may have distorted the relative weight of the model's defects, but defects there are...
...Although the history of these two countries has been dissimilar (Sweden, for example, did not have the corvée [panszczyzna] and its peasantry was therefore more independent, both politically and economically, than in Poland), the outcome was similar...
...A characteristic feature of Sweden's fullemployment policy is the large percentage of resources (in general, the largest of any country) allocated to combating unemployment, as well as the extensive range of means used to implement the policy, including worker retraining and job creation...
...Also crucial was the fact that central institutions and procedures for negotiating collective agreements were already in place...
...The union movement is far better organized...
...I am not advocating that we transplant to Poland another country's entire institutional system but simply that we learn from the experience of others...
...By proposing to increase purchasing power as a remedy for massive unemployment, the Social Democrats were able to reach an agreement with the Agrarian party...
...The Swedish model is perceived as a luxury that induces universal laziness, a luxury we Poles are supposed to deny ourselves for many years if we want to undertake what Tadeusz Syryjczyk calls "great civilizational changes...
...It seems that the strongest argument in favor of a social contract is the widespread feeling of hopelessness in Poland today...
...It is obvious that, during the period of restructuring, the unemployment rate will inevitably be higher than it is in those countries with full-employment policies, especially Sweden...
...In both societies, social barriers are lower and differences in wealth smaller than in many Western societies...
...This was an alliance against three bourgeois parties that continued to cling to the orthodoxy of free trade...
...This alliance was made possible by the fact that the SAP had rejected its previous doctrinaire policies based on Marxism in favor of a program based on pragmatism, reformism, and solidarity...
...While following these positive guidelines, we should be aware of the dangers that have emerged in Sweden...
...At the same time, there emerged two economists with ties to the trade unions who, despite widespread aversion to the market, proposed a mechanism that would replace periodic, and highly destructive, recessionary cycles with the constant "creative destruction" of the market...
...According to Tadeusz Syryjczyk, minister for industry in the former government of Tadeusz Mazowiecki, "Any hope for a return to, or construction of, a welfare state is a vain hope...
...A document drawn up by the new government and parliament states: "The goals of economic policy remain unchanged: full employment, economic growth, stable prices, a just distribution of national income, regional equality, and a healthy environment...
...Fair Wages and "Creative Destruction" It was Joseph Schumpeter who formulated the notion of crises as "creative destruction...
...No doubt, every visitor to Sweden has taken part in conversations about the absurdities resulting from the overprotective policies of the state...
...In this case, only the opposition parties are capable of releasing the state from the grip of vested interests and implementing the now widespread demand for a reduction in the role of the state...
...the amount she receives in family allowances, housing subsidies, and so on far exceeds what she earns if she goes to work as a married woman...
...Just as the first agreement did not mean that the social democrats and agrarians had entered into a lasting coalition, so the second agreement did not turn out to be permanent...
...They have introduced various forms of commercialization and privatization into the sphere of social services and they have made direct cuts in budgetary expenditure...
...This would involve abandoning the attempt to impose a "revolution from above" because "the authorities know better...
...Even later, the path leading to the social contract proved to be a difficult one, with numerous obstacles...
...The other side of the coin is the alienation of the state apparatus, the mistrust of the state on the part of society, for whom the state signifies "them," rulers who care more for their own comforts than for the interests of ordinary people...
...If this is indeed the case, we need to consider not only the negative but also the positive experience of the welfare state in those countries with a high level of economic development...
...From this point of view, both the current institutional arrangements and the way in which they were formed are equally important...
...The slogan that encapsulated all these features was that of folkhemmet, which roughly means the state as "the home of the people" and society as a large family that cares for the well-being and security of all its members...
...There is no doubt that it would now be extremely difficult to achieve such a contract, and that ever more obstacles arise with each passing day...
...When discussing incentive problems, it is important to emphasize that there is not necessarily a conflict between efficiency and equality...
...Perhaps the most important point of this speech is Lindbeck's rejection of the widely accepted neoclassical thesis regarding the contradiction between efficiency and equality...
...Translated from the Polish by JANE CAVE 1 Nicholas Stem, "Public Policy and the Economics of Development," European Economic Review, No...
...Sweden's institutional system was created not by the government, nor even by the social democrats, alone...
...This involves flattening income differentials (and not just through progressive taxation) between workers and managers...
...Specific, nonsystemic circumstances...
...Moreover, he notes the growing consensus regarding numerous exaggerations of the model...
...They also helped to create an atmosphere conducive to cooperation between trade unions and employers...
...The question is whether the short life span of these contracts resulted from the "Polish national character" or from the logic of the process which made them possible—the collapse of the communist system...
...Everyone knows also about the cumulative absurdities of the tax system—although Sweden by no means has a monopoly on such absurdities...
...This is particularly the case when one realizes that for the foreseeable future, Poland will not have an economy based completely, or even largely, on private property...
...Nobody considers whether the welfare state itself might not constitute an irreversible civilizational change...
...Gosta Rehn and Rudolf Meidner suggested implementing the principle of "equal wages for the same work," regardless of the technological level or organization of production in a given plant or branch of industry...
...To these criticisms from an economist's perspective we can add numerous criticisms concerning the excessive growth of the bureaucracy, the arrogance of power, and the "etatization" of the Social Democratic party (SAP) and the trade-union leadership, perhaps an inevitable result of the party's uninterrupted rule for several decades...
...Nevertheless, this approach can be useful in the transformation of property relations if this transformation is viewed as a social process...
...If this is the case, how do we explain the fact that the rates of both economic growth and savings are even lower in the United States than in Sweden...
...Sweden has known rioting and even death on the streets...
...Nevertheless, the natural arbitrator in the effort to conclude a social contract could, once again, be the Catholic church hierarchy, which has played a moderating role in the past...
...It is possible that parliament could play an important arbitrating role...
...Both societies bear the stamp of the peasantry...
...One cannot but agree...
...No sane person, however, suggests that we ought to guarantee the citizens of Poland the same kind of generous state benefits currently provided in Sweden...
...It has been argued, for example, that declining economic growth rates and the low rate of savings are the direct result of the "welfare state...
...Swedish liberalism has been characterized by a pragmatic reformism whose roots reach back to the end of the nineteenth century...
...For this reason, we can only conclude that this argument serves another function...
...It is equally, if not more, important to answer the question of whether these demands are actually realistic in practical terms...
...Nevertheless, there is one fundamental difference in the history of the two countries—the attitude toward the state...
...In both cases, the result has been an egalitarian ethos that has made it easier to arrive at compromises between social groups...
...If so, we are entitled to ask why such factors are studiously ignored in the case of Sweden...
...Unemployment cannot be treated as though it were an integral feature of a market economy based on private ownership, nor should labor power be treated like any other excess commodity...
...The functional notion of property, in the version espoused by Swedish social democrats, has on occasion been drastically simplified or distorted...
...Social Contracts Sweden's socioeconomic system is based on a number of agreements which, taken together, constitute a kind of Social Contract that has survived several decades...
...The most common argument adduced in the effort to discredit the Swedish model is that the current economic crisis is a crisis of the model itself...
...The institutional results of the full-employment policy have turned out to be far more long-lasting...
...After all, if the market fixes everything, if the individual can only correct its mistakes post festum, there is no role for social activity apart from charitable works...
...Another example can be found in a recent article by Dariusz Teresinski criticizing what the author refers to as "socialist capitalism": "Socialism cannot exist without a permanent source of external support...
...In my view, the main danger is that of etatization, which lurks behind all our four proposals...
...This accords with the logic of the free market...
...Right now in Poland there is a widespread feeling that we are not only in the middle of an economic crisis but that a critical point has also been reached in the program that determines the basic direction of systemic change...
...3. Sweden's experience also shows that we should demand state intervention in the economy, that the state should 'pursue an active policy in the labor market and, to a lesser extent, in the capital market also...
...For those who consider the democratic nature of our systemic transformation the central value, the fundamental question is: is there any chance of achieving a social contract that would allow us to overcome what has been termed appropriately "the equilibrium of the powerless" and to make our way out of the blind alley in which we currently find ourselves...
...In addition to creating a housing market for the wealthy, the state should implement a policy of cheap communal and cooperative housing...
...This is especially true in light of the fact that Sweden's prosperity consists not only of the country's income levels but also its accumulated wealth...
...It can be seen in the priority accorded, somewhat thoughtlessly, to the principle of centralization and the failure to appreciate the value of decentralization and polycentrism in social life...
...political and economic realities dictate that we live with a mixed economy for many years to come...
...96 • DISSENT...
...My personal interpretation is that severe problems did not emerge in Sweden as long as total public sector spending was below about 40 or even 50 percent of GNP, including "public consumption" of 15 to 20 percent of GNP...
...The employers' federation, which was dominated by the owners and managers of the most modern enterprises, approved the system of centralized collective bargaining in the hope of minimizing inflationary pressures...
...The state needs to concern itself with investment in the social infrastructure, including subsidized, low-cost housing...
...Farmers' organizations too, despite some purely political differences, form a fairly cohesive bloc with a number of political parties and constitute a powerful lobby...
...On the one hand, there is the feeling that if the state authorities do not gain support from the population they have exceedingly little room for maneuver and, on the other, that in the current situation of polarization and equilibrium of the powerless the only thing left to society is to exercise WINTER • 1993 • 95 negative power and block all initiatives of the government...
...The sensible question is whether we have anything to learn from the path that Sweden followed to its current level of prosperity and social security...
...It is virtually impossible to open a newspaper without seeing headlines such as: "Blind Alley," "Vicious Circle," "Impasse," "A Bad Climate for Reforms...
...The 1980s were years of crisis in which cooperation between capital and labor became ever more attenuated until the Salsjoebaden agreement collapsed completely...
...They laid out the theoretical basis and translated into programs of action an entire package of social and economic reforms that preceded, or ran contemporaneously with, Keynes's interventionist policies and Roosevelt's New Deal...
...It is becoming ever more apparent that, without broad social support, no political party will be able to lead the country out of its blind alley...
...Employers would have to be represented by, on the one hand, the political-state authorities representing the state sector and, on the other, representatives of the still poorly organized private sector...
...In 1931, Wigforss was one of the first in the world (Keynes's major work was not published until 1936) to attack the dogma that high wages were the cause of recession...
...Although the social democrats took the lead in the formation of the Swedish model, an important role was also played by the social reformism of the liberal party (Folkpartiet...
...To a large extent, these problems can be attributed to current economic policy—a factor generally ignored by ideologically motivated critics...
...In general, it can be said that, as far as the guarantee of full employment was concerned, as well as more equal income distribution and housing policy, the policies of Sweden's Social Democrats were closer to democratic planning than the free market...
...One of the main (if not the main) reasons for the social passivity of postcommunist Poland is precisely the fact that the ruling political elite has decided that it "knows best," that from the very beginning and quite deliberately it decided to implement a "revolution from above...
...Lindbeck's detailed recommendations concerning this great "trade-off " will astound those attuned to the policies of Reagan and Thatcher: The Swedish experience also suggests that it is dangerous to create incentives to absenteeism— for instance due to high marginal tax rates or very generous conditions in health insurance and early retirement systems, etc...
...The version that they tried to build in Sweden was supported by a positive foreign-trade balance, and this trade balance resulted from, among other things, an increased demand for khakicolored equipment in a divided world...
...A Model or a Path...
...It is true that both the SAP and recent governments have emphasized the virtues of decentralization, but they have not followed through in a consistent manner...
Vol. 40 • January 1993 • No. 1
