No, Sweden Is Not Really Moving Toward Capitalism

I t was nice for me as a Swede to read a piece in international media about my country. But while the Wall Street Journal’s Tom Fairless gets some things right about Sweden’s supposed embrace of capitalism, the article overstates the case. As someone who was born and raised in Sweden and who works in Swedish politics, I can tell you that Swedes are not embracing capitalism as much as they are losing trust in government institutions and responding to new realities.

First, let’s talk about education. The piece praises Sweden for our expansive school choice policies, which even allow taxpayer-funded for-profit schools (using a voucher model).

What the piece overlooks is why this type of school has become so popular. The answer is right in the text: As the article notes, these private schools are accused of deepening ethnic segregation by admitting relatively well-off, less resource-demanding — and mostly ethnically Swedish — students. This allows the schools to make a profit.

No one familiar with Sweden’s immigration woes should be surprised that school choice acts as a form of “white flight,” with Swedish parents going to great lengths to have their children attend majority-Swedish private schools. This is also why the left is running on a platform to ban publicly funded for-profit schools and other for-profit welfare providers. Since around 80 percent of private schools are for-profit, this would effectively end school choice altogether, cutting off a “flight path” for Swedes fleeing multiculturalism.

The article quotes Aida Hadžialić, the Social Democrat president of the Stockholm County Council, who praises the private hospital of St. Göran. Unmentioned, however, is that Hadžialić is responsible for butchering hundreds of private health-care options in Stockholm. Last summer, all of Stockholm city had to rely on one — yes, one — single ambulance, thanks to Hadžialić having regulated so many private options out of business since taking power in 2022.

Second, there is the tech sector. Sweden is, as the WSJ piece notes, home to an impressive number of “unicorns” and successful start-ups, not least within tech: Klarna, Spotify, and Minecraft all hail from here. Sweden easily beats any continental European country — save possibly Switzerland — when it comes to ease of doing business as a start-up. Again, though, this is not (mainly) because of Sweden embracing capitalism.

Almost all government services in Sweden are digital, and our public administration is far more streamlined than even in supposedly “capitalist” countries: Filing taxes takes mere minutes, anything you wish to apply for (e.g., permits) can be done online, and neither I nor anyone I know have ever waited in line at our equivalent of the DMV.

All of these things reduce the cost of doing business and help start-ups grow. What the WSJ article describes as a recent embrace of capitalism can more accurately be described as a culture of efficiency within the state apparatus that traces its roots back centuries.

It is true that Sweden abolished wealth and inheritance taxes 20 years ago, which Fairless claims contributed to our start-up boom. While there is some truth to that, the reality is that these taxes never raised any significant amount of revenue to begin with.

Unlike so many less competent left-wing parties around the world, the Social Democrats realized, all the way back when they first seized power in 1932, that capital is far more mobile than labor. Tax capital, and it will flee. Tax labor, and what choice do they have but to pay up? The Swedish welfare state was not built on the backs of those born into wealth, but rather on the backs of smart, hardworking people trying to build wealth from scratch, who still to this day face marginal tax rates above 60 percent.

And while the WSJ seems to view the existence of successful start-ups as proof of Sweden repudiating left-wing politics, those things have always coexisted here: Even during the peak of social democracy in the late postwar boom, Swedish businesses like IKEA, Saab, and Volvo were thriving.

This brings me to my final point: Swedes have not in any way changed how they view the role of the state. Only 20 percent of Swedes agree that the size of the public sector should be reduced. Adding insult to injury, this number is lower today than it was 20 years ago, and not once since the year 1990 have a majority of Swedes agreed that public sector amenities should be slashed. Around 70 percent of voters also want to ban taxpayer-funded for-profit health care, elder care, and schools.

Sweden’s left-wing political culture also continues to exacerbate the earlier mentioned issues around immigration. While the unemployment rate among those born in Sweden is just over 6 percent, it’s 16 percent among the foreign-born. High minimum wages and other barriers to the labor market have meant that the kind of entry-level, menial work that is common in first jobs for migrants in countries like the U.S. simply does not exist in Sweden: Our stores have no greeters, baggers, or shopping cart collectors; valets are nonexistent, as are parking garage and toll-booth attendants; and the only place I have ever seen a hand car wash is in American movies.

The toxic combination of lack of entry-level jobs and a right to indefinite cash welfare has contributed to cementing hundreds of thousands of migrants in a permanent state of government dependency. Sadly, labor-market reform remains a third rail. Tesla has fought the labor unions in Sweden for years, without receiving any support from the political right.

Speaking of the right, it should be noted that the right-wing coalition government elected in 2022 (supported by the Sweden Democrats) has by most measures been successful: Asylum migration has dropped to a 40-year low, and deportations are up. Violent crime is down. New nuclear power is on the way. Inflation is running at less than 1 percent. Taxes are lower than at any point since 1975.

And yet, our current coalition government will need a small miracle to be reelected, having not led in polling averages for a single month since the previous election in 2022. Recent polls have the government down between 6 and 10 percent, and the election is less than four months away.

This, more than anything else, goes to show how deeply ingrained social democracy remains in Sweden. Right-wing governments remain an exception and are held to a higher standard by voters. They rarely get the time in office needed to enact structural reforms, and even when they do, they tend to lack the political courage to act and clean up ranks in the administrative state.

The WSJ is right to highlight the strides Sweden has made toward a more market-oriented economy, but it ultimately fails to ask the right questions of the right people. As a Swede, I wish the rosy picture the article paints were accurate. Sadly, the reality of Sweden is more complicated than that.