Magazine | May 20, 2019, Issue

Sweden Is Capitalist

Sweden Democrat party supporters rally in Stockholm, Sweden, September 8, 2018. (Ints Kalnins/Reuters)
It thought better of its experiment with socialism

From the left, Sweden is the Swedish Way, hailed since the 1950s as our own best future in breathless articles among the girdle ads in The New York Times Magazine. From the right, it’s the Road to Serfdom, which That Man in the White House was wont to lead us down.

I’m here to tell you that both are wrong. I’ve been over into the present, and Sweden’s real per capita GDP is, in terms of purchasing power, roughly what your typical rich country earns these days. It’s below that of the workaholic U.S., and — irritatingly to the Swedes, who view themselves as the natural leaders of Scandinavia and make jokes about the idiotic Norwegians — it’s well below that of oil-rich Norway. But if Sweden were actually in the grip of a Communist-style socialism, as the Right fears and the Left desires, its income per head would not now, as it does, exceed by a little Germany’s and Japan’s and Britain’s. It would be more like North Korea’s, or Venezuela’s. Around 1850, it was in fact at such levels, before an enthusiasm for bourgeois liberty and dignity took hold.

Sweden in fact is pretty much as “capitalistic” as is the United States. It’s Minnesota writ large. Not writ all that large, actually, with merely 9.3 million people, many of them now foreign-born, compared with the 5.3 million Minnesotans, 10 percent of Swedish descent. Like the Land of 10,000 Lakes, Sweden is a place of private ownership and thrusting inventors, Swedish bachelor farmers and pretty generous social provision, pretty good schools (with vouchers) and terrible weather.

If “socialism” means government ownership of the means of production, which is the classic definition, Sweden never qualified. When little Sweden’s economists were second in academic standing only to big Britain’s, in the early 20th century, they were “liberal” in the European sense: free-traders opposed to central planning and governmental ownership. None of Sweden’s manufacturing or extractive industries has ever been socialized, this in contrast, for example, to the experiment after 1946 in the world’s first innovative economy, when the Labour party’s Clause IV nationalized the Bank of England, coal, inland transport, gas, steel, health services, and much else. Sweden never followed even the more modest example of America’s temporary nationalization of railways during the First World War. Sweden’s Systembolaget, the state liquor store, was sold off in 2008, as it has not yet been in all the U.S. Apoteket, the maddeningly inefficient Swedish-government drug-store monopoly, was privatized, too, praise the Lord.

But these are small potatoes. The big potatoes in Sweden are owned by reclusive millionaires worthy of Newport, R.I., or Rancho Santa Fe, Calif. Consult Stieg Larsson and The Girl with the Dragon Tattoo. When Saab Autos began its descent into bankruptcy, no Swede suggested that the government give the company billions on the security of its worthless stock. When Volvo became a Chinese company, no Swede objected. Compare the determination of the Bush and Obama administrations in proudly capitalist America to socialize General Motors and Chrysler — Chrysler for the second time. Or compare the plans on the left of the Democratic party to solve any problem by expanding the government instead of solving the problem, such as monopoly in the provision of U.S. health care. “In many fields,” noted a Swedish diplomat, “we have more private ownership compared to other European countries, and to America. About 80 percent of all new schools are privately run, as are the railroads and the subway system.” Compare Amtrak, with eight stops in West Virginia, compliments of Senator Robert Byrd.

Anyway, the word “capitalism” doesn’t capture what is special about an innovative economy such as that of Sweden or the U.S. Capital isn’t the point. People have saved and invested, bought low and sold high, since Abram pulled off the property deal with the Lord. We need a better word for what happened since 1800 in the West, and now increasingly the rest. The worst enemies of liberty popularized “capitalism” in the late 19th century. We shouldn’t let them go on setting the intellectual agenda.

Scientifically speaking, the C-word draws undue attention to the financial sector. Worse, it embodies a mistaken theory, still popular among some economists, right and left, that capital accumulation is what made us rich. What actually made American and Swedish and Japanese people rich was innovation, that is, invention-carried-out, “exchange-tested betterment,” you might say, or even “innovism.” For instance, to speak only of new ways of doing (the modern world was also made by new ways of speaking): the screw propeller in steamships, the blowtorch, the safety match, the improved zipper, Nobel’s dynamite, the adjustable wrench, the pacemaker, dialysis, ultrasound, IKEA furniture, the three-point safety belt, the precision ball-bearing in, for example, automobiles (“Volvo” means in Latin “I roll,” and honors the company’s spinoff in the 1920s from Svenska Kullagerfabriken, SKF, still the leading ball-bearing maker in the world). All these were betterments tested by exchange in tiny Sweden, right up to the present.

A non-technical definition of “socialism” would be “bossy and obstructive and high-handed government.” Sweden certainly has a good deal of that, inspired for example by the eugenicists Gunnar and Alva Myrdal in the 1930s. Sweden, with other Protestant countries, led the world in compulsory sterilization and persecution of gays into the 1970s. It’s an example of the way the Swedes go along with their government too much, sometimes because they assume too easily that whatever is widely agreed must be right. An old Swedish woman left her worn-out frying pan in a trash container for metal packages. She was arrested for committing a crime against the environment, freed only after trial, and fined. Nice.

Yet for bossy and obstructive and high-handed government in the Land of the Free, what about the many American states that had sterilization laws in 1956? What about the drug-war/incarceration complex, destroying black and Hispanic families and neighborhoods and denying the vote to millions of “felons”? Or the U.S. military expelling good soldiers, some of whom speak Arabic, for nearly two decades because they were openly gay — and now because they are transgendered?

Swedish-government spending, true, is very high, half again as large, measured as a share of GDP, as government spending in the U.S. If we could commission the Swedes to come over and run the American government, I’d be willing to feed the beast. Like Iowa (Minnesota a little less so), and unlike Illinois, Sweden has honest government, to which you wouldn’t mind giving that extra krone, since after all a good deal of it comes back in actual services and never goes into Swiss bank accounts.

In 1960 Sweden had a normal, rich, and capitalist economy, having developed from the 1850s after free-market reforms from being the poorest country in Western Europe to being the fourth-richest in the world. In 1938 at Saltsjöbaden, while FDR in the U.S. was still ranting against economic royalists and terrifying the investing class, the unions and corporations in Sweden were agreeing to industrial peace under the Social Democratic regime, which gave wide latitude to the industrialists for investing in technology and earning profits. Seventy percent of working Swedes nowadays belong to a union, a greatly higher rate than in the U.S. at the height of industrial unionism. But unlike, say, the U.S., with its many decades of protecting steel production and its century of keeping sugar prices at twice the world level, Sweden let its shipbuilding industry die quickly, and if you visit factories in Sweden you are struck by how many robots work there. It’s a result of export-oriented managers’ facing export-conceding unions. The unions in bigger countries, less obviously dependent on foreign trade, still think that by stopping innovation they can “protect” workers.

True, Sweden — like the U.S. at the same time — had an era from 1960 to 1976 of dogmatic and union-driven extensions of the welfare state. Olof Palme said in the 1960s, “The political winds are to the left: Let us set sail.” Sweden still supports able-
bodied people who decide not to work very much. Some don’t work at all, declaring, “I am allergic to electricity.” And among working Swedes, in this healthiest of modern countries, with six-week paid vacations, absenteeism for illness is over a month a year. Such policies drove Swedish income per capita down to 17th in the world, though at the gain of eliminating much poverty.

But Sweden can’t be our future in the United States, not unless we give up our beloved ethic of Folktillfältet, the people’s opportunity, and its corollary, I’ve-Got-Mine. It’s an ethic embodied for example in the “agency theory” that dominates modern American business schools. A non-academic version was articulated by the Tammany Hall politician George Washington Plunkitt in 1905: “There’s an honest graft, and I’m an example of how it works. I might sum up the whole thing by sayin’: ‘I seen my opportunities and I took ’em.’” We laugh, because we are Americans, or Chicagoans, or work for Goldman Sachs.

It’s a sort of socialism, come to think of it, in another key. But it ain’t Swedish.

Deirdre Nansen McCloskey serves as professor of economics and history and professor of English and communications at the University of Illinois at Chicago. 

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