301Public-Steering and Private-Performing Sectors: Success and Failures in the. . .

Reforms in Sweden in the 1980s: Success and Failure

During the middle of the twentieth century, Sweden’s economic policy was sometimes referred to as a middle way between socialism and capitalism. Even though the concepts of compromise and negotiation are highly valued within Swedish culture, one can also describe Sweden as a land of extremes in terms of economic and innovation policy. Relative to other Western democracies, Sweden went further than most other countries in the centralization of welfare capitalism between 1932 and 1976, a period which, from a Western perspective, marked a uniquely long period of government power for one political party, the Social Democrats. The active state policies, which are often associated with the ideas of John Maynard Keynes, were already well represented in mainstream Swedish economic thinking from the early 1930s through the influential Stockholm School economists like Gunnar Myrdal, Bertil Ohlin, and Erik Lundberg. The centralized state and business relations dominated the labor market and housing policy during this period. At the same time, old monopolies in telecommunications and finance were seldom questioned. Housing and city development was (and still are) regulated by a municipal planning monopoly, housing costs and rents were (and largely still are) regulated for dwellers, and the salaries of workers were (and largely still are) regulated by unions and employer organizations. The monopolies and oligopolies were mostly government supported and this caused a decline in competition. Although Sweden was more stateinterventionist than many other Western countries, this trend of governmentsupported monopolies was present all over the Western world. In 1942, the famous monopoly expert and later Nobel laureate George Stigler noted that “the major factor in the decline of competition has been governmental support of monopoly” (Stigler, 1942, p. 20). However, the Swedish neoliberal policy in the 1980s, which leaned toward decentralization and market policies, was also considered extreme from a Western perspective. Much of the deregulation across the world was pioneered by Swedish sectors that were often more far-reaching than other Western democracies. One striking example is the deregulation of the stock exchange monopoly. In 1980, the de facto monopoly of the Stockholm Stock Exchange over financial equity was also granted de jure. In the wake of digitalization, institutional entrepreneurship and neoliberal ideas swept across society. This monopoly was soon supplemented by a digital-born options exchange—a successful institutional entrepreneur who managed to outgrow and overturn the monopolist in just 10 years (Blomé, 1990).

Other examples of relatively extreme or pioneering deregulation processes in Sweden include school choice and public transport. These processes constituted the Swedish neoliberal period of the 1980s and 1990s, alongside more mainstream deregulation—from an international perspective—in television, radio, telecommunications, credit, and currency restrictions.2 However, a sector that has remained

2An often-forgotten reform with the same neoliberal character had already occurred in 1965, namely Sweden’s student funding of higher education using loans and support, which is still intact